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What changed in MONARCH CASINO & RESORT INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of MONARCH CASINO & RESORT INC's 2022 and 2023 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 2023 report.

+132 added−165 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-28)

Top changes in MONARCH CASINO & RESORT INC's 2023 10-K

132 paragraphs added · 165 removed · 119 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe tower also includes a private concierge lounge and world-class spa and pool deck on its top floor. ​ The average occupancy rate, ADR and REVPAR at the Monarch Black Hawk for the following periods were: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 2020 (1) Occupancy rate ​ 75.10 % ​ 67.90 % ​ 29.60 % ADR ​ $ 201.92 ​ $ 182.78 ​ $ 177.63 ​ REVPAR ​ $ 164.91 ​ $ 132.75 ​ $ 52.97 ​ ​ (1) The phased opening of the hotel tower at Monarch Black Hawk began in November 2020. ​ Quality.
Biggest changeThe tower also includes a private concierge lounge and world-class spa and pool deck on its top floor. ​ The average occupancy rate, ADR and REVPAR at the Monarch Black Hawk for the following periods were: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 ​ Occupancy rate ​ 79.90 % ​ 75.10 % ​ 67.90 % ADR ​ $ 195.20 ​ $ 201.92 ​ $ 182.78 ​ REVPAR ​ $ 168.78 ​ $ 164.91 ​ $ 132.75 ​ ​ Quality.
We believe that some of our competitors have the advantage of having significantly more guest rooms available for sale than we do.
We believe that some of our competitors have the advantage of having significantly more guest rooms available for sale than we do.
Some jurisdictions require gaming operators licensed in that state to receive their permission before conducting gaming in other jurisdictions. ​ In each jurisdiction in which we have gaming operations, the following conditions and restrictions apply: ​ ● Periodic license fees and taxes must be paid to state and local gaming authorities; ● Certain officers, directors, key employees, and gaming employees are required to be licensed or otherwise approved by the gaming authorities; ● Individuals who must be approved by a gaming authority must submit comprehensive personal disclosure forms and undergo an exhaustive background investigation, the costs for which must be borne by the applicant; 9 Table of Contents ● Changes in any licensed or approved individuals must be reported to and/or approved by the relevant gaming authority; ● Failure to timely file the required application forms by any individual required to be approved by the relevant gaming authority may result in that individual’s denial and the gaming licensee may be required by the gaming authority to disassociate with that individual; and ● If any individual is found unsuitable by a gaming authority, the gaming licensee is required to disassociate with that individual. ​ Nevada.
Some jurisdictions require gaming operators licensed in that state to receive their permission before conducting gaming in other jurisdictions. ​ In each jurisdiction in which we have gaming operations, the following conditions and restrictions apply: ​ ● Periodic license fees and taxes must be paid to state and local gaming authorities; ● Certain officers, directors, key employees, and gaming employees are required to be licensed or otherwise approved by the gaming authorities; ● Individuals who must be approved by a gaming authority must submit comprehensive personal disclosure forms and undergo an exhaustive background investigation, the costs for which must be borne by the applicant; ● Changes in any licensed or approved individuals must be reported to and/or approved by the relevant gaming authority; ● Failure to timely file the required application forms by any individual required to be approved by the relevant gaming authority may result in that individual’s denial and the gaming licensee may be required by the gaming authority to disassociate with that individual; and ● If any individual is found unsuitable by a gaming authority, the gaming licensee is required to disassociate with that individual. 9 Table of Contents ​ Nevada.
The applicant must pay all costs of investigation incurred by the Nevada Gaming Authorities in conducting any investigation. ​ We are subject to disciplinary action if, after we receive notice that a person is unsuitable to be a stockholder or to have any other relationship with us, we: ​ ● pay that person any dividend or interest upon voting securities; ● allow that person to exercise, directly or indirectly, any voting right conferred through securities held by that person; ● pay remuneration in any form to that person for services rendered or otherwise; or ● fail to pursue all lawful efforts to require such unsuitable person to relinquish his voting securities for cash at fair market value. ​ 10 Table of Contents Under certain circumstances, an “institutional investor,” as defined in the Nevada Act, which acquires more than 10%, but not more than 25%, of our voting securities may apply to the Nevada Gaming Commission for a waiver of such finding of suitability if the institutional investor holds the voting securities for investment purposes only. ​ Any person who fails or refuses to apply for a finding of suitability or a license within 30 days after being ordered to do so by the Nevada Gaming Commission or the Chair of the Nevada Gaming Control Board may be found unsuitable. ​ We are required to maintain a current stock ledger in Nevada, and the Nevada Gaming Authorities may examine the ledger at any time.
The applicant must pay all costs of investigation incurred by the Nevada Gaming Authorities in conducting any investigation. ​ We are subject to disciplinary action if, after we receive notice that a person is unsuitable to be a stockholder or to have any other relationship with us, we: ​ ● pay that person any dividend or interest upon voting securities; ● allow that person to exercise, directly or indirectly, any voting right conferred through securities held by that person; ● pay remuneration in any form to that person for services rendered or otherwise; or ● fail to pursue all lawful efforts to require such unsuitable person to relinquish his voting securities for cash at fair market value. ​ Under certain circumstances, an “institutional investor,” as defined in the Nevada Act, which acquires more than 10%, but not more than 25%, of our voting securities may apply to the Nevada Gaming Commission for a waiver of such finding of suitability if the institutional investor holds the voting securities for investment purposes only. ​ 10 Table of Contents Any person who fails or refuses to apply for a finding of suitability or a license within 30 days after being ordered to do so by the Nevada Gaming Commission or the Chair of the Nevada Gaming Control Board may be found unsuitable. ​ We are required to maintain a current stock ledger in Nevada, and the Nevada Gaming Authorities may examine the ledger at any time.
Depending upon the particular fee or tax involved, these fees and taxes are payable monthly, quarterly or annually and are based upon either: ● a percentage of the gross revenues received; 11 Table of Contents ● the number of gaming devices operated; or ● the number of table games operated. ​ A live entertainment tax is also paid on admission charges where entertainment is furnished.
Depending upon the particular fee or tax involved, these fees and taxes are payable monthly, quarterly or annually and are based upon either: ​ ● a percentage of the gross revenues received; ● the number of gaming devices operated; or ● the number of table games operated. ​ 11 Table of Contents A live entertainment tax is also paid on admission charges where entertainment is furnished.
The Atlantis features approximately 61,000 square feet of casino space; 817 guest rooms and suites; eight food outlets; two gourmet coffee and pastry bars and one snack bar; a 30,000 square-foot health spa and salon with an enclosed year-round pool; two retail outlets offering clothing and gift shop merchandise; an 8,000 square-foot family entertainment center; and approximately 52,000 square feet of banquet, convention and meeting room space.
The Atlantis features approximately 61,000 square feet of casino space; 817 guest rooms and suites; eight food outlets; two gourmet coffee and pastry bars and one snack bar; a 30,000 square-foot health spa and salon with an enclosed year-round pool; one retail outlet offering clothing and gift shop merchandise; an 8,000 square-foot family entertainment center; and approximately 52,000 square feet of banquet, convention and meeting room space.
We compete for patrons on the basis of the desirability of our location, which is the first casino encountered when entering the area on the main thoroughfare, as well as the attractive setting, friendly and efficient service, quality of our new hotel, spa and food and beverage offerings.
We compete for patrons on the basis of the desirability of our location, which is the first casino encountered when entering the area on the main thoroughfare, as well as the attractive setting, friendly and efficient service, quality of our hotel, spa and food and beverage offerings.
Sports betting is allowed in Colorado casinos as well as approved mobile apps provided the bettor is within the State of Colorado while the bet is made. ​ Compliance with Environmental Laws ​ In 2022, the Company did not incur any material capital expenses for maintaining compliance with applicable environmental laws and does not expect to incur such in 2023. ​ Requirements to comply with environmental laws may have an impact on capital expenditures, earnings, and our competitive position in the future.
Sports betting is allowed in Colorado casinos as well as approved mobile apps provided the bettor is within the State of Colorado while the bet is made. ​ Compliance with Environmental Laws ​ In 2023, the Company did not incur any material capital expenses for maintaining compliance with applicable environmental laws and does not expect to incur such in 2024. ​ Requirements to comply with environmental laws may have an impact on capital expenditures, earnings, and our competitive position in the future.
We believe our numerous amenities, such as a wide array of restaurants, banquet facilities, spa and surface parking are key advantages in our ability to attract local guests that competitor facilities cannot easily match without significant capital expenditures. ​ We also believe that the legalization of additional land-based casino gaming in or near any major metropolitan area in the Atlantis’ feeder markets, such as San Francisco or Sacramento, could have a material adverse impact on our business. ​ 8 Table of Contents The legalization of internet poker, sports betting and other forms of internet gaming in additional jurisdictions throughout the United States could create further competition for the Atlantis. ​ Black Hawk .
We believe our numerous amenities, such as a wide array of restaurants, banquet facilities, spa and surface parking are key advantages in our ability to attract local guests that competitor facilities cannot easily match without significant capital expenditures. ​ We also believe that the legalization of additional land-based casino gaming in or near any major metropolitan area in the Atlantis’ feeder markets, such as San Francisco or Sacramento, could have a material adverse impact on our business. ​ The legalization of internet poker, sports betting and other forms of internet gaming in additional jurisdictions throughout the United States could create further competition for the Atlantis. ​ Black Hawk .
Our resort now offers 516 guest rooms and suites, additional bars and dining options, banquet and meeting room space, a retail store, a concierge lounge and an upscale spa and pool facility located on the top floor of the tower. ​ Regulation and Licensing ​ We may not own, manage or operate a gaming facility unless we obtain proper licenses, registrations, permits and approvals.
Our resort offers 516 guest rooms and suites, bars and dining options, banquet and meeting room space, a retail store, a concierge lounge and an upscale spa and pool facility located on the top floor of the tower. ​ Regulation and Licensing ​ We may not own, manage or operate a gaming facility unless we obtain proper licenses, registrations, permits and approvals.
The interior of the Sky Terrace houses the Oyster Bar, the Sushi Bar, a video poker bar, banks of slot machines and a lounge area. ​ 4 Table of Contents The Monarch Casino Resort Spa Black Hawk ​ Monarch Black Hawk features approximately 60,000 square feet of casino space; approximately 1,100 slot machines; approximately 43 table games; a live poker room; a keno counter and a sports book.
The interior of the Sky Terrace houses the Oyster and Sushi Bar Restaurant, a video poker bar, banks of slot machines and a lounge area. ​ 4 Table of Contents The Monarch Casino Resort Spa Black Hawk ​ Monarch Black Hawk features approximately 60,000 square feet of casino space; approximately 1,000 slot machines; approximately 43 table games; a live poker room; a keno counter and a sports book.
Based on information obtained from the December 31, 2022 Gaming Revenue Report published by the Nevada Gaming Control Board, there are approximately 15 casinos in the Reno-Sparks area which each generated more than $12.0 million in annual gaming revenues. ​ We believe that the Atlantis’ primary competition for leisure travelers comes from other large-scale casinos that offer amenities that appeal to middle to upper-middle income guests.
Based on information obtained from the December 31, 2023 Gaming Revenue Report published by the Nevada Gaming Control Board, there are approximately 12 casinos in the Reno-Sparks area which each generated more than $12.0 million in annual gaming revenues. ​ We believe that the Atlantis’ primary competition for leisure travelers comes from other large-scale casinos that offer amenities that appeal to middle to upper-middle income guests.
Our superior lodging, spa and dining products are predominantly intended to drive gaming revenue. ​ 7 Table of Contents Our cross-property players’ club, “Monarch Rewards,” allows our guests to be eligible to receive rewards and privileges based on the amount of their gaming play and non-gaming spend at both properties, while allowing us to track play patterns through a computerized system.
Our superior lodging, spa and dining products are predominantly intended to drive gaming revenue. ​ Our cross-property players’ club, “Monarch Rewards,” allows our guests to be eligible to receive rewards and privileges based on the amount of their gaming play and non-gaming spend at both properties, while allowing us to track play patterns through a computerized system.
Established as a high-quality gaming resort in Colorado for gaming, dining and lodging. ​ Higher Tier Play. Through its superior product and service, the property is designed to attract and retain the highest tier guests in the Colorado market. ​ Market Growth.
The property is established as a high-quality gaming resort in Colorado for gaming, dining and lodging. ​ Higher Tier Play. Through its superior product and service, the property is designed to attract and retain the highest tier guests in the Colorado market. ​ Restaurants and Dining.
The Oyster Bar and Sushi Bar can accommodate a combined total of up to 137 guests; ● The 178-seat Purple Parrot coffee shop, which serves breakfast and American comfort food 24 hours a day; ● The 92-seat Red Bloom Asian kitchen, featuring a modern twist on authentic Asian crafted dishes inspired by the Far East, including tasteful dishes from China, Japan, Korea, Singapore, Thailand and Vietnam; ● The 170-seat Manhattan Deli featuring authentic New York deli favorites like matzo ball soup, piled high sandwiches, salads, house made soups, bagels and lox, New York style pizza and famous New York cheesecake; ● Two gourmet coffee bars offering specialty coffee drinks, “grab and go” sandwiches, house made gelato and freshly baked pastries; and ● The Chicago Dogs Eatery, a snack bar, serving Chicago-style hot dogs, pizza, ice cream and arcade-style refreshments. ​ The Sky Terrace.
The Oyster and Sushi Bar Restaurant can accommodate a combined total of up to 140 guests; ● The 178-seat Purple Parrot coffee shop, which serves breakfast and American comfort food 24 hours a day; ● The 92-seat Red Bloom Asian kitchen, featuring a modern twist on authentic Asian dishes inspired by the Far East, including flavorful preparations from China, Japan, Korea, Singapore, Thailand and Vietnam; ● The 170-seat Manhattan Deli featuring authentic New York deli favorites like matzo ball soup, piled high sandwiches, salads, house made soups, bagels and lox, New York style pizza and famous New York cheesecake; ● Two gourmet coffee bars offering specialty coffee drinks, “grab and go” sandwiches, house made gelato and freshly baked pastries; and ● The Chicago Dogs Eatery, a snack bar, serving Chicago-style hot dogs, pizza, ice cream and arcade-style refreshments. ​ The Sky Terrace.
We use this information to determine appropriate levels of complimentary awards and to guide our direct marketing efforts. We believe that Monarch Rewards significantly enhances our ability to build guest loyalty and generate repeat and cross property guest visits. ​ Competition ​ Reno/Sparks. Gaming competition in the Reno area is intense.
We use this information to determine appropriate levels of complimentary awards and to guide our direct marketing efforts. We believe that Monarch Rewards significantly enhances our ability to build guest loyalty and generate repeat and cross property guest visits. ​ 7 Table of Contents Competition ​ Reno/Sparks. Gaming competition in the Reno area is intense.
Our marketing efforts are directed toward three broad consumer groups: leisure travelers, conventioneers and Northern Nevada local residents. ​ The Reno/Sparks region is a major gaming and leisure destination with aggregate gaming revenues of approximately $917 million (as reported by the Nevada Gaming Control Board for the twelve months ended December 31, 2022). ​ Our Atlantis revenues and operating income are principally dependent on the level of gaming activity at the Atlantis casino.
Our marketing efforts are directed toward three broad consumer groups: leisure travelers, conventioneers and Northern Nevada local residents. ​ The Reno/Sparks region is a major gaming and leisure destination with aggregate gaming revenues of approximately $921 million (as reported by the Nevada Gaming Control Board for the twelve months ended December 31, 2023). ​ Our Atlantis revenues and operating income are principally dependent on the level of gaming activity at the Atlantis casino.
We market to this segment through relationships with select wholesalers, primarily to generate guest visits and supplement mid-week occupancy. ​ We welcome domestic and international reservations on the Atlantis’ website (www.atlantiscasino.com), and we are featured on major package tour and travel websites. ​ We market to high-end players selectively through direct marketing and hosts.
We market to this segment through relationships with select wholesalers, primarily to generate guest visits and supplement mid-week occupancy. ​ We welcome domestic and international reservations on the Atlantis’ website (www.atlantiscasino.com), and we are featured on major package tour and travel websites. 6 Table of Contents ​ We market to high-end players selectively through direct marketing and hosts.
The third hotel tower features a four-story waterfall with an adjacent year-round swimming pool in a climate controlled, five-story glass enclosure, which shares an outdoor pool deck with a seasonal outdoor swimming pool and year-round whirlpool.
The third hotel tower features a waterfall with an adjacent year-round swimming pool in a climate-controlled glass enclosure, which shares an outdoor pool deck with a seasonal outdoor swimming pool and year-round whirlpool.
These state constitutional limitations and the scarcity of available and developable land in Black Hawk create a strong barrier to new entries in the gaming market, limiting the threat of potential new competition. ​ The Black Hawk/Central City area gaming market generated approximately $781 million in gaming revenues for the twelve months ended December 31, 2022, according to the Colorado Division of Gaming. ​ Our Monarch Black Hawk revenues and operating income are principally dependent on the level of gaming activity in the Black Hawk market.
These state constitutional limitations and the scarcity of available and developable land in Black Hawk create a strong barrier to new entries in the gaming market, limiting the threat of potential new competition. ​ The Black Hawk/Central City area gaming market generated approximately $803 million in gaming revenues for the twelve months ended December 31, 2023, according to the Colorado Division of Gaming. ​ Our Monarch Black Hawk revenues and operating income are primarily dependent on the level of gaming activity in the Black Hawk market.
Currently, the Monarch Black Hawk has four restaurants and a gourmet coffee bar, as described below: ​ ● The 250-seat Monarch Buffet, which offers a wide variety of food selections from around the globe including a carving station, live action Pho and Mongolian Bar-b-que, artisan charcuterie, and an expansive array of desserts; ● The 160-seat 24/7 restaurant, where guests can savor contemporary American and Asian cuisine in a sophisticated yet comfortable atmosphere with an emphasis on fresh flavors and quality ingredients; ● The 110-seat Monarch Chophouse, a fine dining destination featuring 28-day aged USDA prime cuts of beef chosen for their superior marbling and flavor, fresh seafood, and Colorado lamb in an elegant atmosphere with unsurpassed service and attention to detail; ● The 180-seat Bistro Mariposa, an elevated Southwest Cuisine restaurant; and ● Java, etc., a gourmet coffee bar offering specialty coffee drinks, “grab and go” sandwiches, house made gelato and freshly baked pastries. ​ 5 Table of Contents Acquisition, Improvements and Additional Expansion Potential ​ We seek to identify and evaluate strategic expansion and acquisition opportunities through market and detailed financial analyses.
Currently, the Monarch Black Hawk has four restaurants and a gourmet coffee bar, as described below: ​ ● The 250-seat Monarch Buffet, which offers a wide variety of food selections from around the globe including a carving station, live action Pho and Mongolian Bar-b-que, artisan charcuterie, and an expansive array of desserts; ● The 160-seat 24/7 restaurant, where guests can savor contemporary American and Asian cuisine 24 hours a day in a sophisticated yet comfortable atmosphere with an emphasis on fresh flavors and quality ingredients; ● The 110-seat Monarch Chophouse, a fine dining destination featuring 28-day aged USDA prime cuts of beef chosen for their superior marbling and flavor, fresh seafood, and Colorado lamb in an elegant atmosphere with unsurpassed service and attention to detail; ● The 180-seat Bistro Mariposa, showcasing modern Latin-inspired cuisine, the finest high-end tequilas and Colorado craft beers; and ● Java, etc., a gourmet coffee bar offering specialty coffee drinks, “grab and go” sandwiches, house made gelato and freshly baked pastries. ​ Acquisition, Improvements and Additional Expansion Potential ​ We seek to identify and evaluate strategic expansion and acquisition opportunities through market and detailed financial analyses.
This segment represents a large portion of the Atlantis’ guests. ​ 6 Table of Contents The package tour and travel segment consists of visitors who utilize travel packages offered by wholesale operators.
This segment represents a large portion of the Atlantis’ guests. ​ The package tour and travel segment consists of visitors who utilize travel packages offered by wholesale operators.
As of December 31, 2022, none of the proposals have been adopted by the state’s electorate or by the legislature.
As of December 31, 2023, none of the proposals have been adopted by the state’s electorate or by the legislature.
The hotel features glass elevators that rise the full 19 and 28 stories of the respective towers providing panoramic views of the Reno area and the Sierra Nevada mountain range. 3 Table of Contents ​ The average occupancy rate, average daily room rate (“ADR”) and revenue per available room (“REVPAR”), calculated by dividing total hotel revenue by total rooms available, at the Atlantis for the following periods were: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 2020 Occupancy rate ​ 83.30 % ​ 82.10 % ​ 71.30 % ADR ​ $ 158.54 ​ $ 123.18 ​ $ 108.44 ​ REVPAR ​ $ 149.11 ​ $ 114.85 ​ $ 86.85 ​ ​ We continually monitor and adjust hotel room rates based upon demand and other competitive factors. ​ Restaurants and Dining.
The hotel features glass elevators that rise the full 19 and 28 stories of the respective towers providing panoramic views of the Reno area and the Sierra Nevada mountain range. 3 Table of Contents ​ The average occupancy rate, average daily room rate (“ADR”) and revenue per available room (“REVPAR”), calculated by dividing total hotel revenue by total rooms available, at the Atlantis for the following periods were: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 Occupancy rate ​ 84.50 % ​ 83.30 % ​ 82.10 % ADR ​ $ 157.64 ​ $ 158.54 ​ $ 123.18 ​ REVPAR ​ $ 149.99 ​ $ 149.11 ​ $ 114.85 ​ ​ We continually monitor and adjust hotel room rates based upon demand and other competitive factors. ​ Restaurants and Dining.
The casino features approximately 1,300 slot and video poker machines; approximately 37 table games, including blackjack, craps, roulette, and others; a race and sports book; a 24-hour live keno lounge; and a poker room.
The casino features approximately 1,200 slot and video poker machines; approximately 33 table games, including blackjack, craps, roulette, and others; a race and sports book; a 24-hour live keno lounge; and a poker room.
We develop overall master plans and then aim to execute each phase of the master plan after re-evaluation of the current market conditions and comparison against other capital investment opportunities. ​ We have continuously invested in upgrading our facilities. Capital expenditures were $48.4 million in 2022, $37.8 million in 2021 and $46.4 million in 2020.
We develop overall master plans and then aim to execute each phase of the master plan after re-evaluation of the current market conditions and comparison against other capital investment opportunities. ​ 5 Table of Contents We have continuously invested in upgrading our facilities. Capital expenditures were $51.4 million in 2023, $48.4 million in 2022 and $37.8 million in 2021.
Our marketing efforts are directed toward patrons from the Denver metropolitan area and Colorado mountain areas. Black Hawk, Colorado is approximately 40 miles west of Denver. ​ The Denver metro area is an attractive market with a population of more than three million and a healthy population growth of 16.9% from 2010 to 2021 (national average is 7.5%).
Our marketing efforts are directed toward patrons from the Denver metropolitan area and Colorado mountain areas. Black Hawk, Colorado is approximately 40 miles west of Denver. ​ The Denver metro area is an attractive market with a population of approximately three million and a healthy population growth of 16.5% from 2013 to 2023 (national average is 6.5%).
There are two federally recognized tribes in southwest Colorado, both with gaming facilities, and both more than 350 miles from Denver. There have been proposals for the development of Native American racetrack and video lottery terminal casinos throughout the state over the years.
The only other non-tribal gaming market is Cripple Creek, which is seventy-five miles away. There are two federally recognized tribes in southwest Colorado, both with gaming facilities, and both more than 350 miles from Denver. There have been proposals for the development of Native American racetrack and video lottery terminal casinos throughout the state over the years.
During the last three years, capital expenditures related primarily to: the transformation of part of the Monarch Black Hawk legacy facility; the major redesign and upgrade of all hotel rooms in the first tower and complete renovation of the high-end suites on the top floors of the hotel tower at Atlantis; the new upscale retail shop at Atlantis; the new Red Bloom Asian kitchen at Atlantis; the redesign and upgrade of the Atrium bar at Atlantis; the ongoing capital maintenance spending; and the acquisition of gaming equipment at both of our properties. ​ We have two potential options for expansion at our Atlantis property.
During the last three years, capital expenditures related primarily to: the transformation of part of the Monarch Black Hawk legacy facility; the major redesign and upgrade of all hotel rooms in the first and second towers and complete renovation of the high-end suites on the top floors of the third hotel tower at Atlantis; the redesign and upgrade of the Oyster and Sushi Bar Restaurant located in the Sky Terrace at Atlantis; the ongoing capital maintenance spending; and the acquisition of gaming equipment at both of our properties. ​ We have two potential options for expansion at our Atlantis property.
Denver metro area per capita personal income in 2020 was 17% higher than the national average ($69,822 vs. $59,510). ​ Commercial gaming in Colorado is constitutionally restricted to three mountain towns – Black Hawk, Central City and Cripple Creek – which in 2022 represented 77%, 8% and 15% of total Colorado gaming revenue, respectively (Colorado Division of Gaming statistical summaries).
Denver metro area median household income in 2021 was 30% higher than the national average ($90,716 vs. $69,717). ​ Commercial gaming in Colorado is constitutionally restricted to three mountain towns – Black Hawk, Central City and Cripple Creek – which in 2023 represented 77%, 8% and 15% of total Colorado gaming revenue, respectively (Colorado Division of Gaming statistical summaries).
There is strong competition in the concentrated Black Hawk/Central City area gaming market, which includes approximately 21 casinos as of December 31, 2022, according to the Colorado Division of Gaming report. ​ The Black Hawk and Central City gaming markets are geographically isolated. The only other non-tribal gaming market is Cripple Creek, which is seventy-five miles away.
There is strong competition in the concentrated Black Hawk/Central City area gaming market, which includes approximately 21 casinos as of December 31, 2023, according to the Colorado Division of Gaming report. 8 Table of Contents ​ The Black Hawk and Central City gaming markets are geographically isolated.
See Item 1A, “RISK FACTORS.” ​ Human Capital ​ As of December 31, 2022, we employed approximately 2,700 employees across both properties. ​ We believe that our team is the most important asset in our organization. During the pandemic period, our team members worked together to navigate through the unprecedented challenges of the COVID-19 pandemic.
See Item 1A, “RISK FACTORS.” ​ Human Capital ​ As of December 31, 2023, we employed approximately 2,900 employees across both properties. ​ We believe that our team is the most important asset in our organization. Our management focus is on employee retention and we use retention rate to evaluate it.
Removed
The Colorado market is poised for gross gaming revenue expansion following the passage of Colorado Amendment 77 on November 3, 2020, which effective May 1, 2021, removed betting limits (previously capped at $100 per bet) and allowed new games (including baccarat, pai gow tiles and keno). ​ Restaurants and Dining.
Removed
During the period our operations at both properties were suspended for approximately three months, some team members were temporarily furloughed, but no team member was laid off. The Company continued to provide benefits, including medical, dental and vision insurance, throughout the suspension period.
Removed
After resuming operations and welcoming our team members back to the properties, the health and wellbeing of our team members has been our priority. ​ Our management focus is on employee retention and we use retention rate to evaluate it.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, our existing indebtedness contains certain restrictions on our ability to incur additional indebtedness. 21 Table of Contents ​ RISING OPERATING COSTS AT OUR GAMING PROPERTIES COULD HAVE A NEGATIVE IMPACT ON OUR BUSINESS ​ The operating expenses associated with our properties could increase due to, among other reasons, the following factors: ● current broad-based inflation on the economy; ● supply chain issues; ● changes in federal, state or local tax or regulations, including state gaming rules and regulations or gaming taxes, could impose additional restrictions or increase our operating costs; ● aggressive marketing and promotional campaigns by our competitors for an extended period of time could force us to increase our expenditures for marketing and promotional campaigns in order to maintain our existing customer base or attract new customers; ● increases in costs of labor; ● expenditures for repairs, maintenance, and to replace equipment necessary to operate our business; ● our reliance on slot play revenues and any additional costs imposed on us from vendors; ● availability and cost of the products and services we provide our customers, including food, beverages, retail items, entertainment, hotel rooms and spa; ● availability and costs associated with insurance; ● price increases for electricity, natural gas and other forms of energy; ● adverse impacts of outbreaks of infectious diseases on our business, construction projects, financial condition and operating results; ● actions by government officials at the federal, state and/or local level with respect to steps to be taken, including, without limitation, temporary or extended shutdowns, travel restrictions, social distancing and shelter-in-place orders, in connection with any infectious disease outbreak; ● our ability to manage guest safety concerns caused by any infectious disease outbreak; ● our ability to effectively manage and control expenses during temporary or extended shutdown periods; ● impact of temporary or extended shutdowns on our ability to maintain compliance with the terms and conditions of our credit facilities and other material contracts; ● construction factors, including delays, disruptions, availability of labor and materials, increased costs of labor and materials, contractor disagreements, zoning issues, environmental restrictions, soil and water conditions, weather and other hazards, site access matters, building permit issues and other regulatory approvals or issues; ● ongoing disagreements over costs of and responsibility for delays and other construction related matters with our Monarch Black Hawk general contractor, PCL Construction Services, Inc., including, as previously reported, the litigation against us and liens by such contractor; ● affirmative and extensive counterclaims for construction defects, breach of contract, breach of warranty, fraud, fraudulent inducement, negligence and other construction related claims that we have filed against the Monarch Black Hawk contractor, PCL Construction Services, Inc., in the above-mentioned litigation in which litigation the parties are currently conducting discovery, and investigation of the claims by and against us is therefore ongoing; ● our potential need to post bonds or other forms of surety to support our legal remedies; ● risks related to development and construction activities (including disputes with and defaults by contractors and subcontractors; construction, equipment or staffing problems and delays; shortages of materials or skilled labor; environmental, health and safety issues; weather and other hazards, site access matters, and unanticipated cost increases); ● our ability to generate sufficient operating cash flow to help finance our expansion plans and subsequent debt reduction; ● changes in laws mandating increases in minimum wages and employee benefits; ● changes in laws and regulations permitting expanded and other forms of gaming in our key markets; ● the effects of local and national economic, credit and capital market conditions on the economy in general and on the gaming industry and our business in particular; ● the effects of labor shortages on our market position, growth and financial results; 22 Table of Contents ● the potential of increases in state and federal taxation to address budgetary and other impacts of the COVID-19 pandemic or other infectious disease outbreaks; ● the potential of increased regulatory and other burdens to address the direct and indirect impacts of COVID-19 pandemic or other infectious disease outbreaks; and ● guest acceptance of our expanded facilities once completed and the resulting impact on our market position, growth and financial results. ​ If our operating expenses increase without any offsetting increase in our revenues, our results of operations would suffer. ​ FAILURE TO MAINTAIN THE INTEGRITY OF OUR INFORMATION TECHNOLOGY SYSTEMS, PROTECT OUR INTERNAL AND CUSTOMER INFORMATION FROM CYBERSECURITY OR OTHER RISKS, OR COMPLY WITH APPLICABLE PRIVACY AND DATA SECURITY REGULATIONS COULD ADVERSELY AFFECT US ​ We rely extensively on our computer systems to process customer transactions, manage customer data, manage employee data and communicate with third-party vendors and other third parties, and we access the internet to use our computer systems.
Biggest changeChanges in discretionary consumer spending or consumer preferences in these, and other geographic markets, brought about by factors such as perceived or actual general economic conditions, the impact of high energy and food costs, the increased cost of travel, the potential for bank failures, decreased disposable consumer income and wealth, or fears of war and future acts of terrorism could further reduce customer demand for the amenities that we offer, thus imposing practical limits on pricing and negatively impacting our results of operations and financial condition. ​ RISING OPERATING COSTS AT OUR GAMING PROPERTIES COULD HAVE A NEGATIVE IMPACT ON OUR BUSINESS ​ The operating expenses associated with our properties could increase due to, among other reasons, the following factors: ● current broad-based inflation on the economy; ● supply chain issues; ● changes in federal, state or local tax or regulations, including state gaming rules and regulations or gaming taxes, could impose additional restrictions or increase our operating costs; ● aggressive marketing and promotional campaigns by our competitors for an extended period of time could force us to increase our expenditures for marketing and promotional campaigns in order to maintain our existing customer base or attract new customers; ● increases in costs of labor; ● expenditures for repairs, maintenance, and to replace equipment necessary to operate our business; ● our reliance on slot play revenues and any additional costs imposed on us from vendors; ● availability and cost of the products and services we provide our customers, including food, beverages, retail items, entertainment, hotel rooms and spa; ● availability and costs associated with insurance; ● price increases for electricity, natural gas and other forms of energy; ● adverse impacts of outbreaks of infectious diseases on our business, construction projects, financial condition and operating results; ● actions by government officials at the federal, state and/or local level with respect to steps to be taken, including, without limitation, temporary or extended shutdowns, travel restrictions, social distancing and shelter-in-place orders, in connection with any infectious disease outbreak; 17 Table of Contents ● our ability to manage guest safety concerns caused by any infectious disease outbreak; ● our ability to effectively manage and control expenses during temporary or extended shutdown periods; ● impact of temporary or extended shutdowns on our ability to maintain compliance with the terms and conditions of our credit facilities and other material contracts; ● construction factors, including delays, disruptions, availability of labor and materials, increased costs of labor and materials, contractor disagreements, zoning issues, environmental restrictions, soil and water conditions, weather and other hazards, site access matters, building permit issues and other regulatory approvals or issues; ● ongoing disagreements over costs of and responsibility for delays and other construction related matters with our Monarch Black Hawk general contractor, PCL Construction Services, Inc., including, as previously reported, the litigation against us and liens by such contractor; ● affirmative and extensive counterclaims for construction defects, breach of contract, breach of warranty, fraud, fraudulent inducement, negligence and other construction related claims that we have filed against the Monarch Black Hawk contractor, PCL Construction Services, Inc., in the above-mentioned litigation in which litigation the parties are currently awaiting the Court’s decision following the trial of the matter in September, October, and November of 2023; ● our potential need to post bonds or other forms of surety to support our legal remedies; ● risks related to development and construction activities (including disputes with and defaults by contractors and subcontractors; construction, equipment or staffing problems and delays; shortages of materials or skilled labor; environmental, health and safety issues; weather and other hazards, site access matters, and unanticipated cost increases); ● our ability to generate sufficient operating cash flow to help finance our expansion plans and subsequent debt reduction; ● changes in laws mandating increases in minimum wages and employee benefits; ● changes in laws and regulations permitting expanded and other forms of gaming in our key markets; ● the effects of local and national economic, credit and capital market conditions on the economy in general and on the gaming industry and our business in particular; ● the effects of labor shortages on our market position, growth and financial results; ● the potential of increases in state and federal taxation to address budgetary and other impacts of the COVID-19 pandemic or other infectious disease outbreaks; ● the potential of increased regulatory and other burdens to address the direct and indirect impacts of COVID-19 pandemic or other infectious disease outbreaks; and ● guest acceptance of our expanded facilities once completed and the resulting impact on our market position, growth and financial results. ​ If our operating expenses increase without any offsetting increase in our revenues, our results of operations would suffer. ​ WIN RATES FOR OUR GAMING OPERATIONS DEPEND ON A VARIETY OF FACTORS, MANY OF WHICH ARE BEYOND OUR CONTROL, AND MAY RESULT IN THE WINNINGS OF OUR GAMING CUSTOMERS EXCEEDING OUR WINNINGS. ​ The gaming industry is characterized by an element of chance, and win rates are affected by a player’s skill and experience, the mix of games played, the financial resources of players, the spread of table limits, the volume of bets played and the amount of time played, among other factors.
Although we have insurance coverage with respect to some of these disasters or events, we cannot assure you that any such coverage will be sufficient to indemnify us fully against all direct and indirect costs, including any loss of business that could result from substantial damage to, or partial or complete destruction of, any of our properties. ​ 29 Table of Contents WE ARE SUBJECT TO RISKS RELATED TO CORPORATE SOCIAL RESPONSIBILITY. ​ Governments, investors, customers, employees and other stakeholders are increasingly focusing on corporate environmental, social and governance (“ESG”) practices and disclosures, and expectations in this area are rapidly evolving and growing.
Although we have insurance coverage with respect to some of these disasters or events, we cannot assure you that any such coverage will be sufficient to indemnify us fully against all direct and indirect costs, including any loss of business that could result from substantial damage to, or partial or complete destruction of, any of our properties. ​ WE ARE SUBJECT TO RISKS RELATED TO CORPORATE SOCIAL RESPONSIBILITY. ​ Governments, investors, customers, employees and other stakeholders are increasingly focusing on corporate environmental, social and governance (“ESG”) practices and disclosures, and expectations in this area are rapidly evolving and growing.
Should any form of additional gaming be authorized in the Denver metropolitan area, Monarch Black Hawk could be adversely affected. 19 Table of Contents ​ In addition, Native American gaming facilities in some instances operate under less stringent regulatory requirements than those imposed on our properties, which could provide them a competitive advantage in our markets.
Should any form of additional gaming be authorized in the Denver metropolitan area, Monarch Black Hawk could be adversely affected. ​ 16 Table of Contents In addition, Native American gaming facilities in some instances operate under less stringent regulatory requirements than those imposed on our properties, which could provide them a competitive advantage in our markets.
These financing strategies may not be affected on satisfactory terms, if at all. ​ COVENANT RESTRICTIONS UNDER OUR FIFTH AMENDED CREDIT FACILITY MAY LIMIT OUR ABILITY TO OPERATE OUR BUSINESS AND ADVERSELY AFFECT OUR RESULTS OF OPERATIONS ​ Our Fifth Amended Credit Facility contains covenants that restrict our ability to, among other things, incur additional debt, make distributions, make investments, grant liens on our assets to secure debt, enter into transactions with affiliates and effect mergers or acquisitions, as well as covenants that relate to our Monarch Black Hawk Expansion.
These financing strategies may not be affected on satisfactory terms, if at all. 21 Table of Contents COVENANT RESTRICTIONS UNDER OUR FIFTH AMENDED CREDIT FACILITY MAY LIMIT OUR ABILITY TO OPERATE OUR BUSINESS AND ADVERSELY AFFECT OUR RESULTS OF OPERATIONS ​ Our Fifth Amended Credit Facility contains covenants that restrict our ability to, among other things, incur additional debt, make distributions, make investments, grant liens on our assets to secure debt, enter into transactions with affiliates and effect mergers or acquisitions, as well as covenants that relate to our Monarch Black Hawk Expansion.
The owners of the Arapahoe Racetrack, southeast of Denver, have funded state wide ballot initiatives to allow casino style gaming at the race track. Both measures were voted down by wide margins. As of December 31, 2022, none of the proposals have been adopted by the state’s electorate or by the legislature.
The owners of the Arapahoe Racetrack, southeast of Denver, have funded state wide ballot initiatives to allow casino style gaming at the race track. Both measures were voted down by wide margins. As of December 31, 2023, none of the proposals have been adopted by the state’s electorate or by the legislature.
Such disagreements have resulted in litigation with our Monarch Black Hawk general contractor, as discussed in this annual report. ​ The disputes with the Monarch Black Hawk Expansion general contractor have resulted in and may continue to result in: ​ ● disputes and claims over the quality and management of the construction; ● disputes and claims over design and construction defects; ● disputes and claims over payments, construction costs, staffing costs, damages and other financial responsibility; and ● disruptions of relationships with the general contractor, subcontractors, vendors and others. ​ In addition, our current and future projects could also experience: ​ ● delays and significant cost increases; ● delays in obtaining or inability to obtain necessary permits, licenses and approvals; ● lack of sufficient, or delays in the availability of, financing; ● shortages of materials; ● shortages of skilled labor, work stoppages or labor disputes; ● poor performance or nonperformance by any third parties on whom we place reliance; ● unforeseen construction scheduling, engineering, environmental, permitting, construction or geological problems, including defective plans and specifications; ● weather interference, floods, fires or other casualty losses; and ● COVID-19 related delays. ​ 20 Table of Contents The completion dates of any of our projects could differ significantly from expectations for construction-related or other reasons. ​ In connection with the expansion of the Monarch Black Hawk and the related disputes described above, our general contractor PCL and certain subcontractors have provided Monarch with purported notice of their intent to file a liens against the Monarch Black Hawk and some subcontractors have recorded such liens.
Such disagreements have resulted in litigation with our Monarch Black Hawk general contractor, as discussed in this annual report. ​ The disputes with the Monarch Black Hawk Expansion general contractor have resulted in and may continue to result in: ● disputes and claims over the quality and management of the construction; ● disputes and claims over design and construction defects; ● disputes and claims over payments, construction costs, staffing costs, damages and other financial responsibility; and ● disruptions of relationships with the general contractor, subcontractors, vendors and others. ​ In addition, our current and future projects could also experience: ● delays and significant cost increases; ● delays in obtaining or inability to obtain necessary permits, licenses and approvals; ● lack of sufficient, or delays in the availability of, financing; ● shortages of materials; ● shortages of skilled labor, work stoppages or labor disputes; ● poor performance or nonperformance by any third parties on whom we place reliance; ● unforeseen construction scheduling, engineering, environmental, permitting, construction or geological problems, including defective plans and specifications; ● weather interference, floods, fires or other casualty losses; and ● COVID-19 related delays. ​ The completion dates of any of our projects could differ significantly from expectations for construction-related or other reasons. ​ In connection with the expansion of the Monarch Black Hawk and the related disputes described above, our general contractor PCL and certain subcontractors have provided Monarch with notice of purported liens against the Monarch Black Hawk and some subcontractors have recorded such liens.
Our failure to adopt and implement responsible ESG policies could also impact employee engagement and retention and the willingness of customers and our partners to do business with us, which could have a material adverse effect on our business, results of operations and cash flows. ​ ​
Our failure to adopt and implement responsible ESG policies could also impact employee engagement and retention and the willingness of customers and our partners to do business with us, which could have a material adverse effect on our business, results of operations and cash flows. ​ ​ ITEM 1B.
On February 1, 2023, the Company entered into the Fifth Amended and Restated Credit Agreement with Wells Fargo Bank, N.A., as administrative agent, where it amended and restated in its entirety the Amended Credit Facility (the “Fifth Amended Credit Facility”).
On February 1, 2023, the Company entered into the Fifth Amended and Restated Credit Agreement (the “Amended Credit Facility”) with Wells Fargo Bank, N.A., as administrative agent, where it amended and restated in its entirety the Fifth Amended Credit Facility.
If we are unable to pay all amounts declared due and payable in the event of a default, the lenders could foreclose on these assets. ​ 18 Table of Contents OUR VARIABLE RATE INDEBTEDNESS SUBJECTS US TO INTEREST RATE RISK, WHICH COULD CAUSE OUR DEBT SERVICE OBLIGATIONS TO INCREASE SIGNIFICANTLY ​ An increase in market interest rates would increase our interest expense arising on our indebtedness.
If we are unable to pay all amounts declared due and payable in the event of a default, the lenders could foreclose on these assets. ​ OUR VARIABLE RATE INDEBTEDNESS SUBJECTS US TO INTEREST RATE RISK, WHICH COULD CAUSE OUR DEBT SERVICE OBLIGATIONS TO INCREASE SIGNIFICANTLY ​ An increase in market interest rates would increase our interest expense arising on our indebtedness.
The cost and operational consequences of implementing further data security measures could be significant. ​ Additionally, the collection of customer and employee personal information imposes various privacy compliance related obligations on our business and increases the risks associated with a breach or failure of the integrity of our information technology systems.
The cost and operational consequences of implementing further data security measures could be significant. ​ 20 Table of Contents Additionally, the collection of customer and employee personal information imposes various privacy compliance related obligations on our business and increases the risks associated with a breach or failure of the integrity of our information technology systems.
Our reputation and the value of our brand may be significantly affected if we fail to act responsibly in a number of areas including diversity and inclusion, community engagement and philanthropy, environmental sustainability, climate change, responsible gaming, supply chain management, and workplace conduct.
Our reputation and the value of our brand may be significantly affected if we fail to act responsibly in a number of areas including diversity and inclusion, community engagement and philanthropy, 28 Table of Contents environmental sustainability, climate change, responsible gaming, supply chain management, and workplace conduct.
We have described the risks to us associated with extreme weather events in the risk factors below. ​ 24 Table of Contents OUR BUSINESS MAY BE ADVERSELY AFFECTED BY LEGISLATION PROHIBITING TOBACCO SMOKING. ​ Legislation in various forms to ban indoor tobacco smoking has been enacted or introduced in jurisdictions in which we operate.
We have described the risks to us associated with extreme weather events in the risk factors below. ​ OUR BUSINESS MAY BE ADVERSELY AFFECTED BY LEGISLATION PROHIBITING TOBACCO SMOKING. ​ Legislation in various forms to ban indoor tobacco smoking has been enacted or introduced in jurisdictions in which we operate.
It is important, for competitive reasons, that we offer popular and technologically advanced slot machine games to our customers. ​ 26 Table of Contents In recent years, slot machine manufacturers have frequently refused to sell slot machines featuring the most popular games, instead requiring participation lease arrangements.
It is important, for competitive reasons, that we offer popular and technologically advanced slot machine games to our customers. ​ In recent years, slot machine manufacturers have frequently refused to sell slot machines featuring the most popular games, instead requiring participation lease arrangements.
If the newer slot machines do not result in sufficient incremental revenues to offset the increased investment and participation lease costs, it could hurt our profitability. ​ RISKS RELATING TO OWNERSHIP OF COMMON STOCK ​ OUR COMMON STOCK PRICE MAY FLUCTUATE SUBSTANTIALLY, AND A STOCKHOLDER’S INVESTMENT COULD DECLINE IN VALUE ​ The market price of our common stock may fluctuate substantially due to many factors, such as those described in the Risk Factors described herein and others, including: ​ ● actual or anticipated fluctuations in our results of operations; ● announcements of significant acquisitions or other agreements by us or by our competitors; ● our sale of common stock or other securities in the future; ● trading volume of our common stock; ● conditions and trends in the gaming and destination entertainment industries; ● changes in the estimation of the future size and growth of our markets; ● general economic conditions, including, without limitation, changes in the cost of fuel and air travel; and ● fears of impact on leisure and general travel due to pandemic concerns, include the coronavirus. ​ In addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to companies’ operating performance.
A tightening of such regulations could adversely impact our future expansion opportunities. ​ 25 Table of Contents RISKS RELATING TO OWNERSHIP OF COMMON STOCK ​ OUR COMMON STOCK PRICE MAY FLUCTUATE SUBSTANTIALLY, AND A STOCKHOLDER’S INVESTMENT COULD DECLINE IN VALUE ​ The market price of our common stock may fluctuate substantially due to many factors, such as those described in the Risk Factors described herein and others, including: ​ ● actual or anticipated fluctuations in our results of operations; ● announcements of significant acquisitions or other agreements by us or by our competitors; ● our sale of common stock or other securities in the future; ● trading volume of our common stock; ● conditions and trends in the gaming and destination entertainment industries; ● changes in the estimation of the future size and growth of our markets; ● general economic conditions, including, without limitation, changes in the cost of fuel and air travel; and ● fears of impact on leisure and general travel due to pandemic concerns, include the coronavirus. ​ In addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to companies’ operating performance.
Failure to satisfy these requirements could result in an event of default under these debt instruments or material agreements, which would have a material adverse effect on our financial condition, results of operations or cash flows. ​ NATURAL OR MAN-MADE DISASTERS, AN OUTBREAK OF HIGHLY INFECTIOUS DISEASE, TERRORIST ACTIVITY, GUN VIOLENCE OR WAR MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, RESULTS OF OPERATIONS AND CASH FLOWS ​ Natural disasters, man-made disasters and outbreaks of highly infectious diseases such as the COVID-19 may result in decreases in travel to and from, and economic activity in, areas in which we operate, and may adversely affect the number of visitors to our properties.
Any expansion of gaming or restriction on or prohibition of our gaming operations or enactment of other adverse regulatory changes could have a material adverse effect on our operating results. ​ NATURAL OR MAN-MADE DISASTERS, AN OUTBREAK OF HIGHLY INFECTIOUS DISEASE, TERRORIST ACTIVITY, GUN VIOLENCE OR WAR MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, RESULTS OF OPERATIONS AND CASH FLOWS ​ Natural disasters, man-made disasters and outbreaks of highly infectious diseases such as the COVID-19 may result in decreases in travel to and from, and economic activity in, areas in which we operate, and may adversely affect the number of visitors to our properties.
This is particularly the case if such restrictions are not applicable to all competitive facilities in that gaming market. ​ IF GAMING TAXES AND FEES INCREASE, OUR RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED ​ The federal government has, from time to time, considered a federal tax on casino revenues and may consider such a tax in the future.
This could adversely impact our ability to attract and retain casino guests. ​ IF GAMING TAXES AND FEES INCREASE, OUR RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED ​ The federal government has, from time to time, considered a federal tax on casino revenues and may consider such a tax in the future.
If the state and/or local governments where our properties are located were to increase gaming taxes and fees, our results of operations could be adversely affected. ​ IF WE LOSE OUR KEY PERSONNEL, OUR BUSINESS COULD BE MATERIALLY ADVERSELY AFFECTED ​ We depend on the continued performances of John Farahi and Bob Farahi, our Chief Executive Officer and our President, respectively, and their management team.
As a result, our results of operations could be adversely impacted. ​ IF WE LOSE OUR KEY PERSONNEL, OUR BUSINESS COULD BE MATERIALLY ADVERSELY AFFECTED ​ We depend on the continued performances of John Farahi and Bob Farahi, our Chief Executive Officer and our President, respectively, and their management team.
Additional risks that are presently unknown to us or that we currently deem immaterial may also impact our business. ​ RISKS RELATED TO OUR BUSINESS ​ OUR BUSINESS IS PARTICULARLY SENSITIVE TO WEAK DISCRETIONARY CONSUMER SPENDING ​ Consumer demand for entertainment and other amenities at hotel-casino properties and casino properties, such as ours, are particularly sensitive to downturns in the economy and the corresponding impact on discretionary consumer spending on leisure activities and corporate spending on conventions and trade shows.
Our reputation may also suffer as a result of negative publicity regarding the Company or our resorts, regardless of the accuracy of such publicity. ​ ​ OUR BUSINESS IS PARTICULARLY SENSITIVE TO WEAK DISCRETIONARY CONSUMER SPENDING ​ Consumer demand for entertainment and other amenities at hotel-casino properties and casino properties, such as ours, are particularly sensitive to downturns in the economy and the corresponding impact on discretionary consumer spending on leisure activities and corporate spending on conventions and trade shows.
The risks to which we have a greater degree of exposure include the following: ● changes in local economic and competitive conditions; ● labor supply disruptions or shortages; ● inflationary pressures on labor and supplies; ● disruptions in our supply chain; ● changes in local and state governmental laws and regulations, including gaming laws, rules and regulations, and the way in which those laws, rules and regulations are applied; ● natural and other disasters, including pandemics, epidemics, or outbreaks of infectious or contagious diseases such as the COVID-19 pandemic; ● continuing actions by government officials at the federal, state and/or local level with respect to steps to be taken in connection with the COVID-19 pandemic, including, without limitation, temporary or extended shutdowns, travel restrictions, social distancing and shelter-in-place orders; ● an increase in the cost of maintaining our properties; ● a decline in the number of visitors to Reno or Black Hawk; and ● a decrease in gaming and non-casino activities at our resorts. ​ Any of the factors outlined above could negatively affect our results of operations and our ability to generate sufficient cash flow to make payments or maintain our covenants with respect to our debt. ​ 17 Table of Contents CERTAIN OF OUR STOCKHOLDERS OWN LARGE INTERESTS IN OUR CAPITAL STOCK AND MAY SIGNIFICANTLY INFLUENCE OUR AFFAIRS ​ John Farahi and Bob Farahi, our officers and directors, together with John’s and Bob’s brother Ben Farahi, beneficially own in the aggregate approximately 32% of our outstanding common stock, inclusive of options held by them which are exercisable within 60 days.
The risks to which we have a greater degree of exposure include the following: ● changes in local economic and competitive conditions; ● labor supply disruptions or shortages; ● inflationary pressures on labor and supplies; ● disruptions in our supply chain; ● changes in local and state governmental laws and regulations, including gaming laws, rules and regulations, and the way in which those laws, rules and regulations are applied; ● natural and other disasters, including pandemics, epidemics, or outbreaks of infectious or contagious diseases such as the COVID-19 pandemic; ● continuing actions by government officials at the federal, state and/or local level with respect to steps to be taken in connection with the COVID-19 pandemic, including, without limitation, temporary or extended shutdowns, travel restrictions, social distancing and shelter-in-place orders; ● an increase in the cost of maintaining our properties; ● a decline in the number of visitors to Reno or Black Hawk; and 19 Table of Contents ● a decrease in gaming and non-casino activities at our resorts. ​ Any of the factors outlined above could negatively affect our results of operations and our ability to generate sufficient cash flow to make payments or maintain our covenants with respect to our debt. ​ FAILURE OF THE RENO-SPARKS CONVENTION CENTER TO BOOK AND ATTRACT CONVENTION BUSINESS COULD ADVERSELY IMPACT OUR BUSINESS AT THE ATLANTIS ​ The Atlantis is the closest hotel-casino to the Reno-Sparks Convention Center and the enclosed pedestrian sky bridge, that connects the Atlantis directly with the Reno-Sparks Convention Center, has afforded us a distinct competitive advantage in attracting its conventioneers, who typically pay higher average room rates than non-conventioneers.
Significant delays, cost overruns, or failures of our projects to achieve market acceptance could have a material adverse effect on our business, financial condition and results of operations. ​ OUR EXPANSION AND RENOVATION ACTIVITIES MAY DISRUPT OUR OPERATIONS ​ Although we plan our expansion and renovation projects to minimize disruption of our existing business operations, these projects require, from time to time, all or portions of affected existing operations to be closed or disrupted.
OUR EXPANSION AND RENOVATION ACTIVITIES MAY DISRUPT OUR OPERATIONS ​ Although we plan our expansion and renovation projects to minimize disruption of our existing business operations, these projects require, from time to time, all or portions of affected existing operations to be closed or disrupted.
This could adversely impact our ability to attract and retain casino guests. ​ Climate change, climate change regulations and greenhouse gas effects may adversely impact our operations. ​ There is a growing consensus that greenhouse gas (“GHG”) emissions continue to alter the composition of the global atmosphere in ways that are affecting and are expected to continue affecting the global climate.
If the state and/or local governments where our properties are located were to increase gaming taxes and fees, our results of operations could be adversely affected. ​ 24 Table of Contents Climate change, climate change regulations and greenhouse gas effects may adversely impact our operations. ​ There is a growing consensus that greenhouse gas (“GHG”) emissions continue to alter the composition of the global atmosphere in ways that are affecting and are expected to continue affecting the global climate.
A tightening of such regulations could adversely impact our future expansion opportunities. ​ OUR RESULTS OF OPERATIONS MAY BE ADVERSELY AFFECTED BY HIGH-END PLAYERS’ WINNINGS OR THEIR FAILURE TO REPAY FUNDS EXTENDED ON CREDIT ​ Although not the major focus of our marketing efforts, we have selectively targeted high-end players.
This may result in our having to record a loss from our gaming operations, which could have a material adverse effect on our financial condition, results of operations and cash flows. ​ 18 Table of Contents OUR RESULTS OF OPERATIONS MAY BE ADVERSELY AFFECTED BY HIGH-END PLAYERS’ WINNINGS OR THEIR FAILURE TO REPAY FUNDS EXTENDED ON CREDIT ​ Although not the major focus of our marketing efforts, we have selectively targeted high-end players.
If any of our properties are damaged or if their operations are disrupted as a result of extreme weather or weather-related conditions in the future, or if extreme weather or weather-related conditions adversely impacts general economic or other conditions in the areas in which our properties are located or from which they draw their patrons, our business, financial condition and results of operations could be materially adversely affected. ​ 25 Table of Contents WE ARE SUBJECT TO ENVIRONMENTAL LAWS AND POTENTIAL EXPOSURE TO ENVIRONMENTAL LIABILITIES ​ We are subject to various federal, state and local environmental laws and regulations that govern our operations, including emissions and discharges into the environment, and the handling and disposal of hazardous and nonhazardous substances and wastes.
If any of our properties are damaged or if their operations are disrupted as a result of extreme weather or weather-related conditions in the future, or if extreme weather or weather-related conditions adversely impacts general economic or other conditions in the areas in which our properties are located or from which they draw their patrons, our business, financial condition and results of operations could be materially adversely affected. ​ TO SERVICE OUR INDEBTEDNESS, WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH.
This may result in our having to record a loss from our gaming operations, which could have a material adverse effect on our financial condition, results of operations and cash flows. ​ We are entirely dependent on TWO resorts for all of our cash flow, which subjects us to greater risks than a gaming company with more operating properties ​ We are currently entirely dependent upon our Atlantis Casino Resort and our Monarch Black Hawk for all of our operating cash flow.
If the newer slot machines do not result in sufficient incremental revenues to offset the increased investment and participation lease costs, it could hurt our profitability. ​ We are entirely dependent on TWO resorts for all of our cash flow, which subjects us to greater risks than a gaming company with more operating properties ​ We are currently entirely dependent upon our Atlantis Casino Resort and our Monarch Black Hawk for all of our operating cash flow.
We can provide no assurance that any project will be completed on time, if at all, or within established budgets, or that any project will result in increased earnings to us.
We can provide no assurance that any project will be completed on time, if at all, or within established budgets, or that any project will result in increased earnings to us. Significant delays, cost overruns, or failures of our projects to achieve market acceptance could have a material adverse effect on our business, financial condition and results of operations.
As a result, our results of operations could be adversely impacted. ​ IF WE ARE UNABLE TO OBTAIN FINANCING FOR OUR EXPANSION AND RENOVATION PROJECTS AND OTHER CAPITAL EXPENDITURES, SUCH PROJECTS WILL BE JEOPARDIZED ​ We intend to finance our future expansion and renovation projects, as well as our other capital expenditures, primarily with cash flow from operations and borrowings under our available credit facilities.
If interest rates increase, our debt service obligations under the Fifth Amended Credit Facility will increase even when the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease. ​ IF WE ARE UNABLE TO OBTAIN FINANCING FOR OUR EXPANSION AND RENOVATION PROJECTS AND OTHER CAPITAL EXPENDITURES, SUCH PROJECTS WILL BE JEOPARDIZED ​ We intend to finance our future expansion and renovation projects, as well as our other capital expenditures, primarily with cash flow from operations and borrowings under our available credit facilities.
As such, members of the Farahi family, if voting together, have the ability to significantly influence our affairs, including the election of the board of directors and, except as otherwise provided by law, approving or disapproving other matters submitted to a vote of our stockholders, including a merger, consolidation, or sale of assets. ​ TO SERVICE OUR INDEBTEDNESS, WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH.
As such, members of the Farahi family, if voting together, have the ability to significantly influence our affairs, including the election of the board of directors and, except as otherwise provided by law, approving or disapproving other matters submitted to a vote of our stockholders, including a merger, consolidation, or sale of assets. ​ 26 Table of Contents WE MAY NOT BE ABLE TO PAY OR MAINTAIN DIVIDENDS AND THE FAILURE TO DO SO WOULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK. ​ Commencing in the second quarter of 2023, we intend to pay an annual cash dividend, payable in quarterly amounts, on our common stock.
Our reputation may also suffer as a result of negative publicity regarding the Company or our resorts, regardless of the accuracy of such publicity. ​ OUR EXPANSION AND RENOVATION PROJECTS MAY FACE SIGNIFICANT RISKS INHERENT IN CONSTRUCTION PROJECTS ​ Our development and renovation projects we may undertake will be subject to the many risks inherent in the expansion or renovation of an existing enterprise or construction of a new enterprise, including unanticipated design, construction, regulatory, environmental and operating problems and lack of demand for our projects. ​ We have not entered into a guaranteed maximum price (“GMP”) amendment as contemplated in the construction contract with our Monarch Black Hawk general contractor.
In addition, our existing indebtedness contains certain restrictions on our ability to incur additional indebtedness. ​ OUR EXPANSION AND RENOVATION PROJECTS MAY FACE SIGNIFICANT RISKS INHERENT IN CONSTRUCTION PROJECTS ​ Our development and renovation projects we may undertake will be subject to the many risks inherent in the expansion or renovation of an existing enterprise or construction of a new enterprise, including unanticipated design, construction, regulatory, environmental and operating problems and lack of demand for our projects. ​ 22 Table of Contents We have numerous disagreements with our Monarch Black Hawk general contractor, including disagreements over costs, schedule delays, and other construction related matters.
Our systems are also vulnerable to damage or interruption from earthquakes, floods, fires, telecommunication failures, terrorist attacks, computer viruses, computer denial-of-service attacks and similar events. 23 Table of Contents ​ OUR BUSINESS IS SUBJECT TO RESTRICTIONS AND LIMITATIONS IMPOSED BY GAMING AND OTHER REGULATORY AUTHORITIES THAT COULD ADVERSELY AFFECT US ​ The ownership and operation of casino gaming facilities are subject to extensive state and local regulation.
Any significant disruption in operations of a property could have a significant adverse effect on our business, financial condition and results of operations. 23 Table of Contents OUR BUSINESS IS SUBJECT TO RESTRICTIONS AND LIMITATIONS IMPOSED BY GAMING AND OTHER REGULATORY AUTHORITIES THAT COULD ADVERSELY AFFECT US ​ The ownership and operation of casino gaming facilities are subject to extensive state and local regulation.
If we are unable to attract and retain qualified employees, or if competition for employees results in materially increased wages, our ability to maintain and grow our business could be adversely impacted. ​ WE OWN FACILITIES THAT ARE LOCATED IN AREAS THAT EXPERIENCE EXTREME WEATHER CONDITIONS ​ Extreme weather or weather-related conditions, including snowstorms and forest or range fires may interrupt our operations, damage our properties and reduce the number of customers who visit our facilities in the affected areas.
Our systems are also vulnerable to damage or interruption from earthquakes, floods, fires, telecommunication failures, terrorist attacks, computer viruses, computer denial-of-service attacks and similar events. ​ WE OWN FACILITIES THAT ARE LOCATED IN AREAS THAT EXPERIENCE EXTREME WEATHER CONDITIONS ​ Extreme weather or weather-related conditions, including snowstorms and forest or range fires may interrupt our operations, damage our properties and reduce the number of customers who visit our facilities in the affected areas.
The failure to pay or maintain dividends could adversely affect the market price of our common stock ​ GENERAL RISKS ​ OUR CAPITAL EXPENDITURES MAY NOT RESULT IN THE EXPECTED IMPROVEMENTS IN OUR BUSINESS OR FINANCIAL RESULTS We have expended a significant amount of capital on our multi-phased Monarch Black Hawk Expansion.
Failure to satisfy these requirements could result in an event of default under these debt instruments or material agreements, which would have a material adverse effect on our financial condition, results of operations or cash flows. ​ 27 Table of Contents OUR CAPITAL EXPENDITURES MAY NOT RESULT IN THE EXPECTED IMPROVEMENTS IN OUR BUSINESS OR FINANCIAL RESULTS We have expended a significant amount of capital on our multi-phased Monarch Black Hawk Expansion.
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Changes in discretionary consumer spending or consumer preferences in these, and other geographic markets, brought about by factors such as perceived or actual general economic conditions, the impact of high energy and food costs, the increased cost of travel, the potential for bank failures, decreased disposable consumer income and wealth, or fears of war and future acts of terrorism could further reduce customer demand for the amenities that we offer, thus imposing practical limits on pricing and negatively impacting our results of operations and financial condition. ​ We face risks related to pandemic OR OTHER INFECTIOUS diseases, such as the coronaviRus, which could materially and adversely affect travel, CONVENTIONS, HOTEL STAYS AND/OR LOCAL VISITORS, EMPLOYEES AND OUR SUPPLY CHAIN and result in reduced demand for our properties and could have a material adverse effect on us. ​ Our business has in the past and could be materially and adversely affected in the future by the effect of, or the public perception of a risk of, a pandemic or other infectious disease on the travel, convention and leisure industries.
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Additional risks that are presently unknown to us or that we currently deem immaterial may also impact our business. ​ RISKS RELATED TO OUR BUSINESS ​ INTENSE COMPETITION EXISTS IN THE GAMING INDUSTRY, AND WE EXPECT COMPETITION TO CONTINUE TO INTENSIFY ​ The gaming industry is highly competitive for both customers, employees and management.
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The COVID-19 pandemic has disrupted and is expected to continue to disrupt our convention business for an extended period of time. We expect the impact of these disruptions, including the extent of their adverse impact on our financial results, will be dictated by the length of time that such disruptions continue.
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If we are unable to attract and retain qualified employees, or if competition for employees results in materially increased wages, our ability to maintain and grow our business could be adversely impacted. ​ FAILURE TO MAINTAIN THE INTEGRITY OF OUR INFORMATION TECHNOLOGY SYSTEMS, PROTECT OUR INTERNAL AND CUSTOMER INFORMATION FROM CYBERSECURITY OR OTHER RISKS, OR COMPLY WITH APPLICABLE PRIVACY AND DATA SECURITY REGULATIONS COULD ADVERSELY AFFECT US ​ We rely extensively on our computer systems to process customer transactions, manage customer data, manage employee data and communicate with third-party vendors and other third parties, and we access the internet to use our computer systems.
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After government mandated closures in early 2020, we were allowed to open the Atlantis on June 4, 2020, and Monarch Black Hawk on June 17, 2020.
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This is particularly the case if such restrictions are not applicable to all competitive facilities in that gaming market. ​ WE ARE SUBJECT TO ENVIRONMENTAL LAWS AND POTENTIAL EXPOSURE TO ENVIRONMENTAL LIABILITIES ​ We are subject to various federal, state and local environmental laws and regulations that govern our operations, including emissions and discharges into the environment, and the handling and disposal of hazardous and nonhazardous substances and wastes.
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Future demand for properties may be negatively impacted by the adverse changes in the perceived or actual economic climate, including higher unemployment rates, declines in income levels and loss of personal wealth or reduced business spending for meetings, incentives, conventions and exhibitions resulting from the impact of the COVID-19 pandemic or other infectious diseases. ​ Our businesses would also be impacted should the disruptions from the COVID-19 pandemic lead to prolonged changes in consumer behavior.
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In addition, during the time that such securities are outstanding, they may adversely affect the terms on which we could obtain additional capital. ​ CERTAIN OF OUR STOCKHOLDERS OWN LARGE INTERESTS IN OUR CAPITAL STOCK AND MAY SIGNIFICANTLY INFLUENCE OUR AFFAIRS ​ John Farahi and Bob Farahi, our officers and directors, together with John’s and Bob’s brother Ben Farahi, beneficially own in the aggregate approximately 32% of our outstanding common stock, inclusive of options held by them which are exercisable within 60 days.
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There are certain limitations on our ability to mitigate the adverse financial impact of these matters, such as the fixed costs at our properties.
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The failure to pay or maintain dividends could adversely affect the market price of our common stock. ​ GENERAL RISKS ​ OUR INSURANCE COVERAGE MAY NOT BE ADEQUATE TO COVER ALL POSSIBLE LOSSES THAT OUR PROPERTIES COULD SUFFER.
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In the event the COVID-19 virus returns to pandemic levels, or there is an outbreak of another infectious disease, our ability to staff our business and conduct our operations would be disrupted and, have a material adverse effect on our business, financial condition, results of operations and cash flows. 16 Table of Contents ​ If we are required to raise capital in the future, our access to and cost of financing will depend on, among other things, global economic conditions, conditions in the global financing markets, the availability of sufficient financing, our prospects and our credit ratings.
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UNRESOLVED STAFF COMMENT S ​ There were no unresolved comments from the SEC staff at the time of filing this Form 10-K. ​
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If our credit ratings were to be downgraded, or general market conditions were to ascribe higher risk to our rating levels, our industry, or us, our access to capital and the cost of debt financing would be negatively impacted.
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In addition, the terms of future debt agreements could include more restrictive covenants, or require incremental collateral, which may restrict our business operations or be unavailable due to our covenant restrictions then in effect.
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There is no guarantee that our current debt financings will be enough to fund our obligations, or that they will be available on terms consistent with our expectations. Our current facility contains restrictive covenants that impose significant operating and financial restrictions and various financial covenants.
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We cannot assure you that the impact of an infectious disease outbreak, including the resurgence of the COVID-19 pandemic, will not impact our ability to comply with the financial covenants in the future, nor can we assure you that we would be able to obtain waivers or modifications from our lenders in the event of noncompliance in the future. ​ WIN RATES FOR OUR GAMING OPERATIONS DEPEND ON A VARIETY OF FACTORS, MANY OF WHICH ARE BEYOND OUR CONTROL, AND MAY RESULT IN THE WINNINGS OF OUR GAMING CUSTOMERS EXCEEDING OUR WINNINGS. ​ The gaming industry is characterized by an element of chance, and win rates are affected by a player’s skill and experience, the mix of games played, the financial resources of players, the spread of table limits, the volume of bets played and the amount of time played, among other factors.
Removed
On September 3, 2020, we entered into the Fourth Amended and Restated Credit Agreement with Wells Fargo Bank, N.A., as administrative agent and certain banks (the “Fourth Amended Credit Facility”), which amended and restated our $250.0 million credit facility, dated as of July 20, 2016 (the “Prior Credit Facility”).
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On April 30, 2021, the Company entered into an amendment to the Fourth Amended Credit Facility (collectively, with all prior amendments, the “Amended Credit Facility”).
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If interest rates increase, our debt service obligations under the Fifth Amended Credit Facility will increase even when the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease. ​ INTENSE COMPETITION EXISTS IN THE GAMING INDUSTRY, AND WE EXPECT COMPETITION TO CONTINUE TO INTENSIFY ​ The gaming industry is highly competitive for both customers, employees and management.
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We have numerous disagreements with our Monarch Black Hawk general contractor, including disagreements over costs, schedule delays, and other construction related matters.
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Any significant disruption in operations of a property could have a significant adverse effect on our business, financial condition and results of operations. ​ FAILURE OF THE RENO-SPARKS CONVENTION CENTER TO BOOK AND ATTRACT CONVENTION BUSINESS COULD ADVERSELY IMPACT OUR BUSINESS AT THE ATLANTIS ​ The Atlantis is the closest hotel-casino to the Reno-Sparks Convention Center and the enclosed pedestrian sky bridge, that connects the Atlantis directly with the Reno-Sparks Convention Center, has afforded us a distinct competitive advantage in attracting its conventioneers, who typically pay higher average room rates than non-conventioneers.
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In addition, during the time that such securities are outstanding, they may adversely affect the terms on which we could obtain additional capital. ​ 27 Table of Contents WE MAY NOT BE ABLE TO PAY OR MAINTAIN DIVIDENDS AND THE FAILURE TO DO SO WOULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK. ​ Commencing in the second quarter of 2023, we intend to pay an annual cash dividend, payable in quarterly amounts, on our common stock.
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Any expansion of gaming or restriction on or prohibition of our gaming operations or enactment of other adverse regulatory changes could have a material adverse effect on our operating results. ​ 28 Table of Contents OUR INSURANCE COVERAGE MAY NOT BE ADEQUATE TO COVER ALL POSSIBLE LOSSES THAT OUR PROPERTIES COULD SUFFER.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeFinancial Statements and Supplementary Data – Notes to Consolidated Financial Statements, Notes 5 and 12. ​ Black Hawk, Colorado Properties: ​ (a) An approximate 3.4-acre site on which the Monarch Black Hawk is situated including the hotel tower, casino, conference facilities, resort facilities, restaurant facilities and surrounding parking. ​ (b) An approximate 9.0-acre parcel of land with an industrial building, located between Denver and Monarch Casino Resort Spa Black Hawk, in Clear Creek County, Colorado, which is used as a warehouse. ​ Except for the 37,400 square feet and 4.2-acre parcels of real property adjacent to the Atlantis which are referenced above, we own all of our properties. ​ As of December 31, 2022, our Amended Credit Facility is secured by liens on substantially all of our real and personal property.
Biggest changeFinancial Statements and Supplementary Data – Notes to Consolidated Financial Statements, Notes 5 and 12. ​ Black Hawk, Colorado Properties: ​ (a) An approximate 3.4-acre site on which the Monarch Black Hawk is situated including the hotel tower, casino, conference facilities, resort facilities, restaurant facilities and surrounding parking. ​ (b) An approximate 9.0-acre parcel of land with an industrial building, located between Denver and Monarch Casino Resort Spa Black Hawk, in Clear Creek County, Colorado, which is used as a warehouse. ​ Except for the 37,400 square feet and 4.2-acre parcels of real property adjacent to the Atlantis which are referenced above, we own all of our properties. ​ As of December 31, 2023, our Amended Credit Facility is secured by liens on substantially all of our real and personal property. ​
PROPERTIE S ​ As of December 31, 2022, our properties consist of: ​ Reno, Nevada Properties : ​ (a) An approximately 13-acre site on which the Atlantis is situated, including the hotel towers, casino, restaurant facilities and surrounding parking. ​ (b) An approximately 16-acre site, adjacent to the Atlantis and connected to the Atlantis by the Sky Terrace, which includes approximately 11 acres of paved parking used for customer, employee and valet parking.
PROPERTIE S ​ As of December 31, 2023, our properties consist of: ​ Reno, Nevada Properties : ​ (a) An approximately 13-acre site on which the Atlantis is situated, including the hotel towers, casino, restaurant facilities and surrounding parking. ​ (b) An approximately 16-acre site, adjacent to the Atlantis and connected to the Atlantis by the Sky Terrace, which includes approximately 11 acres of paved parking used for customer, employee and valet parking.
Removed
On February 1, 2023, our Amended Credit Facility was amended and restated by the Fifth Amended Credit Facility which facility continues to encumber substantially all of our real and personal property. ​

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDING S ​ This information is incorporated by reference from Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements, Note 11 of this Form 10-K. ​ 31 Table of Contents ITEM 4. MINE SAFETY DISCLOSURE S ​ Not applicable. PART II ​
Biggest changeITEM 3. LEGAL PROCEEDING S ​ This information is incorporated by reference from Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements, Note 11 of this Form 10-K. ​ ITEM 4. MINE SAFETY DISCLOSURE S ​ Not applicable. 31 Table of Contents PART II ​

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeFinancial Statements and Supplementary Data ​ 46 Consolidated Statements of Income for the years ended December 31, 2022, 2021 and 2020 ​ 47 Consolidated Balance Sheets at December 31, 2022 and 2021 ​ 48 Consolidated Statements of Stockholder’s Equity for the years ended December 31, 2022, 2021 and 2020 ​ 49 Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020 ​ 50 ​ ​ ​ Monarch Casino & Resort, Inc. and Subsidiaries Notes to Consolidated Financial Statements ​ 51 ​ ​ ​
Biggest changeFinancial Statements and Supplementary Data ​ 45 Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 2021 ​ 46 Consolidated Balance Sheets at December 31, 2023 and 2022 ​ 47 Consolidated Statements of Stockholder’s Equity for the years ended December 31, 2023, 2022 and 2021 ​ 48 Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021 ​ 49 ​ ​ ​ Monarch Casino & Resort, Inc. and Subsidiaries Notes to Consolidated Financial Statements ​ 50 ​ ​ ​
Item 4. Mine Safety Disclosures ​ 32 ​ ​ ​ PART II ​ ​ Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ 32 Item 6. Selected Financial Data ​ 34 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 35 Item 8.
Item 4. Mine Safety Disclosures ​ 31 ​ ​ ​ PART II ​ ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ 32 Item 6. Reserved ​ 34 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 35 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWhile we intend to pay dividends quarterly, there can be no assurance that our board of directors will declare dividends at all or on a regular basis or that the amount of our dividends will not change. ​ Unregistered Sales of Equity Securities . ​ None. ​ 32 Table of Contents STOCK PERFORMANCE GRAPH ​ The following chart reflects the cumulative total shareholder return (change in stock price plus reinvested dividends) of a $100 investment in our common stock from the five-year period from December 31, 2017 through December 31, 2022, in comparison to the Standard & Poor’s 500 Composite Stock Index and the Standard & Poor’s 1500 Casinos & Gaming Index.
Biggest change(2) In December 2023, under the authority of the Repurchase Plan, the Company purchased 84,503 shares at average price between $59.23 and $59.99 per share on the open market. ​ 32 Table of Contents STOCK PERFORMANCE GRAPH ​ The following chart reflects the cumulative total shareholder return (change in stock price plus reinvested dividends) of a $100 investment in our common stock from the five-year period from December 31, 2018 through December 31, 2023, in comparison to the Standard & Poor’s 500 Composite Stock Index and the Standard & Poor’s 1500 Casinos & Gaming Index.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIE S ​ Market Information. Our common stock trades on The Nasdaq Stock Market under the symbol MCRI. ​ Stockholders. As of February 15, 2023, there were approximately 62 stockholders of record of our common stock. ​ Dividends.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIE S ​ Market Information. Our common stock trades on The Nasdaq Stock Market under the symbol MCRI. ​ Stockholders. As of February 15, 2024, there were approximately 61 stockholders of record of our common stock. ​ Dividends.
The board of directors also approved, commencing in the second quarter of 2023, a recurring annual cash dividend of $1.20 per outstanding share of Common Stock to be paid in quarterly amounts. See Item 8.
The board of directors also approved, commencing in the second quarter of 2023, a recurring annual cash dividend of $1.20 per outstanding share of Common Stock to be paid in quarterly amounts. In 2023 we paid $5.90 per share of its outstanding common stock. See Item 8.
The actual timing, number and value of shares repurchased under the Repurchase Plan will be determined by management at its discretion and will depend on a number of factors, including the market price of our common stock, general market economic conditions and applicable legal requirements. ​ During the fourth quarter ended December 31, 2022, no shares of our common stock were repurchased under the Repurchase Plan.
The actual timing, number and value of shares repurchased under the Repurchase Plan will be determined by management at its discretion and will depend on a number of factors, including the market price of our common stock, general market economic conditions and applicable legal requirements. ​ During the fourth quarter ended December 31, 2023, the Company purchased 84,503 shares of Company’s common stock on the open market under the Repurchase Plan.
As of December 31, 2022, we have an authorization to purchase up to 2,900,000 shares under the Repurchase Plan. ​ ​
As of December 31, 2023, we have an authorization to purchase up to 2,815,497 shares under the Repurchase Plan. ​ ​
The comparisons are not intended to forecast or be indicative of possible future performance of our common stock. ​ The following performance graph shall not be deemed to be "filed" for purposes of Section 18 of the Exchange Act, nor shall this information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference into a filing. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending ​ Index 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Monarch Casino & Resort, Inc. ​ 100.00 ​ 85.10 ​ 108.32 ​ 136.59 ​ 164.99 ​ 171.55 S&P 500 Index 100.00 95.62 125.72 148.85 191.58 156.88 ​ S&P 1500 Casinos & Gaming Index 100.00 66.75 100.32 115.85 114.14 90.34 ​ ​ Source: S&P Global Market Intelligence © 2022 ​ ​ 33 Table of Contents Repurchases ​ On October 22, 2014, the board of directors of Monarch authorized a stock repurchase plan (the “Repurchase Plan”).
The comparisons are not intended to forecast or be indicative of possible future performance of our common stock. ​ The following performance graph shall not be deemed to be "filed" for purposes of Section 18 of the Exchange Act, nor shall this information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference into a filing. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending ​ Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Monarch Casino & Resort, Inc. ​ 100.00 ​ 127.29 ​ 160.51 ​ 193.89 ​ 201.60 ​ 196.32 S&P 500 Index 100.00 131.49 155.68 200.37 164.08 207.21 ​ S&P 1500 Casinos & Gaming Index 100.00 150.30 173.56 171.00 135.35 156.34 ​ ​ Source: S&P Global Market Intelligence © 2024 ​ ​ 33 Table of Contents Repurchases ​ On October 22, 2014, the board of directors of Monarch authorized a stock repurchase plan (the “Repurchase Plan”).
See Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA, Notes to Consolidated Financial Statements, Note 6. ​ On February 7, 2023, the Company’s board of directors authorized a one-time cash dividend of $5.00 per share of its outstanding common stock, payable on March 15, 2023, to stockholders of record of the Company on March 1, 2023.
We had used our free cash flow to finance our operating activities, our capital expenditures and to pay down our debt. ​ On February 7, 2023, the Company’s board of directors authorized a one-time cash dividend of $5.00 per share of its outstanding common stock, payable on March 15, 2023, to stockholders of record of the Company on March 1, 2023.
Removed
Up to December 31, 2022, we have never paid dividends on our common stock. We had used our free cash flow to finance our operating activities, our capital expenditures and to pay down our debt. Our Amended Credit Facility also contained provisions that require the achievement of certain financial ratios before we can pay or declare dividends to our stockholders.
Added
Up to December 31, 2022, we have never paid dividends on our common stock.
Added
While we intend to pay dividends quarterly, there can be no assurance that our board of directors will declare dividends at all or on a regular basis or that the amount of our dividends will not change. ​ Unregistered Purchases of Equity Securities ​ The following table presents the number and average price of shares purchased in each fiscal month of the fourth quarter of fiscal 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total number of shares purchased (1) Average price paid per share (2) ​ Total number of shares purchased as part of publicly announced plans or programs (1) (2) ​ Maximum number of shares that may yet be purchased under the plans or programs (2) October 1, 2023 - October 31, 2023 ​ 84,503 ​ $ 59.46 ​ 184,503 ​ 2,815,497 November 1, 2023 - November 30, 2023 ​ — ​ — ​ — ​ 2,815,497 December 1, 2023 - December 31, 2023 ​ — ​ — ​ — ​ 2,815,497 Total ​ 84,503 ​ $ 59.46 ​ 184,503 ​ 2,815,497 (1) This amount represents a repurchase pursuant to our Repurchase Plan, see Note 8.

Item 7. Management's Discussion & Analysis

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

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Biggest changeTherefore, you should not rely on any of these forward-looking statements. ​ Various risks and uncertainties may affect the operation, performance, development and results of our business and could cause future outcomes to change significantly from those set forth in our forward-looking statements, including the following factors: ​ ● our ability to successfully implement our business and growth strategies; ● our ability to successfully defend against and remove the liens recorded against the Monarch Black Hawk by the general contractor and certain subcontractors with respect to the expansion and renovation of the property; ● adverse impacts of the COVID-19 pandemic or other infectious disease outbreak on our business, construction projects, financial condition and operating results; 35 Table of Contents ● actions by government officials at the federal, state and/or local level with respect to steps to be taken, including, without limitation, temporary or extended shutdowns, travel restrictions, social distancing and shelter-in-place orders, in connection with the COVID-19 pandemic or other infectious disease outbreak; ● our ability to manage guest safety concerns caused by COVID-19 or other infectious disease outbreak; ● access to available and reasonable financing on a timely basis; ● our ability to maintain strong working relationships with our regulators, employees, lenders, suppliers, insurance carriers, customers, and other stakeholders; ● impact of any uninsured losses; ● changes in guest visitation or spending patterns due to health or other concerns; ● construction factors, including delays, disruptions, availability of labor and materials, increased costs of labor and materials, contractor disagreements, zoning issues, environmental restrictions, soil and water conditions, weather and other hazards, site access matters, building permit issues and other regulatory approvals or issues; ● ongoing disagreements over costs of and responsibility for delays and other construction related matters with our Monarch Black Hawk general contractor, PCL Construction Services, Inc., including, as previously reported, the litigation against us by such contractor; ● affirmative and extensive counterclaims for construction defects, breach of contract, breach of warranty, fraud, fraudulent inducement, negligence and other construction related claims that we have filed against the Monarch Black Hawk contractor, PCL Construction Services, Inc., in the above-mentioned litigation in which litigation the parties are currently conducting discovery, and investigation of the claims by and against us is therefore ongoing; ● our potential need to post bonds or other forms of surety to support our legal remedies; ● risks related to development and construction activities (including disputes with and defaults by contractors and subcontractors; construction, equipment or staffing problems and delays; shortages of materials or skilled labor; environmental, health and safety issues; weather and other hazards, site access matters, and unanticipated cost increases); ● changes in laws mandating increases in minimum wages and employee benefits; ● changes in laws, rules and regulations permitting expanded and other forms of gaming in our key markets; ● the effects of labor shortages on our market position, growth and financial results; ● current broad-based inflation on the economy, including wage inflation; ● the potential of increases in state and federal taxation to address budgetary and other impacts of the COVID-19 pandemic; ● the potential of increased regulatory and other burdens to address the direct and indirect impacts of the spread of infectious diseases, including COVID-19 pandemic; ● guest acceptance of our expanded facilities at Monarch Black Hawk and the resulting impact on our market position, growth and financial results; ● competition in our target market areas; ● our dependence on two resorts; ● our ability to realize the anticipated benefits of our expansion and renovation projects, including the Monarch Black Hawk Expansion; ● our ability to effectively manage expenses to optimize our margins and operating results; ● risks related to our present indebtedness and future borrowings and our ability to meet our debt obligations and comply with our loan covenants; ● adverse trends in the gaming industries; ● changes in patron demographics; ● general market and economic conditions, including but not limited to, the effects of local and national economic, credit and capital market conditions, housing and energy conditions on the economy in general and on the gaming and lodging industries in particular; ● our ability to generate sufficient operating cash flow to finance our expansion plans and fund working capital; 36 Table of Contents ● the impact of rising interest rates and our ability to refinance debt as it matures at commercially reasonable rates or at all; ● disruptions and shortages in the supply chain; ● ability of large stockholders to influence our affairs; ● our dependence on key personnel; ● the availability of adequate levels of insurance; ● changes in federal, state, and local laws, rules and regulations, including environmental and gaming licenses or legislation and regulations; ● our ability to comply with existing laws and regulations to which we are subject; ● our ability to obtain and maintain gaming and other governmental licenses and regulatory approvals; ● any violations by us of the anti-money laundering laws; ● cybersecurity risks, including misappropriation of customer information or other breaches of information security; ● impact of natural disasters, severe weather, terrorist activity and similar events; ● competitive environment, including increased competition in our target market areas; ● increases in the effective rate of taxation at any of our properties or at the corporate level; ● our ability to successfully estimate the impact of accounting, tax and legal matters; ● risks, uncertainties and other factors described from time to time in this and our other SEC filings and reports; ● the effects of macro and micro economic conditions on employment growth in the economy in general; ● the effects of labor shortages on our ability to grow our business and to expand our market share in each of our key markets; ● our ability to generate sufficient cash flow and manage our expenses to deleverage the Company; and ● the impact of the events occurring in Eastern Europe, including the conflict taking place in Ukraine, and other parts of the world. ​ For a more detailed description of certain Risk Factors affecting our business, see Item 1A, “Risk Factors.” ​ We undertake no obligation to publicly update or revise any forward-looking statements as a result of future developments, events or conditions, except as required by law.
Biggest changeTherefore, you should not rely on any of these forward-looking statements. ​ Various risks and uncertainties may affect the operation, performance, development and results of our business and could cause future outcomes to change significantly from those set forth in our forward-looking statements, including the following factors: ​ ● our ability to successfully implement our business and growth strategies; ● our ability to successfully defend against and remove the liens recorded against the Monarch Black Hawk by the general contractor and certain subcontractors with respect to the expansion and renovation of the property; ● access to available and reasonable financing on a timely basis; ● our ability to maintain strong working relationships with our regulators, employees, lenders, suppliers, insurance carriers, customers, and other stakeholders; ● impact of any uninsured losses; 35 Table of Contents ● changes in guest visitation or spending patterns due to health or other concerns; ● construction factors, including delays, disruptions, availability of labor and materials, increased costs of labor and materials, contractor disagreements, zoning issues, environmental restrictions, soil and water conditions, weather and other hazards, site access matters, building permit issues and other regulatory approvals or issues; ● ongoing disagreements over costs of and responsibility for delays and other construction related matters with our Monarch Black Hawk general contractor, PCL Construction Services, Inc., including, as previously reported, the litigation against us by such contractor; ● affirmative and extensive counterclaims for construction defects, breach of contract, breach of warranty, fraud, fraudulent inducement, negligence and other construction related claims that we have filed against the Monarch Black Hawk contractor, PCL Construction Services, Inc., in the above-mentioned litigation in which litigation the parties are currently awaiting the Court’s decision following the trial of the matter in September, October, and November of 2023; ● our potential need to post bonds or other forms of surety to support our legal remedies; ● risks related to development and construction activities (including disputes with and defaults by contractors and subcontractors; construction, equipment or staffing problems and delays; shortages of materials or skilled labor; environmental, health and safety issues; weather and other hazards, site access matters, and unanticipated cost increases); ● changes in laws mandating increases in minimum wages and employee benefits; ● changes in laws, rules and regulations permitting expanded and other forms of gaming in our key markets; ● the effects of labor shortages on our market position, growth and financial results; ● current broad-based inflation on the economy, including wage inflation; ● the potential of increases in state and federal taxation to address budgetary and other impacts of the COVID-19 pandemic; ● the potential of increased regulatory and other burdens to address the direct and indirect impacts of the spread of infectious diseases, including COVID-19 pandemic; ● guest acceptance of our expanded facilities at Monarch Black Hawk and the resulting impact on our market position, growth and financial results; ● competition in our target market areas; ● our dependence on two resorts; ● our ability to realize the anticipated benefits of our expansion and renovation projects, including the Monarch Black Hawk Expansion; ● our ability to effectively manage expenses to optimize our margins and operating results; ● risks related to our present indebtedness and future borrowings and our ability to meet our debt obligations and comply with our loan covenants; ● adverse trends in the gaming industries; ● changes in patron demographics; ● general market and economic conditions, including but not limited to, the effects of local and national economic, credit and capital market conditions, housing and energy conditions on the economy in general and on the gaming and lodging industries in particular; ● our ability to generate sufficient operating cash flow to finance our expansion plans and fund working capital; ● the impact of rising interest rates and our ability to refinance debt as it matures at commercially reasonable rates or at all; ● disruptions and shortages in the supply chain; ● ability of large stockholders to influence our affairs; ● our dependence on key personnel; ● the availability of adequate levels of insurance; ● changes in federal, state, and local laws, rules and regulations, including environmental and gaming licenses or legislation and regulations; ● our ability to comply with existing laws and regulations to which we are subject; 36 Table of Contents ● our ability to obtain and maintain gaming and other governmental licenses and regulatory approvals; ● any violations by us of the anti-money laundering laws; ● cybersecurity risks, including misappropriation of customer information or other breaches of information security; ● impact of natural disasters, severe weather, terrorist activity and similar events; ● competitive environment, including increased competition in our target market areas; ● increases in the effective rate of taxation at any of our properties or at the corporate level; ● our ability to successfully estimate the impact of accounting, tax and legal matters; ● risks, uncertainties and other factors described from time to time in this and our other SEC filings and reports; ● the effects of macro and micro economic conditions on employment growth in the economy in general; ● the effects of labor shortages on our ability to grow our business and to expand our market share in each of our key markets; ● our ability to generate sufficient cash flow and manage our expenses to deleverage the Company; and ● the impact of the events occurring in Eastern Europe, including the conflict taking place in Ukraine, and other parts of the world ; ● adverse impacts of the COVID-19 pandemic or other infectious disease outbreak on our business, construction projects, financial condition and operating results; ● actions by government officials at the federal, state and/or local level with respect to steps to be taken, including, without limitation, temporary or extended shutdowns, travel restrictions, social distancing and shelter-in-place orders, in connection with the COVID-19 pandemic or other infectious disease outbreak; ● our ability to manage guest safety concerns caused by COVID-19 or other infectious disease outbreak. ​ For a more detailed description of certain Risk Factors affecting our business, see Item 1A, “Risk Factors.” ​ We undertake no obligation to publicly update or revise any forward-looking statements as a result of future developments, events or conditions, except as required by law.
Under the asset and liability approach for financial accounting and reporting for income taxes, the following basic principles are applied in accounting for income taxes at the date of the financial statements: (a) a current liability or asset is recognized for the estimated taxes payable or refundable on taxes for the current year; (b) a deferred income tax liability or asset is recognized for the estimated future tax effects attributable to temporary differences and carryforwards; (c) the measurement of current and deferred tax liabilities and assets is based on the provisions of the enacted tax law; the effects of future changes in tax laws or rates are not anticipated; and (d) the measurement of deferred income taxes is reduced, if necessary, by the amount of any tax benefits that, based upon available evidence, are not expected to be realized. 44 Table of Contents ​ Our income tax returns are subject to examination by tax authorities.
Under the asset and liability approach for financial accounting and reporting for income taxes, the following basic principles are applied in accounting for income taxes at the date of the financial statements: (a) a current liability or asset is recognized for the estimated taxes payable or refundable on taxes for the current year; (b) a deferred income tax liability or asset is recognized for the estimated future tax effects attributable to temporary differences and carryforwards; (c) the measurement of current and deferred tax liabilities and assets is based on the provisions of the enacted tax law; the effects of future changes in tax laws or rates are not anticipated; and (d) the measurement of deferred income taxes is reduced, if necessary, by the amount of any tax benefits that, based upon available evidence, are not expected to be realized. ​ Our income tax returns are subject to examination by tax authorities.
Certain of our policies, including the estimated useful lives assigned to our assets and the calculation of the capitalized interest, the determination of the allowance for doubtful accounts and allowance for unredeemed gift certificates, self-insurance reserves, deferred revenue, the calculation of income tax liabilities and the calculation of stock-based compensation, require that we apply significant judgment in defining the appropriate assumptions for calculating financial estimates.
Certain of our policies, including the estimated useful lives assigned to our assets, the determination of the allowance for doubtful accounts and allowance for unredeemed gift certificates, self-insurance reserves, deferred revenue, the calculation of income tax liabilities and the calculation of stock-based compensation, require that we apply significant judgment in defining the appropriate assumptions for calculating financial estimates.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. ​ CAPITAL SPENDING AND DEVELOPMENT ​ We seek to continuously upgrade and maintain our facilities in order to present a fresh, high quality product to our guests.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. ​ CAPITAL SPENDING AND DEVELOPMENT ​ We seek to continuously upgrade and maintain our facilities in order to present a fresh, high quality product to our guests.
Example of forward-looking statements include, among others, statements we make regarding: (i) our belief that we have sufficient liquidity to fund our operations and any remaining renovation projects, litigation costs and ongoing capital expenditures; (ii) our belief that our business is well-positioned to benefit from any post-pandemic recovery; (iii) our expectation regarding the availability of future acquisition opportunities; (iv) our beliefs regarding the quality of our products and guest services in Reno and Black Hawk; (v) our expectations regarding our guests' acceptance of the expanded casino, new hotel and enhanced amenities at Monarch Casino Resort Spa Black Hawk; (vi) our expectations regarding our future position in, and share of, the high-end segment of the market and the quality of service we provide to our guests; (vii) our expectations regarding the litigation relating to the construction of the Monarch Black Hawk expansion and related liens recorded by the general contractor and certain subcontractors against the Monarch Black Hawk; (viii) our belief regarding the proximity that the Reno-Sparks Convention Center will have for the Atlantis and the normalization of the convention business to pre-pandemic levels; (ix) the continuing strength of our balance sheet and our expected free cash flow; (x) our expectations regarding continuing our dividend payments in the future; (xi) our belief regarding the appeal of the locations of our properties to certain segments of our customers; and (xii) our expectations regarding broad-based employment growth in the Reno market.
Example of forward-looking statements include, among others, statements we make regarding: (i) our belief that we have sufficient liquidity to fund our operations and any remaining renovation projects, litigation costs and ongoing capital expenditures; (ii) our belief that our business is well-positioned to benefit from the continued gaming industry expansion after the pandemic; (iii) our expectation regarding the availability of future acquisition opportunities; (iv) our beliefs regarding the quality of our products and guest services in Reno and Black Hawk; (v) our expectations regarding our guests' acceptance of the expanded casino, new hotel and enhanced amenities at Monarch Casino Resort Spa Black Hawk; (vi) our expectations regarding our future position in, and share of, the high-end segment of the market and the quality of service we provide to our guests; (vii) our expectations regarding the litigation relating to the construction of the Monarch Black Hawk expansion and related liens recorded by the general contractor and certain subcontractors against the Monarch Black Hawk; (viii) our belief regarding the proximity that the Reno-Sparks Convention Center will have for the Atlantis and the normalization of the convention business to pre-pandemic levels; (ix) the continuing strength of our balance sheet and our expected free cash flow; (x) our expectations regarding continuing our dividend payments in the future; (xi) our belief regarding the appeal of the locations of our properties to certain segments of our customers; and (xii) our expectations regarding broad-based employment growth in the Reno market.
If we are unable to generate sufficient cash flow in the upcoming months or if our cash needs exceed the Company’s borrowing capacity under the Amended Credit Facility, we could be required to adopt one or more alternatives, such as reducing, delaying or eliminating planned capital expenditures, selling assets, restructuring debt or issuing additional equity. ​ 43 Table of Contents CRITICAL ACCOUNTING POLICIES AND ESTIMATES ​ We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”).
If we are unable to generate sufficient cash flow in the upcoming months or if our cash needs exceed the Company’s borrowing capacity under the Amended Credit Facility, we could be required to adopt one or more alternatives, such as reducing, delaying or eliminating planned capital expenditures, selling assets, restructuring debt or issuing additional equity. ​ CRITICAL ACCOUNTING POLICIES AND ESTIMATES ​ We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”).
We use historical data and projections to estimate expected volatility and expected employee behaviors related to option exercises and forfeitures. ​ RECENTLY ISSUED ACCOUNTING STANDARDS ​ A variety of proposed or otherwise potential accounting standards are currently under review and study by standard-setting organizations and certain regulatory agencies.
We use historical data and projections to estimate expected volatility and expected employee behaviors related to option exercises and forfeitures. 43 Table of Contents ​ RECENTLY ISSUED ACCOUNTING STANDARDS ​ A variety of proposed or otherwise potential accounting standards are currently under review and study by standard-setting organizations and certain regulatory agencies.
Monarch Black Hawk is positioned to leverage from the expanded operation, from the elimination of betting limits and new game types in Black Hawk, Colorado, as well as to benefit from the growing state-wide online and retail sports betting.
Monarch Black Hawk is positioned to leverage from the expanded operation, and take advantage of the elimination of betting limits and allowance of new game types in Black Hawk, Colorado, as well as to benefit from the growing state-wide online and retail sports betting.
To provide an understanding of the methodologies applied, our significant accounting policies are discussed where appropriate in this discussion and analysis and in the Notes to Consolidated Financial Statements. ​ The consolidated financial statements include the accounts of Monarch and its subsidiaries.
To provide an understanding of the methodologies applied, our significant accounting policies are discussed where appropriate in this discussion and analysis and in the Notes to Consolidated Financial Statements. 42 Table of Contents ​ The consolidated financial statements include the accounts of Monarch and its subsidiaries.
In managing the food and beverage operation we use Cost Of Goods Sold (“COGS”) percentage, which represents a percentage of product cost to the food and beverage revenue and is a measurement of commodity prices and menu sales prices. ​ Our management evaluates the KPI as compared to prior periods, the peer group, or market, as well as for any trends. ​ RESULTS OF OPERATIONS ​ Monarch Casino Resort Spa Black Hawk Expansion ​ Our financial results for the years ended December 31, 2022 and 2021 were positively impacted by the phased opening of operations at our newly transformed Monarch Black Hawk, which opening began in the fourth quarter of 2020.
In managing the food and beverage operation we use Cost Of Goods Sold (“COGS”) percentage, which represents a percentage of product cost to the food and beverage revenue and is a measurement of commodity prices and menu sales prices. ​ Our management evaluates the KPI as compared to prior periods, the peer group, or market, as well as for any trends. ​ RESULTS OF OPERATIONS ​ Monarch Casino Resort Spa Black Hawk Expansion ​ Our financial results for the years ended December 31, 2023, 2022 and 2021 were positively impacted by the phased opening and ramp up of operations at our newly transformed Monarch Black Hawk.
Our hands-on management style focuses on customer service and cost efficiencies. 37 Table of Contents ​ FACTORS IMPACTING OUR RESULTS OF OPERATIONS ​ Our operating results may be affected by, among other things, competitive factors, gaming tax increases, mandated minimum wages, the commencement of new gaming operations, construction at our facilities, general public sentiment regarding travel and public gatherings, overall economic conditions and governmental policies affecting the disposable income of our patrons, widespread public health emergencies including pandemics such as the global coronavirus (COVID-19) pandemic, terrorism and weather conditions affecting our properties, as well as those matters discussed in Item 1A.
Our hands-on management style focuses on customer service and cost efficiencies. 37 Table of Contents ​ FACTORS IMPACTING OUR RESULTS OF OPERATIONS ​ Our operating results may be affected by, among other things, competitive factors, gaming tax increases, mandated minimum wages, the commencement of new gaming operations, renovations at our facilities, general public sentiment regarding travel and public gatherings, overall economic conditions and governmental policies affecting the disposable income of our patrons, public health conditions including both pandemics such as the global coronavirus (COVID-19) pandemic and localized outbreaks of infectious diseases, terrorism and weather conditions affecting our properties, as well as those matters discussed in Item 1A.
The increase in the labor costs and the increase in price inflation, combined with continued aggressive marketing programs by our competitors, has applied upward pressure on Atlantis’ operating costs and is lowering our profit margins. ​ Monarch Casino Resort Spa Black Hawk: Monarch Black Hawk is the first property encountered by visitors arriving from Denver and other major population centers via Highway 119.
The increase in the labor costs and the other inflationary pressures, combined with continued aggressive marketing programs by our competitors, has applied pressure on Atlantis’ revenue growth, operating costs and profit margins. ​ Monarch Casino Resort Spa Black Hawk: Monarch Black Hawk is the first property encountered by visitors arriving from Denver and other major population centers via Highway 119.
Food and beverage operating expense as a percentage of food and beverage revenue in the year ended December 31, 2022 was 75.5% compared to 79.8% over the same period in 2021.
Food and beverage operating expense as a percentage of food and beverage revenue in the year ended December 31, 2023 was 72.4% compared to 75.5% over the same period in 2022.
The increase in expense is primarily a result of the ramp up of the expanded operation at Monarch Black Hawk.
The increase in expense is primarily a result of the ramp up of the expanded operation at Monarch Black Hawk, as well as inflation related price increases.
We expect that the Company’s cash position in the next several quarters will be negatively impacted by the outstanding construction retention and other payments related to the Monarch Black Hawk Expansion project of $50.0 million, which are reflected in “Construction Accounts Payable” on the balance sheet as of December 31, 2022.
We expect to receive the rest of the refund in the next few quarters. 41 Table of Contents We expect that the Company’s cash position in the next several quarters may be negatively impacted by the outstanding construction retention and other payments related to the Monarch Black Hawk Expansion project of $47.6 million, which are reflected in “Construction Accounts Payable” on the balance sheet as of December 31, 2023.
Purchase obligations of materials and supplies used in the normal operation of our business represent approximately $23.6 million as of December 31, 2022 and all are cancelable by us upon providing a 30-day notice. ​ Amended Credit Facility ​ On September 3, 2020, we entered into the Fourth Amended and Restated Credit Agreement with Wells Fargo Bank, N.A., as administrative agent and certain banks (the “Fourth Amended Credit Facility”).
Purchase obligations of materials and supplies used in the normal operation of our business represent approximately $16.3 million as of December 31, 2023 and all are cancelable by us upon providing a 30-day notice. ​ Amended Credit Facility ​ On February 1, 2023, the Company entered into the Fifth Amended and Restated Credit Agreement (the “Amended Credit Facility”) with Wells Fargo Bank, N.A., as administrative agent.
As of December 31, 2022, our Total Leverage Ratio and Fixed Charge Coverage Ratio were 0.04:1 and 4.4:1. ​ The interest rate under the Amended Credit Facility is LIBOR plus a margin ranging from 1.00% to 2.00%, or a base rate (as defined in the Amended Credit Facility) plus a margin ranging from 0.00% to 1.00%, or the Prime Rate.
As of December 31, 2023, our Total Leverage Ratio and Fixed Charge Coverage Ratio were 0.04:1 and 46.18:1. ​ The interest rate under the Amended Credit Facility is SOFR (the Secured Overnight Financing Rate) plus a margin ranging from 1.00% to 1.50%, or a base rate (as defined in the Amended Credit Facility) plus a margin ranging from 0.00% to 0.50%.
Reno remains a healthy local-oriented market, but at the same time a very competitive market. The market’s employment growth is broad based and we expect this positive indicator will support the continued strength of our business at Atlantis.
Reno remains a healthy local-oriented market, but at the same time a very competitive market. The market’s employment growth is broad based and we expect this positive indicator will support the continued strength of our business at Atlantis. At the same time, the tight employment environment has created labor challenges, including wage inflation, which we are actively managing.
Net cash used in investing activities during the years ended December 31, 2022 and 2021 consisted primarily of cash used for the transformation of part of the legacy building at Monarch Casino Black Hawk, for renovation projects at Atlantis, and for the acquisition of gaming and other equipment at both properties. ​ Financing Activities ​ Net cash used in financing activities of $86.5 million in 2022 represented $83.0 million principal payments under the Amended Credit Facility and $6.5 million used for the for repurchase of company common stock under the Repurchase Plan, offset by $3.0 million of proceeds from stock options exercise, net of payroll taxes from net exercises.
Net cash used in investing activities during the years ended December 31, 2023 and 2022 consisted primarily of cash used for renovation projects at Atlantis, and for the acquisition of gaming and other equipment at both properties. ​ Financing Activities ​ Net cash used in financing activities of $117.2 million in 2023 represented $112.8 million used for payment of dividends, $5.0 million used for the repurchase of Company common stock under the Repurchase Plan and $1.5 million principal payments under the Amended Credit Facility, offset by $2.1 million of proceeds from stock options exercise, net of payroll taxes from net exercises.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA, Notes to Consolidated Financial Statements, Note 13. ​ We believe that the expected cash flows from operating activities and the $69.4 million available under our Amended Credit Facility as of December 31, 2022 will be sufficient to support our current operations, meet our debt obligations and fulfill our capital expenditure plans for the twelve months from the filing of Form 10-K for the year ended December 31, 2022; however, we are surrounded by uncertainty about financial, economic, competitive, regulatory, and other factors, many of which are beyond our control.
As of December 31, 2023, the interest rate was 8.50%, or SOFR plus a 1.00% margin. ​ We believe that the expected cash flows from operating activities and the $93.9 million available under our Amended Credit Facility as of December 31, 2023 will be sufficient to support our current operations, meet our debt obligations and fulfill our capital expenditure plans for the twelve months from the filing of Form 10-K for the year ended December 31, 2023; however, we are surrounded by uncertainty about financial, economic, competitive, regulatory, and other factors, many of which are beyond our control.
Casino operating expense as a percentage of casino revenue increased to 35.1% for the year ended December 31, 2022, compared to 32.2% in 2021, primarily due to an increase in labor costs and an increase in promotional expenses at Monarch Black Hawk . ​ Food and beverage revenue increased 28.6% in the year ended December 31, 2022 over the same period in 2021, due to a 17.4% increase in covers, combined with a 9.5% increase in average revenue per cover.
Casino operating expense as a percentage of casino revenue increased to 36.4% for the year ended December 31, 2023, compared to 35.1% in 2022, primarily due to increases in labor and slots participation expenses, as well as an increase in promotional allowances at both properties . ​ Food and beverage revenue increased 8.1% in the year ended December 31, 2023 over the same period in 2022, due to a 5.6% increase in average revenue per cover combined with a 2.4% increase in covers.
These expenses are included in Other operating items, net in the Consolidated Statement of Operations. ​ During the year ended December 31, 2022, we decreased the outstanding principal balance under our Amended Credit Facility by $83 million to $7 million as of December 31, 2022. During 2022 and 2021, we expensed $2.4 million and $4.5 million, respectively, in interest.
These expenses are included in Other operating items, net in the Consolidated Statements of Operations. ​ During the year ended December 31, 2023, we decreased the outstanding principal balance under our Amended Credit Facility by $1.5 million to $5.5 million as of December 31, 2023.
As a percentage of net revenue, SG&A expense decreased to 20.4% in 2022 from 21.4% in 2021. ​ Depreciation and amortization expense increased to $43.4 million for the year ended December 31, 2022, as compared to $38.4 million for the same period in 2021 primarily due to the addition of assets related to opening of the sportsbook and new restaurant and bar at Monarch Black Hawk, and hotel rooms and retail space renovations at Atlantis. ​ During the year ended December 31, 2022, we recognized $7.3 million in construction litigation expense related to the lawsuit filed by the Monarch Black Hawk Expansion construction project general contractor against the Company and our countersuit against the general contractor, offset by $0.1 million gain on disposal of assets and $0.1 million litigation proceeds.
As a percentage of net revenue, SG&A expense increased to 21.1% in 2023 from 20.4% in 2022. ​ Depreciation and amortization expense increased to $47.3 million for the year ended December 31, 2023, as compared to $43.4 million for the same period in 2022 primarily due to the addition of assets related to the redesign and upgrade of the hotel rooms at Atlantis and the Oyster and Sushi Bar Restaurant located on the Sky Terrace at Atlantis. ​ During the year ended December 31, 2023, we recognized $6.9 million in construction litigation expense related to the lawsuit filed by the Monarch Black Hawk Expansion construction project general contractor against the Company and our countersuit against the general contractor and $0.2 million in loss on disposal of assets, offset by $1.2 million net proceeds from a sale of a COVID closure related insurance claim.
See further discussion of our Amended Credit Facility in the LIQUIDITY AND CAPITAL RESOURCES section below. ​ 40 Table of Contents Comparison of Operating Results for the Years Ended December 31, 2021 and 2020 ​ Refer to ITEM 7.
During 2023 and 2022, we recognized $1.6 million and $2.4 million, respectively, in interest expense, net of interest income. See further discussion of our Amended Credit Facility in the LIQUIDITY AND CAPITAL RESOURCES section below. ​ 40 Table of Contents Comparison of Operating Results for the Years Ended December 31, 2022 and 2021 ​ Refer to ITEM 7.
During the year ended December 31, 2021, we recognized $5.1 million in construction litigation expense related to the lawsuit filed by the Monarch Black Hawk Expansion construction project general contractor against the Company and our countersuit against the general contractor, $0.1 million in equipment, supplies and employee testing expenses directly attributable to the pandemic for reopening of the properties and incremental to normal operations; and $0.1 million loss on disposal of assets, offset by $0.3 million of litigation proceeds and $0.1 million of insurance claims proceeds.
During the year ended December 31, 2022, we recognized $7.3 million in construction litigation expense related to the lawsuit filed by the Monarch Black Hawk Expansion construction project general contractor against the Company and our countersuit against the general contractor, offset by $0.1 million of gain on disposed assets and $0.1 million of insurance claims proceeds.
RevPAR was $153.44 in 2022 and $119.03 for the 2021. Hotel operating expense as a percent of the hotel revenue for the year ended December 31, 2022 was 35.8% compared to 40.7% for the same period in 2021.
RevPAR was $159.20 in 2023 and $153.44 in 2022. Hotel operating expense as a percent of the hotel revenue for the year ended December 31, 2023 was 37.2% compared to 35.8% for the same period in 2022. The decrease in the hotel expense margin was primarily due to the decrease in ADR.
Additionally, net win is reduced by the performance obligations for the players’ club program, progressive jackpots and any pre-arranged marker discounts. The players club performance obligations result in recognition of deferred revenue at the standalone selling prices (“SSP”) of the goods and services that the points are expected to be redeemed for.
The players club performance obligations result in recognition of deferred revenue at the standalone selling prices (“SSP”) of the goods and services that the points are expected to be redeemed for.
The decrease in the hotel expense margin was primarily due to the increase in ADR and RevPAR. ​ Other revenue increased 13.7% in 2022 compared to 2021 driven by increase in spa revenue and commission revenues, partially offset by a decline in retail revenue and arcade revenue. ​ SG&A Expense increased to $97.6 million in the year ended December 31, 2022 from $84.4 million in the same period of 2021 due to: i) a $7.2 million increase in salaries, wages and related employee benefits expense; ii) a $2.4 million increase in utility expense; iii) a $1.0 million increase in advertising and promotional expenses; iv) a $0.6 million increase in insurance expense; v) a $0.5 million increase in employee relations; vi) a $0.5 million increase in repairs and maintenance expense; and vii) a $1.0 million increase in other expenses.
The group and convention business is still below the pre-pandemic level. ​ Other revenue increased 14.9% in 2023 compared to 2022 driven primarily by increases in spa and retail revenues, partially offset by a decline in arcade revenue. ​ SG&A expense increased to $105.8 million in the year ended December 31, 2023 from $97.6 million in the same period of 2022 due to: i) a $3.8 million increase in salaries, wages and related employee benefits expense; ii) a $1.1 million increase in property taxes; iii) a $1.1 million increase in utility expense; iv) a $1.1 million increase in repairs and maintenance expense; v) a $0.5 million increase in insurance expense; and vi) a $0.6 million increase in other expenses.
Food and beverage operating expense as a percentage of food and beverage revenue decreased as a result of cost efficiency and an increase in average revenue per cover. ​ Hotel revenue increased 30.9% in the year ended December 31, 2022 over the same period in 2021 due to a higher hotel occupancy of 79.9% in 2022 compared to 76.7% in 2021 and higher ADR of $175.07 for the year ended December 31, 2022, compared to $141.17 for the year ended December 31, 2021.
Food and beverage operating expense as a percentage of food and beverage revenue decreased as a result of cost efficiency and an increase in average revenue per cover as we were actively aligning menu prices with the food and labor costs. ​ Hotel revenue decreased 0.3% in the year ended December 31, 2023 over the same period in 2022 due to a decrease in ADR from $175.07 for the year ended December 31, 2022 to $172.56 for the year ended December 31, 2023, offset by higher hotel occupancy of 84.5% in 2023 compared to 79.9% in 2022.
In 2021, we added a poker room, a keno counter, a sportsbook, sports lounge and bar, as well as additional slot machines in the legacy facility. In February 2022, we completed the Monarch Black Hawk expansion with the opening of a new specialty restaurant.
In May 2021, we opened our new poker room and in mid-December 2021 we opened our new sportsbook, lounge and bar and additional casino space at the legacy part of the building. In February 2022, we completed the Monarch Black Hawk expansion with the opening of a new specialty restaurant.
Net cash used in financing activities of $85.1 million in 2021 represented $92.5 million principal payments under the credit facility, offset by $7.4 million of proceeds from stock options exercise, net of payroll taxes from net exercises.
Net cash used in financing activities of $86.5 million in 2022 represented $83.0 million principal payments under the Amended Credit Facility and $6.5 million used for the for repurchase of Company common stock under the Repurchase Plan, offset by $3.0 million of proceeds from stock options exercise, net of payroll taxes from net exercises.
Because of the tentative and preliminary nature of such proposed standards, we have not yet determined the effect, if any, the implementation of any such proposed or revised standards would have on the Company’s Consolidated Financial Statements. ​ Reference Rate Reform: In March 2020, the FASB issued temporary accounting guidance to ease the accounting effects of reform to the London Interbank Offered Rate (“LIBOR”) and other reference rates.
Because of the tentative and preliminary nature of such proposed standards, we have not yet determined the effect, if any, the implementation of any such proposed or revised standards would have on the Company’s Consolidated Financial Statements. ​ ​
As of December 31, 2022, we had $25.0 million expected federal tax refund, which is reflected in “Income taxes receivable” on the balance sheet as of December 31, 2022. On January 5, 2023, we received $23.8 million payment from Internal Revenue Service, which included $23.2 million refund and $0.6 million interest income.
On January 5, 2023, we received $23.8 million payment from Internal Revenue Service, which included $23.2 million refund and $0.6 million interest income.
Jackpots, other than the incremental amount of progressive jackpots, are recognized at the time they are won by customers. Funds deposited by customers in advance and outstanding chips and slot tickets in the customers’ possession are recognized as a liability until such amounts are redeemed or used in gaming play by the customer.
Funds deposited by customers in advance and outstanding chips and slot tickets in the customers’ possession are recognized as a liability until such amounts are redeemed or used in gaming play by the customer. Additionally, net win is reduced by the performance obligations for the players’ club program, progressive jackpots and any pre-arranged marker discounts.
With the opening of our expanded casino floor at the beginning of 2021 and the additional casino space at the legacy building in early 2022, we increased the number of slot machines by approximately 300 and table games by 28, compared to the pre-opening of the Monarch Black Hawk expansion active gaming devices.
With the opening of our expanded casino floor at the beginning of 2021 and the additional casino space at the legacy building in early 2022, we increased the number of slot machines by approximately 300 and table games by 28, compared to the pre-opening of the Monarch Black Hawk expansion active gaming devices. ​ Comparison of Operating Results for the Years Ended December 31, 2023 and 2022 ​ For 2023, our net income totaled $82.4 million, or $4.20 per diluted share, compared to net income of $87.5 million, or $4.47 per diluted share for the same period of 2022, reflecting a 5.8% decrease in net income and 6.0% decrease in diluted EPS (“Earnings Per Share”).
Net revenue for the years ended December 31, 2022 and 2021 were $477.9 million and $395.4 million, respectively, reflecting an increase of $82.5 million, or 20.9%.
Net revenue for the years ended December 31, 2023 and 2022 were $501.5 million and $477.9 million, respectively, reflecting an increase of $23.6 million, or 4.9%. ​ 39 Table of Contents Casino revenue increased 4.3% in the year ended December 31, 2023, compared to the same period of 2022.
Monarch Black Hawk also is experiencing labor challenges, resulting from the distance to the staffing filter markets of Golden, Colorado and the Denver Metro area and low unemployment at those markets. We continue to attract high value players from across Colorado’s Front Range, who had previously traveled to other markets, such as Las Vegas, for a high-end casino entertainment experience.
Monarch Black Hawk also is experiencing labor challenges, resulting from the distance to the staffing filter markets of Golden, Colorado and the Denver Metro area and low unemployment at those markets.
The Amended Credit Facility consists of: a $200 million Term Loan Facility and a $70 million Revolving Credit Facility, together with an option to increase the facility by up to an additional $75 million Revolving Credit Facility. ​ We are required to make quarterly principal payments under the Term Loan Facility on each Term Loan Installment Date, commencing on December 31, 2020, in an amount equal to (x) the percentage set forth opposite the applicable period during which such Term Loan Installment Date occurs (i.e., 1.25% for the period from December 31, 2020 to September 30, 2021, and 2.50% for the period from December 31, 2021 and thereafter) multiplied by (y) $200 million. ​ 42 Table of Contents As of December 31, 2022, we had an outstanding principal balance of $7 million under the Term Loan Facility, a $0.6 million letter of credit and no borrowings under the Revolving Credit Facility; $69.4 million remained available for borrowing. ​ Borrowings under the Amended Credit Facility are secured by liens on substantially all of the Company’s real and personal property. ​ In addition to other customary covenants for a facility of this nature, as of December 31, 2022, we are required to maintain a Total Leverage Ratio (as defined in the Amended Credit Facility) of no more than 4.0:1 and Fixed Charge Coverage Ratio (as defined in the Amended Credit Facility) of at least 1.15:1.
The Amended Credit Facility provides for a $100 million line of credit which matures on January 1, 2025. ​ As of December 31, 2023, the Company had an outstanding principal balance of $5.5 million under the Amended Credit Facility, a $0.6 million letter of credit and $93.9 million remained available for borrowing. ​ Borrowings under the Amended Credit Facility are secured by liens on substantially all of the Company’s real and personal property. ​ In addition to other customary covenants for a facility of this nature, as of December 31, 2023, we are required to maintain a Total Leverage Ratio (as defined in the Amended Credit Facility) of no more than 4.0:1 and Fixed Charge Coverage Ratio (as defined in the Amended Credit Facility) of at least 1.15:1.
The new hotel, including a spa and pool on the top floor, were fully opened to the public in the first quarter of 2021. In May, 2021, we opened our new poker room and in mid-December we opened our new sportsbook, lounge and bar and additional casino space at the legacy part of the building.
The opening began in the fourth quarter of 2020. The new hotel, including a spa and pool on the top floor, were fully opened to the public in the first quarter of 2021.
This increase was primarily due to: i) a $19.0 million increase in Net income; ii) a $5.6 million increase in depreciation and amortization, including amortization of deferred loan costs; iii) a $1.0 million increase in stock-based compensation expense; offset by iv) a $3.1 million decrease in change in deferred tax; v) a $0.2 million variance in gain/loss on disposition of assets; and vi) a $10.6 million change in working capital. ​ Investing Activities ​ Net cash used in investing activities totaled $48.0 million and $37.8 million in the years ended December 31, 2022 and 2021, respectively.
This increase was primarily due to a $23.8 million federal income tax refund received from IRS, and a $14.4 million change in working capital, of which $12.8 million is from an increase in accounts payable, primarily construction payable, offset by $5.0 million decrease in net income. ​ Investing Activities ​ Net cash used in investing activities totaled $51.2 million and $48.0 million in the years ended December 31, 2023 and 2022, respectively.
The book value of receivables approximates fair value due to the short-term nature of the receivables. ​ Casino Revenues Casino revenues represent the net win from gaming activity, which is the difference between the amounts won and lost, which represents the transaction price.
Intercompany balances and transactions are eliminated. ​ Casino Revenues Casino revenues represent the net win from gaming activity, which is the difference between the amounts won and lost, which represents the transaction price. Jackpots, other than the incremental amount of progressive jackpots, are recognized at the time they are won by customers.
LIQUIDITY AND CAPITAL RESOURCES ​ Our principal sources of liquidity are cash provided by operations and, for capital expansion projects, borrowings available under our Amended Credit Facility. ​ 41 Table of Contents Operating Activities ​ For the year ended December 31, 2022, net cash provided by operating activities totaled $139.8 million, an increase of $11.7 million, or 9.1%, compared to the same period of the prior year.
Capital expenditures during the years ended December 31, 2023 and 2022 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 Atlantis ​ $ 43,634 ​ $ 32,058 ​ Monarch Black Hawk ​ 7,762 ​ 16,353 ​ ​ ​ $ 51,396 ​ $ 48,411 ​ ​ During the years ended December 31, 2023 and 2022, capital expenditures related primarily to the major redesign and upgrade of all hotel rooms in the first and second towers and complete renovation of the high-end suites on the top floors of the third hotel tower at Atlantis, the redesign and upgrade of the Oyster and Sushi Bar Restaurant located in the Sky Terrace at Atlantis and the acquisition of gaming equipment at both of our properties. ​ LIQUIDITY AND CAPITAL RESOURCES ​ Our principal sources of liquidity are cash provided by operations and, for capital expansion projects, borrowings available under our Amended Credit Facility. ​ Operating Activities ​ For the year ended December 31, 2023, net cash provided by operating activities totaled $173.0 million, an increase of $33.3 million, or 23.8%, compared to the same period of the prior year.
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At the same time, the tight employment environment, with the local unemployment rate below the national average, has created labor challenges, including wage inflation, which we continue to actively manage. We expect this to be a recurring trend for the market and Atlantis in the years ahead.
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In addition, we are facing additional competition from the continued growth of California tribal gaming and an extremely competitive promotional environment in Northern Nevada.
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Monarch Black Hawk operations continue to ramp up. ​ Comparison of Operating Results for the Years Ended December 31, 2022 and 2021 ​ For 2022, our net income totaled $87.5 million, or $4.47 per diluted share, compared to net income of $68.5 million, or $3.53 per diluted share for the same period of 2021, reflecting a 27.7% increase in net income and 26.6% increase in diluted earnings per share.
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We continue to attract high value players from across Colorado’s Front Range, who had previously tended to travel to other markets, such as Las Vegas, for a high-end casino entertainment experience.
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Net income and diluted earnings per share for the years ended December 31, 2022 and 2021, were impacted by the $7.3 million and $5.1 million, respectively, of legal and consulting costs, related to the ongoing litigation with Monarch Black Hawk general contractor.
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Net income and diluted EPS for the years ended December 31, 2023 and 2022, were impacted by: i) the effective tax rate (24.0% in 2023 and 19.8% in 2022), which varied primarily based on the amount of the excess tax benefit on stock compensation and drove a $4.8 million and $0.24 decrease in net income and diluted EPS, respectively; and ii) higher depreciation expense in 2023 compared to 2022, which drove $3.9 million and $0.19 decrease in net income and diluted EPS, respectively.
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Income from operations for the year ended December 31, 2022 totaled $111.4 million compared to $89.9 million for the same period in 2021, representing an increase of $21.6 million, or 24.0%. ​ 39 Table of Contents Casino revenue increased 16.0% in the year ended December 31, 2022, compared to the same period of 2021 and was driven primarily by the ongoing ramp up of the expanded gaming operation at Monarch Black Hawk.
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The applicable margins will vary depending on the Company’s leverage ratio. In addition, SOFR-based loans will incur a 0.10% credit adjustment spread due to the conversion from LIBOR to SOFR as the new benchmark rate.
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Capital expenditures during the years ended December 31, 2022 and 2021 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Atlantis ​ $ 32,058 ​ $ 16,075 ​ Monarch Black Hawk ​ 16,353 ​ 21,733 ​ ​ ​ $ 48,411 ​ $ 37,808 ​ ​ During the years ended December 31, 2022 and 2021, capital expenditures related primarily to the transformation of part of the Monarch Black Hawk legacy building into a new specialty restaurant, sportsbook lounge and bar, and additional casino space, the redesign and upgrade of the first hotel tower and the suites on the top floors of the concierge hotel tower at Atlantis, the redesign and upgrade of the retail space at Atlantis, as well as the acquisition of gaming and other equipment at both properties. ​ Monarch Black Hawk Expansion Plan ​ In 2013, we began work to convert the Monarch Black Hawk into a full-scale casino resort spa.
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The multi-phased expansion of the Monarch Casino Resort Spa Black Hawk involved construction of a new parking structure, demolition of the existing parking structure, construction of a new hotel tower and casino expansion and redesign and upgrade of a portion of the legacy facility. ​ In November 2016, the new nine-story parking structure, offering approximately 1,350 parking spaces, was completed and became available for use by Monarch Black Hawk guests.
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The demolition and removal of the old parking structure, which included a controlled implosion of the old garage, was completed in the first quarter of 2017. ​ On February 8, 2017, we broke ground on the hotel tower and casino expansion. ​ In the fourth quarter of 2020, we began the phased opening of our new hotel tower and casino expansion, which increased the casino space and added a 23-story hotel tower with 516 guest rooms and suites, banquet and meeting room space, a retail store, a concierge lounge, an upscale spa and pool facility located on the top floor of the tower, three new restaurants, and additional bars and lounges.
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We are confident that the quality of our expanded product and exceptional guest service will meet the demand of the high-end segment of the market and will derive accelerated market share and revenue growth.
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We expect to receive the rest of the refund in next few quarters.
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On April 30, 2021, the Company entered into an amendment to the Fourth Amended Credit Facility (collectively, with all prior amendments, the “Amended Credit Facility”). ​ The maturity date of the Amended Credit Facility is September 3, 2023.
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The applicable margins vary depending on Company’s leverage ratio.
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Commitment fees are equal to the daily average unused revolving commitment multiplied by the commitment fee percentage, ranging from 0.175% to 0.325%, based on our leverage ratio. ​ At December 31, 2022, our interest rate was based on LIBOR and our leverage ratio was such that pricing for borrowings under the Amended Credit Facility was LIBOR plus 1.0%.
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On December 31, 2022, the Term Loan Facility interest rate was 5.39%, computed as LIBOR of 4.39% plus interest margin of 1.0%. ​ On the terms and subject to some conditions, the Company may, at any time before the Maturity Date, request an increase of the Revolving Credit Facility, provided that each such increase is equal to $15.0 million or an integral multiple of $1.0 million in excess and, after giving effect to the requested increase, the aggregate amount of the increases in the total revolving loan commitment shall not exceed $75.0 million. ​ We may prepay borrowings under the Amended Credit Facility revolving loan without penalty (subject to certain conditions and certain charges applicable to the prepayment of LIBOR borrowings prior to the end of the applicable interest period).
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Once reduced or cancelled, the Revolving Credit Facility may not be increased or reinstated without the prior written consent of all lenders.
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During the twelve months ended December 31, 2022, the Company made $63.0 million in optional prepayments on its Term Loan Facility in addition to $20 million in mandatory payments. ​ As of December 31, 2021, $6.7 million, representing $7.0 million outstanding loan amount under the Amended Credit Facility, net of $0.3 million unamortized debt issuance costs, is presented in the Current liabilities section of the Company’s consolidated balance sheet as “Current maturities of long-term debt”.
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On January 31, 2023, the Company repaid the remaining $7.0 million outstanding under the Term Loan Facility. ​ On February 1, 2023, the Company entered into the Fifth Amended Credit Facility with Wells Fargo Bank, N.A., which amended and restated the Amended Credit Facility. For further discussion, see Item 8.
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Intercompany balances and transactions are eliminated. ​ Allowance for Doubtful Accounts ​ We extend short-term credit to our gaming customers. Such credit is non-interest bearing and is due on demand.
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In addition, we also have receivables due from hotel guests and convention groups and events, which are primarily secured with a credit card at the time a customer makes a reservation or checks in.
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An allowance for doubtful accounts is established for all of our receivables based upon our historical collection and write-off experience, and taking into consideration the current economic and business conditions and management’s expectations of future economic and business conditions. The allowance is applied even when the risk of credit loss is remote.
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When a situation warrants, the Company may create a specific identification reserve for a high collection risk receivable. We write off our uncollectible receivables once all efforts have been made to collect such receivables.
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The guidance contains optional expedients and exceptions that apply to accounting for contract modifications, hedging relationships, and other transactions affected by reference rate reform.
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The guidance was effective for all entities as of March 12, 2020 through December 31, 2022, and may be applied from the beginning of an interim period or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020.
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In the first quarter of 2022, the FASB voted to extend the transition date under ASC 848 from December 31, 2022, to December 31, 2024. The Company does not expect the adoption to have a material impact on its Consolidated Financial Statements. ​

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+1 added−1 removed0 unchanged
Biggest changeA hypothetical 1% increase in the interest rate on the balance outstanding under the Amended Credit Facility on December 31, 2022 would result in an increase in our annual interest cost of approximately $0.1 million. ​ We do not have any cash or cash equivalents as of December 31, 2022 which are subject to market risk. ​ 45 Table of Contents
Biggest changeAs of December 31, 2023, we had $5.5 million of outstanding debt under our Amended Credit Facility which bears interest at variable rates. A hypothetical 2% increase in the interest rate on the balance outstanding under the Amended Credit Facility on December 31, 2023 would result in an increase in our annual interest cost of approximately $0.1 million.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ​ Market risk is the risk of loss arising from adverse changes in interest rates, foreign currency exchange rates and commodity prices. Our current primary market risk exposure is interest rate risk relating to the impact of interest rate movements under our Amended Credit Facility.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ​ Market risk is the risk of loss arising from adverse changes in interest rates, foreign currency exchange rates and commodity prices. Our current primary market risk exposure is interest rate risk relating to the short-term floating interest rates on borrowings under our Amended Credit Facility.
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As of December 31, 2022, we had $7 million of outstanding debt under our Amended Credit Facility which bears interest at variable rates.
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As of December 31, 2023, we have $93.9 million of available borrowing capacity under our Amended Credit Facility. ​ We do not have any cash or cash equivalents as of December 31, 2023 which are subject to market risk. ​ 44 Table of Contents

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