As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 3/01/18  Penn National Gaming Inc          10-K       12/31/17  101:20M                                    Toppan Merrill Bridge/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                       HTML   2.15M 
 2: EX-21.1     Subsidiaries List                                   HTML     54K 
 3: EX-23.1     Consent of Experts or Counsel                       HTML     33K 
 4: EX-23.2     Consent of Experts or Counsel                       HTML     32K 
 5: EX-23.3     Consent of Experts or Counsel                       HTML     32K 
 6: EX-23.4     Consent of Experts or Counsel                       HTML     31K 
11: EX-99.1     Miscellaneous Exhibit                               HTML     68K 
12: EX-99.2     Miscellaneous Exhibit                               HTML    197K 
13: EX-99.3     Miscellaneous Exhibit                               HTML    198K 
 7: EX-31.1     Certification -- §302 - SOA'02                      HTML     39K 
 8: EX-31.2     Certification -- §302 - SOA'02                      HTML     39K 
 9: EX-32.1     Certification -- §906 - SOA'02                      HTML     31K 
10: EX-32.2     Certification -- §906 - SOA'02                      HTML     31K 
20: R1          Document and Entity Information                     HTML     55K 
21: R2          Consolidated Balance Sheets                         HTML    141K 
22: R3          Consolidated Balance Sheets (Parenthetical)         HTML     58K 
23: R4          Consolidated Statements of Operations               HTML    108K 
24: R5          Consolidated Statements of Comprehensive Income     HTML     44K 
                (Loss)                                                           
25: R6          Consolidated Statements of Changes in               HTML     79K 
                Shareholders' Deficit                                            
26: R7          Consolidated Statements of Changes in               HTML     30K 
                Shareholders' Deficit (Parenthetical)                            
27: R8          Consolidated Statements of Cash Flows               HTML    175K 
28: R9          Consolidated Statements of Cash Flows               HTML     42K 
                (Parenthetical)                                                  
29: R10         Business and Basis of Presentation                  HTML     36K 
30: R11         Principles of Consolidation                         HTML     32K 
31: R12         Summary of Significant Accounting Policies          HTML    248K 
32: R13         New Accounting Pronouncements                       HTML     55K 
33: R14         Acquisitions and Other Recent Business Ventures     HTML    157K 
34: R15         Investment In and Advances to Unconsolidated        HTML     87K 
                Affiliates                                                       
35: R16         Property and Equipment                              HTML     84K 
36: R17         Goodwill and Other Intangible Assets                HTML    183K 
37: R18         Long-term Debt                                      HTML    104K 
38: R19         Master Lease Financing Obligation                   HTML     55K 
39: R20         Commitments and Contingencies                       HTML     72K 
40: R21         Income Taxes                                        HTML    298K 
41: R22         Shareholders' Equity                                HTML     47K 
42: R23         Stock-Based Compensation                            HTML    151K 
43: R24         Segment Information                                 HTML    230K 
44: R25         Summarized Quarterly Data (Unaudited)               HTML    122K 
45: R26         Related Party Transactions                          HTML     33K 
46: R27         Fair Value Measurements                             HTML    271K 
47: R28         Summary of Significant Accounting Policies          HTML    304K 
                (Policies)                                                       
48: R29         Summary of Significant Accounting Policies          HTML    180K 
                (Tables)                                                         
49: R30         Acquisitions and Other Recent Business Ventures     HTML    119K 
                (Tables)                                                         
50: R31         Investment In and Advances to Unconsolidated        HTML     74K 
                Affiliates (Tables)                                              
51: R32         Property and Equipment (Tables)                     HTML     81K 
52: R33         Goodwill and Other Intangible Assets (Tables)       HTML    178K 
53: R34         Long-term Debt (Tables)                             HTML     85K 
54: R35         Master Lease Financing Obligation (Tables)          HTML     51K 
55: R36         Commitments and Contingencies (Tables)              HTML     42K 
56: R37         Income Taxes (Tables)                               HTML    275K 
57: R38         Stock-Based Compensation (Tables)                   HTML    134K 
58: R39         Segment Information (Tables)                        HTML    225K 
59: R40         Summarized Quarterly Data (Unaudited) (Tables)      HTML    112K 
60: R41         Fair Value Measurements (Tables)                    HTML    266K 
61: R42         Business and Basis of Presentation (Details)        HTML     35K 
62: R43         Summary of Significant Accounting Policies -        HTML     49K 
                Concentration of Risk (Details)                                  
63: R44         Summary of Significant Accounting Policies -        HTML     48K 
                Finite-lived and Indefinite-lived Assets (Details)               
64: R45         Summary of Significant Accounting Policies -        HTML     31K 
                Failed Spin-Off-Leaseback Financing Obligation                   
                (Details)                                                        
65: R46         Summary of Significant Accounting Policies          HTML     49K 
                -Revenue Recognition, Player Loyalty Programs, and               
                Gaming and Racing Taxes (Details)                                
66: R47         Summary of Significant Accounting Policies -        HTML     67K 
                Payments Related to Master Lease (Details)                       
67: R48         Summary of Significant Accounting Policies -        HTML     94K 
                Earnings Per Share (Details)                                     
68: R49         Summary of Significant Accounting Policies -        HTML     43K 
                Stock-Based Compensation (Details)                               
69: R50         Summary of Significant Accounting Policies -        HTML     65K 
                Segment Information (Details)                                    
70: R51         New Accounting Pronouncements (Details)             HTML     60K 
71: R52         Acquisitions and Other Recent Business Ventures -   HTML     58K 
                Pinnacle Acquisition (Details)                                   
72: R53         Acquisitions and Other Recent Business Ventures -   HTML    299K 
                Acquisitions (Details)                                           
73: R54         Acquisitions and Other Recent Business Ventures -   HTML     58K 
                Jamul Indian Village (Details)                                   
74: R55         Acquisitions and Other Recent Business Ventures -   HTML     46K 
                Jamul Tribe Credit Facilities (Details)                          
75: R56         Acquisitions and Other Recent Business Ventures -   HTML    101K 
                Financing Extended to Jamul Tribe (Details)                      
76: R57         Acquisitions and Other Recent Business Ventures -   HTML     47K 
                Plainridge Racecourse Acquisition (Details)                      
77: R58         Investment In and Advances to Unconsolidated        HTML     84K 
                Affiliates (Details)                                             
78: R59         Property and Equipment (Details)                    HTML     68K 
79: R60         Goodwill and Other Intangible Assets (Details)      HTML    178K 
80: R61         Long-term Debt - Debt Summary (Details)             HTML     61K 
81: R62         Long-term Debt - Senior Secured Credit Facility     HTML    192K 
                and Senior Notes (Details)                                       
82: R63         Master Lease Financing Obligation (Details)         HTML     43K 
83: R64         Master Lease Financing Obligation - Future Minimum  HTML     59K 
                Payments (Details)                                               
84: R65         Commitments and Contingencies - Capital             HTML     79K 
                Commitments and Purchase Obligations (Details)                   
85: R66         Commitments and Contingencies - Employee Benefit    HTML     89K 
                Plans and Labor Agreements (Details)                             
86: R67         Income Taxes - Tax Cuts and Jobs Act (Details)      HTML     42K 
87: R68         Income Taxes - Deferred Tax Assets and Liabilities  HTML    136K 
                (Details)                                                        
88: R69         Income Taxes - Tax Provision and Reconciliation of  HTML    159K 
                Unrecognized Tax Benefits (Details)                              
89: R70         Income Taxes - Other Income Tax Disclosures         HTML     61K 
                (Details)                                                        
90: R71         Shareholders' Equity (Details)                      HTML    120K 
91: R72         Stock-Based Compensation - Stock-Based              HTML    161K 
                Compensation Plans (Details)                                     
92: R73         Stock-Based Compensation - Stock Options by         HTML     68K 
                Exercise Price Ranges (Details)                                  
93: R74         Stock-Based Compensation - Restricted Stock, PSUs,  HTML     73K 
                and SARs (Details)                                               
94: R75         Segment Information (Details)                       HTML    137K 
95: R76         Summarized Quarterly Data (Unaudited) (Details)     HTML     48K 
96: R77         Summarized Quarterly Data (Unaudited) - Additional  HTML     59K 
                Information (Details)                                            
97: R78         Related Party Transactions (Details)                HTML     33K 
98: R79         Fair Value Measurements (Details)                   HTML    142K 
100: XML         IDEA XML File -- Filing Summary                      XML    175K  
99: EXCEL       IDEA Workbook of Financial Reports                  XLSX    153K 
14: EX-101.INS  XBRL Instance -- penn-20171231                       XML   5.02M 
16: EX-101.CAL  XBRL Calculations -- penn-20171231_cal               XML    307K 
17: EX-101.DEF  XBRL Definitions -- penn-20171231_def                XML   1.35M 
18: EX-101.LAB  XBRL Labels -- penn-20171231_lab                     XML   2.74M 
19: EX-101.PRE  XBRL Presentations -- penn-20171231_pre              XML   1.90M 
15: EX-101.SCH  XBRL Schema -- penn-20171231                         XSD    336K 
101: ZIP         XBRL Zipped Folder -- 0001558370-18-001376-xbrl      Zip    376K  

Exhibit 99.1

 

Description of Governmental Regulations

 

General

 

The ownership, operation, and management of our gaming and racing facilities are subject to significant regulation under the laws and regulations of each of the jurisdictions in which we operate. Gaming laws are generally based upon declarations of public policy designed to protect gaming consumers and the viability and integrity of the gaming industry. Gaming laws also may be designed to protect and maximize state and local revenues derived through taxes and licensing fees imposed on gaming industry participants, as well as to enhance economic development and tourism. To accomplish these public policy goals, gaming laws establish stringent procedures to ensure that participants in the gaming industry meet certain standards of character and fitness. In addition, gaming laws require gaming industry participants to:

 

 

Typically, a state regulatory environment is established by statute and is administered by a regulatory agency with broad discretion to regulate the affairs of owners, managers, and persons with financial interests in gaming operations. Among other things, gaming authorities in the various jurisdictions in which we operate:

 

 

Any change in the laws or regulations of a gaming jurisdiction could have a material adverse effect on our gaming operations.

 

Licensing and Suitability Determinations

 

Gaming laws require us, each of our subsidiaries engaged in gaming operations, certain of our directors, officers and employees, and in some cases, certain of our shareholders and holders of our debt securities, to obtain licenses from gaming authorities. Licenses typically require a determination that the applicant qualifies or is suitable to hold the license. Gaming authorities have broad discretion in determining whether an applicant qualifies for licensing or should be deemed suitable. Criteria used in determining whether to grant or renew a license to conduct gaming operations, while varying between jurisdictions, generally include consideration of factors such as:

 

 

In evaluating individual applicants, gaming authorities consider the individual’s business experience and reputation for good character, the individual’s criminal history and the character of those with whom the individual associates.

 

Many gaming jurisdictions limit the number of licenses granted to operate casinos within the state, and some states limit the number of licenses granted to any one gaming operator. Licenses under gaming laws are generally not transferable without regulatory approval. Licenses in most of the jurisdictions in which we conduct gaming operations are granted for limited durations and require renewal from time to time. There can be no assurance that any of our licenses will be renewed. The failure to renew any of our licenses could have a material adverse effect on our gaming operations.

 

In addition, our Development and Operating Agreement with respect to the operation of Casino Rama was extended in June 2014 on a month-to-month basis with a 60-day notice period for a maximum period of forty-eight months, ending September 30, 2018. The Ontario Lottery and Gaming Corporation (“OLG”) is exploring bids for new operating contracts and privatization plans in Ontario, including at Casino Rama. As a result, we expect our management contract with the OLG to end shortly after June 30, 2018.

 

In addition to us and our direct and indirect subsidiaries engaged in gaming operations, gaming authorities may investigate any individual who has a material relationship to or material involvement with any of these entities to determine whether such individual is suitable or should be licensed. Our officers, directors and certain key employees must file applications with the gaming authorities and may be required to be licensed, qualify or be found suitable in many jurisdictions. Gaming authorities may deny an application for licensing for any cause which they deem reasonable. Qualification and suitability determinations require submission of detailed personal and financial information followed by a thorough investigation. The applicant must pay all the costs of the investigation. Changes in licensed positions must be reported to gaming authorities and in addition to their authority to deny an application for licensure, qualification or a finding of suitability, gaming authorities have jurisdiction to disapprove a change in a corporate position.

 

If one or more gaming authorities were to find that an officer, director or key employee fails to qualify or is unsuitable for licensing or unsuitable to continue having a relationship with us, we would be required to sever all relationships with such person. In addition, gaming authorities may require us to terminate the employment of any person who refuses to file appropriate applications.

 

Moreover, in many jurisdictions, certain of our stockholders or holders of our debt securities may be required to undergo a suitability investigation similar to that described above. Many jurisdictions require any person who acquires beneficial ownership of more than a certain percentage of our voting securities, typically 5%, to report the acquisition to gaming authorities, and gaming authorities may require such holders to apply for qualification or a finding of suitability. Most gaming authorities, however, allow an “institutional investor” to apply for a waiver. An “institutional investor” is generally defined as an investor acquiring and holding voting securities in the ordinary course of business as an institutional investor for passive investment purposes only, and not for the purpose of causing, directly or indirectly, the election of a member of our board of directors, any change in our corporate charter, bylaws, management, policies or operations, or those of any of our gaming affiliates, or the taking of any other action which gaming authorities find to be inconsistent with holding our voting securities for passive investment purposes only. Even if a waiver is granted, an institutional investor generally may not take any action inconsistent with its status when the waiver was granted without once again becoming subject to the foregoing reporting and application obligations.

 

Generally, any person who fails or refuses to apply for a finding of suitability or a license within the prescribed period after being advised that it is required by gaming authorities may be denied a license or found unsuitable, as applicable. Any stockholder found unsuitable or denied a license and who holds, directly or indirectly, any beneficial ownership of our voting securities beyond such period of time, as may be prescribed by the applicable gaming authorities, may be guilty of a criminal offense. Furthermore, we may be 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 or any of our

subsidiaries, we: (i) pay that person any dividend or interest upon our voting securities; (ii) allow that person to exercise, directly or indirectly, any voting right conferred through securities held by that person; (iii) pay remuneration in any form to that person for services rendered or otherwise; or (iv) fail to pursue all lawful efforts to require such unsuitable person to relinquish his voting securities including, if necessary, the immediate purchase of said voting securities for cash at fair market value.

 

The gaming jurisdictions in which we operate also require that suppliers of certain goods and services to gaming industry participants be licensed and require us to purchase and lease gaming equipment, and certain supplies and services only from licensed suppliers.

 

Violations of Gaming Laws

 

If we or our subsidiaries violate applicable gaming laws, our gaming licenses could be limited, conditioned, suspended or revoked by gaming authorities, and we and any other persons involved could be subject to substantial fines. Further, a supervisor or conservator can be appointed by gaming authorities to operate our gaming properties, or in some jurisdictions, take title to our gaming assets in the jurisdiction, and under certain circumstances, earnings generated during such appointment could be forfeited to the applicable state or states. Furthermore, violations of laws in one jurisdiction could result in disciplinary action in other jurisdictions. As a result, violations by us of applicable gaming laws could have a material adverse effect on our gaming operations.

 

Some gaming jurisdictions prohibit certain types of political activity by a gaming licensee, its officers, directors and key people. A violation of such a prohibition may subject the offender to criminal and/or disciplinary action.

 

Reporting and Record-keeping Requirements

 

We are required periodically to submit detailed financial and operating reports and furnish any other information about us and our subsidiaries which gaming authorities may require. Under federal law, we are required to record and submit detailed reports of currency transactions involving greater than $10,000 at our casinos as well as any suspicious activity that may occur at such facilities. We are required to maintain a current stock ledger which may be examined by gaming authorities at any time. If any securities are held in trust by an agent or by a nominee, the record holder may be required to disclose the identity of the beneficial owner to gaming authorities. A failure to make such disclosure may be grounds for finding the record holder unsuitable. Gaming authorities may require certificates for our securities to bear a legend indicating that the securities are subject to specified gaming laws.

 

Review and Approval of Transactions

 

Substantially all material loans, leases, sales of securities and similar financing transactions by us and our subsidiaries must be reported to and in some cases approved by gaming authorities. Neither we nor any of our subsidiaries may make a public offering of securities without the prior approval of certain gaming authorities. Changes in control through merger, consolidation, stock or asset acquisitions, management or consulting agreements, or otherwise are subject to receipt of prior approval of gaming authorities. Entities seeking to acquire control of us or one of our subsidiaries must satisfy gaming authorities with respect to a variety of stringent standards prior to assuming control. Gaming authorities may also require controlling stockholders, officers, directors and other persons having a material relationship or involvement with the entity proposing to acquire control to be investigated and licensed as part of the approval process relating to the transaction.

 

Because of regulatory restrictions, our ability to grant a security interest in any of our gaming assets is limited and subject to receipt of prior approval by certain gaming authorities.

 

License Fees and Gaming Taxes

 

We pay substantial license fees and taxes in many jurisdictions, including some of the counties and cities in which our operations are conducted, in connection with our casino gaming operations, computed in various ways depending on the type of gaming or activity involved. Depending upon the particular fee or tax involved, these fees and taxes are payable with varying frequency. License fees and taxes are based upon such factors as:

 

 

In many jurisdictions, gaming tax rates are graduated, such that they increase as gross gaming revenues increase. Furthermore, tax rates are subject to change, sometimes with little notice, and such changes could have a material adverse effect on our gaming operations.

 

In addition to taxes specifically unique to gaming, we are required to pay all other applicable taxes.

 

Operational Requirements

 

In most jurisdictions, we are subject to certain requirements and restrictions on how we must conduct our gaming operations. In many states, we are required to give preference to local suppliers and include minority and women-owned businesses as well as organized labor in construction projects to the maximum extent practicable as well as in general vendor business activity. Similarly, we may be required to give employment preference to minorities, women and in-state residents in certain jurisdictions.

 

Some gaming jurisdictions also prohibit a distribution, except to allow for the payment of taxes, if the distribution would impair the financial viability of the gaming operation. Moreover, many jurisdictions require a gaming operation to maintain insurance and post bonds in amounts determined by their gaming authority.

 

In addition, our ability to conduct certain types of games, introduce new games or move existing games within our facilities may be restricted or subject to regulatory review and approval. Some of our operations are subject to restrictions on the number of gaming positions we may have and the maximum wagers allowed to be placed by our customers.

 

In Mississippi, for example, we are required to include a 500 car parking facility in close proximity to each casino complex and infrastructure facilities that will amount to at least twenty five percent of the casino cost. This requirement was subsequently increased for any new casinos in Mississippi.

 

Riverboat Casinos

 

In addition to all other regulations generally applicable to the gaming industry, certain of our riverboat casinos are also subject to regulations applicable to vessels operating on navigable waterways, including regulations of the U.S. Coast Guard, or alternative inspection requirements. These requirements set limits on the operation of the vessel, mandate that it must be operated by a minimum complement of licensed personnel, establish periodic inspections, including the physical inspection of the outside hull, and establish other mechanical and operations rules. In addition, the riverboat casinos may be subject to future U.S. Coast Guard regulations, or alternative security procedures, designed to increase homeland security which could affect some of our properties and require significant expenditures to bring such properties into compliance.

 

Racetracks

 

We conduct horse racing operations at our thoroughbred racetracks in Charles Town, West Virginia, Grantville, Pennsylvania, Hobbs, New Mexico, Austintown, Ohio, and at our harness racetracks in Bangor, Maine, Dayton, Ohio and Plainville, Massachusetts. Through a joint venture agreement we have an ownership interest in a harness racetrack in Freehold, New Jersey, along with two off-track wagering facilities and a minority interest in an account wagering operations.  In Texas, we have a joint venture agreement for the operation of a thoroughbred track in Houston and a greyhound racing facility in Harlingen.  We conduct greyhound racing in Seminole County, Florida, at our Sanford Orlando facility. In Pennsylvania, we operate three off-track wagering facilities.  We also conduct telephonic and electronic account wagering operations pursuant to pari-mutuel licensees or approvals issued to us or one of our subsidiaries in Pennsylvania, Oregon and Massachusetts. We currently operate video lottery terminals and table games at the Charles Town, West Virginia racetrack, and operate video lottery terminals at our racetracks in Austintown, Ohio and Dayton, Ohio. We operate slot machines and table games at our Grantville, Pennsylvania racetrack, operate slot machines and table games in Bangor, Maine at a facility located near the racetrack, operate slot machines at our Hobbs,

New Mexico racetrack, and operate slot machines at our Plainville, Massachusetts racetrack. Generally, our slot and table operations at racetracks are regulated in the same manner as our gaming operations in other jurisdictions. In some jurisdictions, our ability to conduct gaming operations may be conditioned on the maintenance of agreements or certain arrangements with horsemen’s or labor groups or meeting minimum live racing requirements.

 

Regulations governing our horse, harness, and greyhound racing operations are, in most jurisdictions, administered separately from the regulations governing gaming operations, with separate licenses and license fee structures. The racing authorities responsible for regulating our racing operations have broad oversight authority, which may include: annually reviewing and granting racing licenses and racing dates; approving the opening and operation of off track wagering facilities; approving simulcasting activities; licensing all officers, directors, racing officials and certain other employees of a racing licensee; and approving certain contracts entered into by a racing licensee affecting racing, pari-mutuel wagering, account wagering and off track wagering operations.

 

Retail Gaming Operations

 

Our subsidiary Illinois Gaming Investors LLC is licensed in Illinois as a Video Gaming Terminal (“VGT”) Operator to install and operate gaming devices in certain non-casino licensed establishments (such as restaurants, bars, taverns).  A VGT Operator may not have any ownership or control with respect to an establishment, and the regulations pertaining to VGT Operators are similar to those generally applicable to the gaming industry in Illinois. 

 

Indian Gaming

 

On October 10, 2016 we began managing Hollywood Casino Jamul – San Diego, pursuant to a management agreement with the Jamul Indian Village (the “Jamul Tribe”) on part of the Jamul Tribe’s trust land in San Diego County, California, which is located approximately 20 miles east of downtown San Diego.

 

The terms and conditions of management contracts and the operation of casinos and gaming on Indian land in the United States are subject to the Indian Gaming Regulatory Act of 1988 (the “IGRA”), which is administered by the National Indian Gaming Commission (the “NIGC”). The IGRA is subject to interpretation by the NIGC and may be subject to judicial and legislative clarification or amendment.   

 

The IGRA requires NIGC approval of management contracts for gaming on Indian lands, as well as the review of all agreements collateral to the management contracts. Management contracts which are not so approved are void. The NIGC approved our management contract with the Jamul Tribe's wholly owned subsidiary, the Jamul Indian Village Development Corporation, on September 30, 2016.    There is no periodic or ongoing review of approved contracts by the NIGC. The only post-approval action that could result in possible modification or cancellation of a contract would be as the result of an enforcement action taken by the NIGC based on a violation of the law or an issue affecting suitability.

 

Indian tribes are sovereign with their own governmental systems that have primary regulatory authority over activities within the tribes’ jurisdiction. Therefore, persons engaged in gaming activities, including the Company, are subject to the provisions of tribal ordinances and regulations. The Jamul Tribe has a Class III gaming ordinance that was approved by the NIGC on July 1, 2013. Tribal gaming ordinances are subject to review by the NIGC under certain circumstances. The NIGC may determine that some or all of the ordinances require amendment, and/or that additional requirements, including additional licensing requirements, may be imposed on us. The possession of valid licenses from the Jamul Tribe is an ongoing condition of our agreement with the Jamul Tribe.

 

Interactive Business

We are subject to various federal, state and international laws and regulations that affect our interactive business, including those relating to the privacy and security of customer and employee personal information and those relating to the Internet, behavioral tracking, mobile applications, advertising and marketing activities, sweepstakes and contests. Additional laws in all of these areas are likely to be passed in the future, which could result in significant limitations on or changes to the ways in which we can collect, use, host, store or transmit the personal information and data of our customers or employees, communicate with our customers, and deliver products and services, or may significantly increase our compliance costs.  As our business expands to include new uses or collection of data that is subject to privacy or security regulations, our compliance requirements and costs will increase and we may be subject to increased regulatory scrutiny. 

Some of our social gaming products and features are based upon traditional casino games, such as slots and table games. Although we do not believe these products and features, including those available at HollywoodCasino.com, constitute gambling, it is possible that additional laws or regulations may be passed in the future that would restrict or impose additional requirements on our social gaming products and features.