UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

FORM 10-Q

(Mark One)



x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2017~~2018



o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 001-37666

____________________________

PINNACLE ENTERTAINMENT, INC.

(Exact name of registrant as specified in its charter)



Delaware		47-4668380
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3980 Howard Hughes Parkway

Las Vegas, NV 89169

(Address of principal executive offices) (Zip Code)

(702) 541-7777

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ox Accelerated filer o Non-accelerated filer xo Smaller reporting company o Emerging growth company o (Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO x

As of the close of business on ~~November~~May 68, ~~2017~~2018, the number of outstanding shares of the registrant’s common stock was 5758,~~452~~494,~~535~~668.

PINNACLE ENTERTAINMENT, INC.

TABLE OF CONTENTS

PART I
Item 1. Financial Statements (Unaudited)	3
Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2017 and 2016	3
Condensed Consolidated Statements of Operations for the Three Months ended March 31, 2018 and 2017	3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months ended September 30, 2017 and 2016	4
Condensed Consolidated Statements of Comprehensive Income for the Three Months ended March 31, 2018 and 2017	4
Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016	5
Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017	5
Condensed Consolidated Statement of Changes in Stockholders’ Deficit for the Nine Months ended September 30, 2017	6
Condensed Consolidated Statement of Changes in Stockholders’ Deficit for the Three Months ended March 31, 2018	6
Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2017 and 2016	7
Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2018 and 2017	7
Notes to Condensed Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2625
Executive Summary	2625
Results of Operations	2827
Liquidity and Capital Resources	3635
Contractual Obligations and Other Commitments	4038
Critical Accounting Estimates	40
Recently Issued Accounting Pronouncements	38
Forward-Looking Statements	40
Critical Accounting Estimates	38
Item 3. Quantitative and Qualitative Disclosures About Market Risk	44
Forward-Looking Statements	38
Item 4. Controls and Procedures	45
Item 3. Quantitative and Qualitative Disclosures About Market Risk	42
Item 4. Controls and Procedures	43
PART II
Item 1. Legal Proceedings	4644
Item 1A. Risk Factors	4644
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 6. Exhibits	44
Item 6. Exhibits	47
Signature Page	45
Signature Page	49
Exhibit 11
Exhibit 31.1
Exhibit 31.2
Exhibit 32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

Table of Contents

PART I

Item 1. Financial Statements

PINNACLE ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(amounts in thousands, except per share data)

	For the three months ended September 30,						For the nine months ended September 30,
	For the three months ended March 31,
	2017			2016			2017			2016
	2018			2017
Revenues:
Gaming	$	~~575~~499,~~290~~263		$	~~530~~574,~~097~~169		$	~~1,731,433~~		$	~~1,556,636~~
Food and beverage	3369,~~608~~667			3233,~~160~~255			~~100,837~~			~~93,901~~
Lodging	1437,~~562~~819			1411,~~490~~987			~~40,024~~			~~38,871~~
Retail, entertainment and other	2321,~~943~~646			1820,~~427~~563			~~68,725~~			~~52,023~~
Total revenues	~~647~~628,~~403~~395			~~595~~639,~~174~~974			~~1,941,019~~			~~1,741,431~~
Expenses and other costs:
Gaming	~~309~~258,~~976~~763			~~288~~313,~~389~~239			~~939,449~~			~~822,181~~
Food and beverage	3162,~~895~~724			31,~~175~~414			~~95,586~~			~~89,267~~
Lodging	614,~~817~~346			6,~~893~~062			~~19,380~~			~~18,676~~
Retail, entertainment and other	1110,~~198~~431			78,~~899~~292			~~31,128~~			~~19,299~~
General and administrative	~~117~~112,~~067~~534			~~108~~112,~~999~~615			~~344,341~~			~~340,867~~
Depreciation and amortization	5450,~~125~~039			5456,~~354~~018			~~166,300~~			~~162,423~~
Pre-opening, development and other costs	~~403~~1,820			~~5,594~~799			~~2,997~~			~~54,951~~
Impairment of goodwill	—			(11,600		)	—			321,300
Write-downs, reserves and recoveries, net	2,401			524
Impairment of other intangible assets	—			—			—			129,500
Total expenses and other costs	513,058			528,963
Write-downs, reserves and recoveries, net	4,192			6,190			12,644			13,830
Operating income	115,337			111,011
Total expenses and other costs	535,673			497,893			1,611,825			1,972,294
Interest expense, net	(92,353		)	(94,108		)
Operating income (loss)	111,730			97,281			329,194			(230,863		)
Income before income taxes	22,984			16,903
Interest expense, net	(95,851		)	(94,276		)	(286,589		)	(239,116		)
Income tax benefit (expense)	(1,190		)	305
Loss on early extinguishment of debt	(516		)	—			(516		)	(5,207		)
Net income	21,794			17,208
Loss from equity method investment	—			—			(90		)	(90		)
Less: net loss attributable to non-controlling interest	149			9
Income (loss) from continuing operations before income taxes	15,363			3,005			41,999			(475,276		)
Net income attributable to Pinnacle Entertainment, Inc.	$	21,943		$	17,217
Income tax benefit (expense)	(1,423		)	(3,537		)	(2,425		)	26,435
Net income per common share:
Income (loss) from continuing operations	13,940			(532		)	39,574			(448,841		)
Basic	$	0.39		$	0.31
Income from discontinued operations, net of income taxes	—			37			—			433
Diluted	$	0.35		$	0.28
Net income (loss)	13,940			(495		)	39,574			(448,408		)
Weighted average common shares outstanding:
Less: Net loss attributable to non-controlling interest	193			9			1,153			24
Basic	56,901			55,977
Net income (loss) attributable to Pinnacle Entertainment, Inc.	$	14,133		$	(486	)	$	40,727		$	(448,384	)
Diluted	62,245			60,884
Net income (loss) per common share—basic
Income (loss) from continuing operations	$	0.25		$	(0.01	)	$	0.72		$	(7.52	)
Income from discontinued operations, net of income taxes	—			0.00			—			0.01
Net income (loss) per common share—basic	$	0.25		$	(0.01	)	$	0.72		$	(7.51	)
Net income (loss) per common share—diluted
Income (loss) from continuing operations	$	0.23		$	(0.01	)	$	0.66		$	(7.52	)
Income from discontinued operations, net of income taxes	—			0.00			—			0.01
Net income (loss) per common share—diluted	$	0.23		$	(0.01	)	$	0.66		$	(7.51	)
Number of shares—basic	56,799			57,004			56,478			59,722
Number of shares—diluted	61,880			57,004			61,738			59,722

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

Table of Contents

PINNACLE ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~

(UNAUDITED)

(amounts in thousands)

	For the three months ended September 30,					For the nine months ended September 30,
	For the three months ended March 31,
	2017		2016			2017		2016
	2018		2017
Net income (loss)	$	13,940	$	(495	)	$	39,574	$	(448,408	)
Net income	$	21,794	$	17,208
Comprehensive income (loss)	13,940		(495		)	39,574		(448,408		)
Comprehensive income	21,794		17,208
Less: Comprehensive loss attributable to non-controlling interest	193		9			1,153		24
Less: comprehensive loss attributable to non-controlling interest	149		9
Comprehensive income (loss) attributable to Pinnacle Entertainment, Inc.	$	14,133	$	(486	)	$	40,727	$	(448,384	)
Comprehensive income attributable to Pinnacle Entertainment, Inc.	$	21,943	$	17,217

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

Table of Contents

PINNACLE ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share data)

	September 30, 2017			December 31, 2016
	March 31, 2018			December 31, 2017
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	~~144~~152,~~374~~416		$	~~185~~184,~~093~~218
Accounts receivable, net of allowance for doubtful accounts of $5,898 and $5,282	40,104			42,997
Accounts receivable, net of allowance for doubtful accounts of $5,869 and $6,167	45,205			53,998
Inventories	10,~~538~~409			910,~~967~~145
Prepaid expenses and other assets	2529,~~654~~687			1721,~~760~~944
Total current assets	~~220~~237,~~670~~717			~~255~~270,~~817~~305
Land, buildings, vessels and equipment, net	2,~~657~~596,~~292~~302			2,~~768~~629,~~491~~013
Goodwill	610,889			610,889
Other intangible assets, net	~~385~~381,~~798~~969			~~392~~383,~~398~~569
Other assets, net	51,649			49,472
Deferred incomes taxes	1,077			1,468
Total assets	$	3,926,298		$	4,077,067
Other assets, net	56,804			54,984
Total assets	$	3,884,758		$	3,950,228
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable	$	3747,~~021~~174		$	6981,~~069~~071
Accrued interest	12,~~382~~538			5,~~286~~401
Accrued compensation	6550,~~609~~073			7274,~~939~~204
Accrued taxes	7148,~~779~~647			5856,~~207~~538
Current portion of long-term debt	10,414			12,258
Current portion of long-term financing obligation	14,319			24,658
Current portion of long-term financing obligation	34,956			49,770
Other accrued liabilities	94,927			89,150
Other accrued liabilities	78,738			91,062
Total current liabilities	267,678			331,022
Total current liabilities	310,899			358,591
Long-term debt less current portion	795,198			812,315
Long-term debt less current portion	814,101			924,442
Long-term financing obligation less current portion	3,086,123			3,088,871
Long-term financing obligation less current portion	3,091,608			3,113,529
Other long-term liabilities	37,213			38,991
Deferred income taxes	15,145			13,242
Total liabilities	4,186,212			4,271,199
Other long-term liabilities	38,308			40,143
Commitments and contingencies (Note 9)
Total liabilities	4,270,061			4,449,947
Commitments and contingencies (Note 8)
Stockholders’ Deficit:
Preferred stock—$0.01 par value, 250,000 shares authorized, none issued or outstanding	—			—
Common stock—$0.01 par value, 150,000,000 authorized, 57,025,771 and 55,812,425 shares issued and outstanding, net of treasury shares	644			620
Common stock—$0.01 par value, 150,000,000 authorized, 58,167,414 and 57,629,392 shares issued and outstanding, net of treasury shares	656			650
Additional paid-in capital	~~931~~933,~~336~~247			~~919~~932,~~974~~246
Accumulated deficit	(1,~~193~~152,~~092~~056		)	(1,~~233~~170,~~819~~715		)
Accumulated other comprehensive income	~~326~~264			~~326~~264
Treasury stock, at cost, 7,347,844 and 6,209,541 of treasury shares	(92,009		)	(70,166		)
Treasury stock, at cost, 7,386,998 and 7,371,080 of treasury shares	(92,511		)	(92,511		)
Total Pinnacle stockholders’ deficit	(~~352~~310,~~795~~400		)	(~~383~~330,~~065~~066		)
Non-controlling interest	98,~~032~~946			109,~~185~~095
Total stockholders’ deficit	(~~343~~301,~~763~~454		)	(~~372~~320,~~880~~971		)
Total liabilities and stockholders’ deficit	$	3,~~926~~884,~~298~~758		$	43,~~077~~950,~~067~~228

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

Table of Contents

PINNACLE ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

(UNAUDITED)

(amounts in thousands)

	Capital Stock
	Number of Shares		Common Stock		Additional Paid-In Capital			AccumulatedDeficit			Accumulated OtherComprehensiveIncome		TreasuryStock			Total Pinnacle Stockholders’ Deficit			Non-Controlling Interest			Total Stockholders’Deficit
Balance as of January 1, 2017	55,812		$	620	$	919,974		$	(1,233,819	)	$	326	$	(70,166	)	$	(383,065	)	$	10,185		$	(372,880	)
Balance as of January 1, 2018	57,629		$	650	$	932,246		$	(1,170,715	)	$	264	$	(92,511	)	$	(330,066	)	$	9,095		$	(320,971	)
Net income (loss)	—		—		—			4021,~~727~~943			—		—			4021,~~727~~943			(~~1,153~~149		)	3921,~~574~~794
Share-based compensation	—		—		103,~~399~~895			—			—		—			103,~~399~~895			—			103,~~399~~895
Common stock issuance and option exercises	~~2,352~~554		246		~~3,593~~389			—			—		—			~~3,617~~395			—			~~3,617~~395
Forfeiture of restricted stock awards	(16	)	—		—			—			—		—			—			—			—
Tax withholding related to vesting of share-based payment awards	(16	)	—		(3,283		)	—			—		—			(3,283		)	—			(3,283		)
Treasury stock purchases	(1,122	)	—		—			—			—		(21,843		)	(21,843		)	—			(21,843		)
Cumulative effect adjustment from new revenue standard	—		—		—			(3,284		)	—		—			(3,284		)	—			(3,284		)
Tax withholding related to vesting of share-based awards	—		—		(2,630		)	—			—		—			(2,630		)	—			(2,630		)
Balance as of March 31, 2018	58,167		$	656	$	933,247		$	(1,152,056	)	$	264	$	(92,511	)	$	(310,400	)	$	8,946		$	(301,454	)
Balance as of September 30, 2017	57,026		$	644	$	931,336		$	(1,193,092	)	$	326	$	(92,009	)	$	(352,795	)	$	9,032		$	(343,763	)

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

Table of Contents

PINNACLE ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(amounts in thousands)

	For the nine months ended September 30,
	For the three months ended March 31,
	2017			2016
	2018			2017
Cash flows from operating activities:
Net income (loss)	$	39,574		$	(448,408	)
Net income	$	21,794		$	17,208
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	~~166~~50,~~300~~039			~~162~~56,~~423~~018
Loss on sales or disposals of long-lived assets, net	7,753			13,092
Loss on disposals of long-lived assets, net	1,809			358
Loss from equity method investment	90			90
Impairment of long-lived assets	17			—
Loss on early extinguishment of debt	516			5,207
Amortization of debt issuance costs and debt discounts/premiums	960			2,009
Impairment of goodwill	—			321,300
Share-based compensation expense	3,895			2,420
Impairment of other intangible assets	—			129,500
Change in income taxes	103			(2,291		)
Impairment of held-to-maturity securities	3,844			—
Impairment of long-lived assets	—			238
Amortization of debt issuance costs and debt discounts/premiums	6,877			5,964
Share-based compensation expense	10,399			32,654
Change in income taxes	(675		)	(37,285		)
Changes in operating assets and liabilities:
Receivables, net	28,~~673~~793			27,~~109~~739
Prepaid expenses and other	(1310,~~422~~162		)	(510,~~303~~603		)
Accounts payable, accrued expenses and other	(3155,~~274~~462		)	(1552,~~942~~639		)
Net cash provided by operating activities	~~192~~21,~~655~~786			~~165~~20,~~639~~219
Cash flows from investing activities:
Capital expenditures	(5618,~~392~~230		)	(7316,~~103~~857		)
Payment for business combination, net of cash acquired	—			(103,365		)
Proceeds from sales of furniture, fixtures and equipment	9			51
Net proceeds from disposition of asset held for sale	—			10,325
Loans receivable	(575		)	(500		)
Proceeds from sales of furniture, fixtures and equipment	86			143
Net cash used in investing activities	(18,796		)	(17,306		)
Loans receivable	(2,000		)	(1,500		)
Restricted cash	603			—
Net cash used in investing activities	(57,703		)	(167,500		)
Cash flows from financing activities:
Proceeds from Senior Secured Credit Facilities	~~471~~201,~~100~~550			~~902~~190,~~900~~000
Repayments under Senior Secured Credit Facilities	(~~589~~219,~~507~~238		)	(~~313~~218,~~963~~382		)
Proceeds from Former Senior Secured Credit Facilities	—			134,500
Repayments under financing obligation	(13,087		)	(11,798		)
Repayments under Former Senior Secured Credit Facilities	—			(1,011,285		)
Proceeds from common stock options exercised	395			1,835
Proceeds from issuance of long-term debt	—			375,000
Tax withholdings on share-based payment awards	(3,283		)	(421		)
Repayments under financing obligation	(36,735		)	(19,238		)
Other	(615		)	(131		)
Proceeds from common stock options exercised	3,617			579
Net cash used in financing activities	(34,278		)	(38,897		)
Purchase of treasury stock	(21,342		)	(60,402		)
Change in cash, cash equivalents and restricted cash	(31,288		)	(35,984		)
Debt issuance costs and debt discount	—			(14,276		)
Cash, cash equivalents and restricted cash at the beginning of the period	187,440			188,911
Other	(2,804		)	(1,192		)
Cash, cash equivalents and restricted cash at the end of the period	$	156,152		$	152,927
Net cash used in financing activities	(175,671		)	(7,377		)
Supplemental cash flow information:
Change in cash and cash equivalents	(40,719		)	(9,238		)
Cash paid for interest, net of amounts capitalized	$	84,429		$	85,493
Cash and cash equivalents at the beginning of the period	185,093			164,034
Cash payments related to income taxes, net	$	593		$	1,971
Cash and cash equivalents at the end of the period	$	144,374		$	154,796
Decrease in construction-related deposits and liabilities	$	(639	)	$	(946	)
Supplemental Cash Flow Information:
Non-cash issuance of common stock	$	6		$	—
Cash paid for interest, net of amounts capitalized	$	272,888		$	240,156
Reconciliation of cash, cash equivalents and restricted cash:
Cash payments related to income taxes, net	$	3,001		$	9,811
Cash and cash equivalents	$	152,416		$	149,243
Increase (decrease) in construction-related deposits and liabilities	$	(313	)	$	656
Restricted cash included in Prepaid expenses and other assets	1,648			1,441
Non-cash issuance of common stock	$	—		$	686
Restricted cash included in Other assets, net	2,088			2,243
Non-cash retirement of debt in connection with Spin-Off and Merger	$	—		$	(2,761,287	)
Total cash, cash equivalents and restricted cash	$	156,152		$	152,927
Non-cash settlement of accrued interest in connection with Spin-Off and Merger	$	—		$	(34,133	)
Non-cash recognition of financing obligation	$	—		$	3,194,287
Non-cash consideration for business combination	$	—		$	4,563

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

Table of Contents

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1—Organization and Summary of Significant Accounting Policies

Organization: Pinnacle Entertainment, Inc. owns and operates 16 gaming, hospitality and entertainment businesses, of which 15 operate in leased facilities. Our owned facility is anlocated ~~owner~~in Ohio and our leased facilities are located in Colorado, ~~operator~~Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada and ~~developer~~Pennsylvania. The leased facilities located outside of ~~casinos~~Pennsylvania are subject to the Master Lease and ~~related~~our ~~hospitality~~leased facility in Pennsylvania is subject to the Meadows Lease (see Note 3, “Master Lease Financing Obligation and ~~entertainment~~Meadows ~~businesses~~Lease” for the definitions and further discussion of the Master Lease and Meadows Lease). References in these footnotes to “Pinnacle,” the “Company,” “we,” “our” or “us” refer to Pinnacle Entertainment, Inc. and its subsidiaries, except where stated or the context otherwise indicates. ~~References to “Former Pinnacle” refer to Pinnacle Entertainment, Inc. prior to the Spin-Off and Merger (as such terms are defined below).~~

We own and operate 16 gaming, hospitality and entertainment businesses, of which 15 operate in leased facilities. Our owned facility is located in Ohio and our leased facilities are located in Colorado, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada and Pennsylvania, subject to either the Master Lease or the Meadows Lease (as such terms are defined below). We view each of our operating businesses as an operating segment with the exception of our two businesses in Jackpot, Nevada, which we view as one operating segment. For financial reporting purposes, we aggregate our operating segments into the following reportable segments:

Midwest segment, which includes:	Location
Ameristar Council Bluffs (1)	Council Bluffs, Iowa
Ameristar East Chicago (1)	East Chicago, Indiana
Ameristar Kansas City (1)	Kansas City, Missouri
Ameristar St. Charles (1)	St. Charles, Missouri
Belterra Resort (1)	Florence, Indiana
Belterra Park	Cincinnati, Ohio
Meadows (2)	Washington, Pennsylvania
River City (1)	St. Louis, Missouri
South segment, which includes:	Location
Ameristar Vicksburg (1)	Vicksburg, Mississippi
Boomtown Bossier City (1)	Bossier City, Louisiana
Boomtown New Orleans (1)	New Orleans, Louisiana
L’Auberge Baton Rouge (1)	Baton Rouge, Louisiana
L’Auberge Lake Charles (1)	Lake Charles, Louisiana
West segment, which includes:	Location
Ameristar Black Hawk (1)	Black Hawk, Colorado
Cactus Petes and Horseshu (1)	Jackpot, Nevada



Midwest segment, which includes:	Location
Ameristar Council Bluffs	Council Bluffs, Iowa
Ameristar East Chicago	East Chicago, Indiana
Ameristar Kansas City	Kansas City, Missouri
Ameristar St. Charles	St. Charles, Missouri
Belterra Resort	Florence, Indiana
Belterra Park	Cincinnati, Ohio
Meadows	Washington, Pennsylvania
River City	St. Louis, Missouri

South segment, which includes:	Location
Ameristar Vicksburg	Vicksburg, Mississippi
Boomtown Bossier City	Bossier City, Louisiana
Boomtown New Orleans	New Orleans, Louisiana
L’Auberge Baton Rouge	Baton Rouge, Louisiana
L’Auberge Lake Charles	Lake Charles, Louisiana

West segment, which includes:	Location
Ameristar Black Hawk	Black Hawk, Colorado
Cactus Petes and Horseshu	Jackpot, Nevada

~~(1)~~On WeDecember 17, ~~lease~~2017, Pinnacle entered into an Agreement and Plan of Merger (the ~~real~~“Penn ~~estate~~National ~~associated~~Merger Agreement”) with ~~these~~Penn ~~gaming~~National ~~facilities~~Gaming, ~~under~~Inc., a Pennsylvania corporation (“Penn National”), and Franchise Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Penn National (“Franchise Merger Sub”), providing for the ~~terms~~merger of Franchise Merger Sub with and into Pinnacle (the ~~Master~~“Proposed ~~Lease~~Company Sale”), with Pinnacle surviving the Proposed Company Sale as a wholly-owned subsidiary of Penn National.

At the effective time of the Proposed Company Sale, each share of Pinnacle common stock, par value $0.01 per share issued and outstanding immediately prior to the effective time (2other than shares held by Penn National and other than dissenting shares) ~~The~~will ~~Meadows~~be ~~Racetrack~~canceled and ~~Casino~~converted automatically into the right to receive (i) $20.00 in cash (plus, if the Proposed Company Sale is not consummated on or prior to October 31, 2018, $0.01 for each day during the period commencing on November 1, 2018 through the effective time of the Proposed Company Sale) (the “~~Meadows~~Cash Consideration”) ~~was~~and ~~acquired~~(ii) on0.42 ~~September~~shares 9,of ~~2016~~common stock, aspar ~~discussed~~value ~~below~~$0.01 Weper ~~lease~~share, of Penn National (the ~~real~~“Penn ~~estate~~National ~~associated~~Common Stock”) (together with ~~this~~the ~~gaming~~Cash ~~facility~~Consideration ~~under~~and ~~the~~cash ~~terms~~required to be paid in lieu of fractional shares of Penn National Common Stock, the ~~Meadows~~“Proposed ~~Lease~~Company Sale Consideration”).

OnIn ~~April~~connection ~~28, 2016, Former Pinnacle completed the transactions under the terms of a definitive agreement (the “Merger Agreement”)~~ with ~~Gaming and Leisure Properties, Inc. (“GLPI”), a real estate investment trust. Pursuant to~~ the ~~terms~~Proposed ofCompany ~~the Merger Agreement~~Sale, ~~Former~~Penn ~~Pinnacle~~National ~~separated~~entered ~~its~~into ~~operating assets and liabilities~~ (~~and its Belterra Park property and excess land at certain locations~~i) ~~into the Company,~~ a ~~newly~~Membership ~~formed~~Interest ~~subsidiary,~~Purchase ~~and distributed to its stockholders~~Agreement, ondated aDecember ~~pro rata basis~~17, ~~all~~2017 ~~of the issued and outstanding shares of common stock of the Company~~ (~~such distribution referred to as~~ the “~~Spin-Off”).~~Membership AsInterest aPurchase result, Former Pinnacle stockholders received one share of the Company’s common stock, with a par value of $0.01 per share, for each share of Former Pinnacle common stock that they owned. Gold Merger Sub, LLC, a wholly owned subsidiary of GLPI (“Merger SubAgreement”), ~~then merged~~ with ~~and~~Boyd ~~into~~Gaming ~~Former~~Corporation Pinnacle (the “Merger”), with Merger Sub surviving the Merger as a wholly owned subsidiary of GLPI. Immediately following the Merger, the Company was renamed Pinnacle Entertainment, Inc., and operates its gaming businesses in the facilities acquired by GLPI under a triple-net master lease agreement (the “Master Lease”). For more information regarding the Spin-Off and Merger, see Note 2, “Spin-Off, Merger, Master Lease Financing Obligation and Meadows Lease.”

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~~Former~~(“Boyd”), which Pinnacle’s ~~historical~~will ~~consolidated~~become ~~financial~~a ~~statements~~party ~~and~~to ~~accompanying~~immediately ~~notes~~prior ~~thereto~~to ~~were~~the ~~determined~~Proposed toCompany ~~represent~~Sale, ~~the~~pursuant ~~Company’s~~to ~~historical~~which ~~consolidated~~a ~~financial~~subsidiary ~~statements~~of ~~based~~Boyd onwill acquire the ~~conclusion~~gaming ~~that~~and related operations of Ameristar St. Charles, ~~for~~Ameristar ~~accounting~~Kansas ~~purposes~~City, ~~the~~Belterra ~~Spin-Off~~Resort ~~was~~and toBelterra bePark, ~~evaluated~~in asconnection with the ~~reverse~~Proposed ofCompany ~~its~~Sale; ~~legal~~and ~~form~~(ii) definitive ~~under~~agreements ~~the~~with ~~requirements~~a subsidiary of ~~Accounting~~Gaming ~~Standards~~and ~~Codification~~Leisure Properties, Inc. (“~~ASC~~GLPI”), ~~Subtopic~~a ~~505-60,~~Pennsylvania ~~Spinoffs~~corporation and ~~Reverse~~real ~~Spinoffs~~estate investment trust, ~~resulting~~which inPinnacle ~~the~~will ~~Company~~become ~~being~~a ~~considered~~party ~~the~~to ~~accounting~~immediately ~~spinnor.~~prior Into ~~addition~~the Proposed Company Sale, ~~the~~pursuant ~~Master~~to ~~Lease~~which ofGLPI’s ~~the~~subsidiary ~~gaming~~will ~~facilities~~acquire ~~acquired~~the byreal ~~GLPI~~estate ~~did~~associated ~~not~~with ~~qualify~~Belterra ~~for~~Park, ~~sale-leaseback~~from ~~accounting~~Pinnacle, ~~pursuant~~and toPlainridge ~~ASC~~Park ~~Topic~~Casino ~~840~~in Plainville, ~~Leases~~Massachusetts, from Penn National. ~~Therefore,~~At the ~~Master~~closing ~~Lease~~of isthe ~~accounted~~transactions ~~for~~contemplated asby athe ~~financing~~Membership ~~obligation~~Interest Purchase Agreement, GLPI and Boyd will enter into a master lease agreement for the gaming ~~facilities~~operations ~~remain~~acquired onby ~~the~~Boyd ~~Company~~and Penn National will assume Pinnacle’s ~~unaudited~~existing ~~Condensed~~Master ~~Consolidated~~Lease ~~Financial~~and ~~Statements~~Meadows Lease and enter into certain amendments thereto.

On ~~September~~March 929, ~~2016~~2018, ~~we closed on a purchase agreement (~~the ~~“Purchase~~shareholders ~~Agreement”) with GLP Capital, L.P. (“GLPC”), a subsidiary~~ of ~~GLPI,~~Penn ~~pursuant~~National toand ~~which~~stockholders ~~we acquired all~~ of ~~the~~Pinnacle ~~equity~~approved ~~interests of~~ the ~~Meadows~~Proposed ~~located~~Company ~~in Washington~~Sale, ~~Pennsylvania~~including ~~for base consideration of $138.0 million, subject to certain adjustments. The purchase price, after giving effect to such adjustments was $134.0 million and~~ the ~~cash~~approval ~~paid~~by ~~for~~Penn ~~the~~National ~~Meadows~~shareholders ~~business, net~~ of ~~cash~~the ~~acquired~~issuance ~~was $107.5 million. As a result~~ of ~~the~~Penn ~~transaction, we own and operate the Meadows~~National’s ~~gaming~~common ~~entertainment~~stock ~~and~~in ~~harness~~connection ~~racing business subject to a triple-net lease of its underlying real property~~ with ~~GLPI (~~the ~~“Meadows~~Proposed ~~Lease”).~~Company ~~See~~Sale ~~Note 2, “Spin-Off, Merger, Master Lease Financing Obligation and Meadows Lease,” and Note 7, “Investment and Acquisition Activities~~Consideration.”

~~Basis~~Completion of ~~Presentation: The~~the ~~accompanying~~Proposed ~~unaudited~~Company ~~Condensed~~Sale ~~Consolidated~~is ~~Financial~~subject ~~Statements~~to ~~have~~certain ~~been~~conditions, ~~prepared~~many inof ~~accordance~~which ~~with~~are beyond our control, including, among others: (1) the ~~instructions~~absence of any injunction, restraining order or other orders or laws prohibiting the ~~Securities~~consummation ~~and~~of ~~Exchange~~the ~~Commission~~Proposed Company Sale; (2) the ~~“SEC”)~~expiration or termination of any waiting period applicable to the ~~Quarterly~~Proposed ~~Report~~Company onSale ~~Form~~under 10the Hart-QScott-Rodino ~~and,~~Antitrust ~~therefore,~~Improvement doActs ~~not~~of ~~include~~1976, ~~all~~as ~~information~~amended; ~~and~~(3) ~~notes~~the ~~necessary~~receipt ~~for~~of ~~complete~~the ~~financial~~remaining ~~statements~~required regulatory approvals in ~~conformity~~a ~~with~~timely ~~generally~~manner ~~accepted~~(including ~~accounting~~receipt ~~principles~~of innecessary ~~the~~approvals ~~United~~from ~~States~~gaming regulatory authorities); (~~“GAAP”~~4). ~~The~~the ~~results~~registration ~~for~~of the ~~periods~~shares ~~indicated~~of ~~are~~Penn ~~unaudited,~~National ~~but~~to ~~reflect~~be ~~all~~issued ~~adjustments,~~to ~~which~~stockholders ~~are~~ of aPinnacle; ~~normal~~and ~~recurring~~(5) ~~nature,~~the ~~that~~listing ~~management~~of ~~considers~~the ~~necessary~~shares ~~for~~of aPenn ~~fair~~National ~~presentation~~on ofThe ~~operating~~NASDAQ ~~results~~Stock Market LLC. The ~~results~~obligation of ~~operations~~each ~~for~~party ~~interim~~to ~~periods~~consummate ~~are~~the ~~not~~Proposed ~~indicative~~Company ofSale ais ~~full~~also ~~year~~conditioned ofupon ~~operations.~~the ~~These~~accuracy ~~unaudited~~of ~~Condensed~~the ~~Consolidated~~other ~~Financial~~party’s ~~Statements~~representations and ~~notes~~warranties, ~~thereto~~the ~~should~~absence beof ~~read~~a inmaterial ~~conjunction~~adverse ~~with~~effect involving the ~~Consolidated~~other ~~Financial~~party, ~~Statements~~ and ~~notes~~the ~~thereto~~other ~~included~~party inhaving ~~our~~performed ~~Annual~~in ~~Report~~all onmaterial ~~Form~~respects ~~10-K~~its ~~filed~~obligations ~~with~~under the ~~SEC~~Penn ~~for~~National Merger Agreement. Subject to the ~~fiscal~~satisfaction ~~year~~or ~~ended~~waiver ~~December~~of 31the closing conditions, ~~2016~~the Proposed Company Sale is expected to close in the second half of 2018.

If the Proposed Company Sale is not consummated on or before October 31, 2018, subject to certain limited extensions (including pursuant to Penn National’s election to extend under certain circumstances) provided in the Penn National Merger Agreement, either party may terminate the Penn National Merger Agreement. Consummation of the Proposed Company Sale is not subject to a financing condition.

Basis of Presentation: The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the instructions of the Securities and Exchange Commission (the “SEC”) to the Quarterly Report on Form 10-Q and, therefore, do not include all information and notes necessary for complete financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”). The results for the periods indicated are unaudited, but reflect all adjustments, which are of a normal recurring nature, that management considers necessary for a fair presentation of operating results. The results of operations for interim periods are not indicative of a full year of operations. These unaudited Condensed Consolidated Financial Statements and notes thereto should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2017.

Principles of Consolidation: The unaudited Condensed Consolidated Financial Statements include the accounts of Pinnacle Entertainment, Inc. and its subsidiaries. Investments in the common stock of unconsolidated affiliates in which we have the ability to exercise significant influence are accounted for under the equity method. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates: The preparation of unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and (iii) the reported amounts of revenues and expenses during the reporting period. Estimates used by us include, among other things, the estimated useful lives for depreciable and amortizable assets, the estimated allowance for doubtful accounts receivable, estimated income tax provisions, the evaluation of the future realization of deferred tax assets, determining the adequacy of reserves for self-insured liabilities and our guest loyalty ~~programs~~program, the initial measurement of the financing obligation associated with the Master Lease, estimated cash flows in assessing the recoverability of long-lived assets, asset impairments, goodwill and other intangible assets, contingencies and litigation, and estimates of the forfeiture rate and expected term of share-based payment awards and stock price volatility when computing share-based compensation expense. Actual results may differ from those estimates.

Fair Value: Fair value measurements affect our accounting and impairment assessments of our long-lived assets, investments in unconsolidated affiliates, assets acquired in an acquisition, goodwill, and other intangible assets. Fair value measurements also affect our accounting for certain financial assets and liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and is measured according to a hierarchy that includes: “Level 1” inputs, such as quoted prices in an active market for identical assets or liabilities; “Level 2” inputs, which are observable inputs for similar assets; or “Level 3” inputs, which are unobservable inputs.

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be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and is measured according to a hierarchy that includes: “Level 1” inputs, such as quoted prices in an active market for identical assets or liabilities; “Level 2” inputs, which are observable inputs for similar assets; or “Level 3” inputs, which are unobservable inputs.

The following table presents a summary of fair value measurements by level for certain financial instruments not measured at fair value on a recurring basis in the unaudited Condensed Consolidated Balance Sheets for which it is practicable to estimate fair value:

					Fair Value Measurements Using:
	Total Carrying Amount		Total Fair Value		Level 1		Level 2		Level 3
	(in millions)
As of September 30, 2017
As of March 31, 2018
Assets:
Held-to-maturity securities	$	10.43	$	10.43	$	—	$	7.5	$	2.98
Promissory notes	$	16.9	$	17.2	$	—	$	17.2	$	—
Liabilities:
Long-term debt	$	~~824~~795.52	$	~~843~~822.10	$	—	$	~~843~~822.10	$	—
Other long-term liabilities	$	54.19	$	54.29	$	—	$	54.29	$	—
As of December 31, 2016
As of December 31, 2017
Assets:
Held-to-maturity securities	$	1410.34	$	1610.4	$	—	$	137.45	$	32.09
Promissory notes	$	1516.69	$	1917.82	$	—	$	1917.82	$	—
Liabilities:
Long-term debt	$	~~936~~812.73	$	~~953~~854.2	$	—	$	~~953~~854.2	$	—
Other long-term liabilities	$	5.50	$	5.60	$	—	$	5.60	$	—

The estimated fair values for certain of our long-term held-to-maturity securities and our long-term promissory notes were based ~~primarily~~ on Level 2 inputs using observable market data for comparable instruments in establishing prices. The estimated fair values of certain of our other long-term liabilities were based on Level 2 inputs using a present value of future cash flow valuation technique, which is based on contractually obligated payments and terms.

The estimated fair values for certain of our long-term held-to-maturity securities were based on Level 3 inputs using a present value of future cash flow valuation technique that relies on management assumptions and qualitative observations. Key significant unobservable inputs in this technique include discount rate risk premiums and probability-weighted cash flow scenarios.

The estimated fair values of our long-term debt, ~~which include our 5.625% Notes and Senior Secured Credit Facilities (as such terms are defined in Note 3, “Long-Term Debt”),~~ were based on Level 2 inputs of observable market data on comparable debt instruments on or about ~~September~~March 3031, ~~2017~~2018 and December 31, ~~2016~~2017. See Note 4, as“Long-Term ~~applicable~~Debt.”

~~The~~Cash ~~fair~~and ~~values~~Cash Equivalents: Cash equivalents are highly liquid investments with an original maturity of ~~our~~three ~~short-term~~months ~~financial~~or ~~instruments~~less ~~approximate~~at the ~~carrying~~date ~~amounts~~of ~~due~~purchase, toare ~~their~~stated ~~short-term~~at ~~nature~~the lower of cost or market value, and are valued using Level 1 inputs. Book overdraft balances are included in “Accounts payable” in our unaudited Condensed Consolidated Balance Sheets.

Accounts Receivable: Accounts receivable consist of casino, hotel, automatic teller machines (“ATM”), cash advances and other receivables, which principally arise from contracts with customers. We extend casino credit to approved customers in states where it is permitted following investigations of creditworthiness. Accounts receivable are non-interest bearing and are initially recorded at cost. In order to reduce accounts receivable to their carrying amount, which approximates fair value, we have estimated an allowance for doubtful accounts based upon, among other things, collection experience, customer credit evaluations and the age of the receivables.

Land, Buildings, Vessels and Equipment: Land, buildings, vessels and equipment are stated at cost. We capitalize the costs of improvements that extend the life of the asset. We expense repair and maintenance costs as incurred. Gains or losses on the disposition of land, buildings, vessels and equipment are included in the determination of income.

We review the carrying amounts of our land, buildings, vessels and equipment used in our operations whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable from estimated future undiscounted cash flows expected to result from its use and eventual disposition. If the undiscounted cash flows exceed the carrying amount, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying amount, then an impairment charge is recorded based on the fair value of the asset.

Development costs directly associated with the acquisition, development, and construction of a project are capitalized as a cost of the project during the periods in which activities necessary to get the property ready for its intended use are in progress. The costs incurred for development projects are carried at cost. Interest costs associated with development projects are capitalized as part of the cost of the constructed asset. When no debt is incurred specifically for a project, interest is capitalized on amounts expended for the project using our weighted-average cost of borrowing. Capitalization of interest ceases when the project, or discernible portion of the project, is substantially complete. If substantially all of the construction activities of a project are suspended, capitalization of interest will cease until such activities are resumed.

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AsWe areview ~~result~~the ofcarrying ~~the~~amounts ~~Spin-Off~~of ~~and~~our ~~Merger~~land, ~~transactions~~buildings, ~~substantially~~vessels ~~all~~and ofequipment ~~the~~used ~~real~~in ~~estate~~our ~~assets~~operations ~~used~~whenever events or changes in circumstances indicate that the ~~Company’s~~carrying ~~operations~~amount ~~are~~of ~~subject~~an asset may not be recoverable from estimated future undiscounted cash flows expected to ~~the~~result ~~Master~~from ~~Lease~~its use and ~~owned~~eventual ~~by GLPI~~disposition. ~~See~~If ~~Note~~the 2,undiscounted ~~“Spin-Off~~cash flows exceed the carrying amount, ~~Merger~~no impairment is indicated. If the undiscounted cash flows do not exceed the carrying amount, ~~Master~~then ~~Lease~~an ~~Financing~~impairment ~~Obligation~~charge ~~and~~is ~~Meadows~~recorded ~~Lease~~based on the fair value of the asset.”

~~The~~Development ~~following~~costs ~~table~~directly ~~presents~~associated with the acquisition, development, and construction of a ~~summary~~project are capitalized as a cost of ~~our~~the ~~land~~project during the periods in which activities necessary to get the property ready for its intended use are in progress. The costs incurred for development projects are carried at cost. Interest costs associated with development projects are capitalized as part of the cost of the constructed asset. When no debt is incurred specifically for a project, ~~buildings~~interest is capitalized on amounts expended for the project using our weighted-average cost of borrowing. Capitalization of interest ceases when the project, ~~vessels~~or ~~and~~discernible ~~equipment~~portion of the project, ~~including~~is ~~those~~substantially ~~subject~~complete. If tosubstantially all of the ~~Master~~construction ~~Lease:~~activities of a project are suspended, capitalization of interest will cease until such activities are resumed.

	September 30, 2017			December 31, 2016
	(in millions)
Land, buildings, vessels and equipment:
Land and land improvements	$	429.1		$	426.7
Buildings, vessels and improvements	2,696.7			2,689.0
Furniture, fixtures and equipment	805.0			805.9
Construction in progress	26.8			32.7
Land, buildings, vessels and equipment, gross	3,957.6			3,954.3
Less: accumulated depreciation	(1,300.3		)	(1,185.8		)
Land, buildings, vessels and equipment, net	$	2,657.3		$	2,768.5

Substantially all of the land, buildings, vessels and associated improvements used in the Company’s operations and included in our unaudited Condensed Consolidated Balance Sheets are subject to the Master Lease and owned by GLPI. For more information regarding the Master Lease, see Note 3, “Master Lease Financing Obligation and Meadows Lease.” The following table presents a summary of our land, buildings, vessels and equipment:

Goodwill and Other Intangible Assets: Goodwill consists of the excess of the acquisition cost over the fair value of the net assets acquired in business combinations and has been allocated to our reporting units. We consider each of our operating segments to represent a reporting unit. Other indefinite-lived intangible assets include gaming licenses and trade names for which it is reasonably assured that we will continue to renew indefinitely. Goodwill and other indefinite-lived intangible assets are subject to an annual assessment for impairment during the fourth quarter (October 1st test date), or more frequently if there are indications of possible impairment. Amortizing intangible assets include player relationships and favorable leasehold interests. We review amortizing intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.



	March 31, 2018			December 31, 2017

	(in millions)
Land, buildings, vessels and equipment:
Land and land improvements	$	432.3		$	431.6
Buildings, vessels and improvements	2,705.9			2,700.3
Furniture, fixtures and equipment	809.0			805.0
Construction in progress	22.4			28.6
Land, buildings, vessels and equipment, gross	3,969.6			3,965.5
Less: accumulated depreciation	(1,373.3		)	(1,336.5		)
Land, buildings, vessels and equipment, net	$	2,596.3		$	2,629.0

~~The~~Goodwill ~~Spin-Off~~ and ~~Merger~~Other ~~transactions,~~Intangible ~~which~~Assets: Goodwill ~~closed~~consists onof ~~April~~the ~~28,~~excess ~~2016,~~of ~~represented~~the aacquisition ~~significant~~cost ~~financial~~over ~~restructuring~~the ~~event~~fair ~~that~~value ~~increased~~of ~~our~~the ~~cash~~net ~~flow~~assets ~~obligations~~acquired in ~~connection~~business ~~with~~combinations ~~the~~and ~~Master~~has ~~Lease,~~been ~~which~~allocated weto ~~concluded~~our ~~represented~~reporting anunits. ~~indicator~~We ~~that~~consider ~~impairment~~each ~~may~~of ~~exist~~our onoperating ~~our~~segments ~~goodwill~~to ~~and~~represent ~~other~~a ~~intangible~~reporting ~~assets~~unit. ~~Consequently,~~Other ~~during~~indefinite-lived ~~the~~intangible ~~second~~assets ~~quarter~~include ~~2016,~~gaming welicenses ~~performed~~and atrade ~~preliminary~~names ~~impairment~~for ~~assessment~~which onit ~~goodwill~~is ~~and~~reasonably ~~completed~~assured ~~impairment~~that ~~assessments~~we onwill ~~gaming~~continue ~~licenses~~to renew indefinitely. Goodwill and ~~trade~~other ~~names.~~indefinite-lived Asintangible aassets ~~result~~are ofsubject ~~those~~to ~~impairment~~an ~~assessments,~~annual assessment for impairment during the ~~second~~fourth quarter ~~2016,~~(October we1st ~~recognized~~test ~~non-cash~~date), ~~impairments~~or tomore ~~goodwill,~~frequently ~~gaming~~if ~~licenses~~there ~~and~~are ~~trade~~indications ~~names~~of ~~totaling~~possible ~~$332~~impairment.9 ~~million,~~In ~~$68.5~~determining ~~million~~the ~~and~~carrying ~~$61.0~~amount ~~million,~~of ~~respectively.~~our ~~During~~reporting ~~the~~units, ~~three~~we ~~months~~allocate ~~ended~~each ~~September~~reporting ~~30,~~unit ~~2016,~~that weis ~~completed~~subject ~~our~~to ~~impairment~~the ~~assessment~~Master onLease ~~goodwill,~~a ~~which~~pro-rata ~~resulted~~portion inof the ~~reversal~~Master ofLease ~~$11~~financing obligation.6 ~~million~~Amortizing ofintangible ~~non-cash~~assets ~~impairment~~include toplayer ~~goodwill.~~relationships ~~Consequently,~~and ~~the~~favorable ~~non-cash~~leasehold ~~impairment~~interests. toWe ~~goodwill~~review ~~recorded~~amortizing ~~during~~intangible ~~the~~assets ~~nine~~for ~~months~~impairment ~~ended~~whenever ~~September~~events ~~30,~~or ~~2016~~changes asin ~~result~~circumstances ofindicate that the ~~Spin-Off~~carrying ~~and~~amount ~~Merger~~may ~~transactions~~not ~~totaled~~be ~~$321~~recoverable.~~3 million.~~

~~Guest~~Revenue ~~Loyalty Programs~~Recognition: We ~~offer~~generate ~~incentives~~revenues tofrom ~~our~~the ~~guests~~goods ~~through~~and ~~our~~services ~~mychoice~~that ~~guest~~we ~~loyalty~~provide ~~program~~to ~~(“mychoice~~our ~~program”).~~customers ~~Under~~at the ~~mychoice~~facilities ~~program~~in which we operate our gaming, ~~guests~~hospitality ~~earn~~and ~~points~~entertainment ~~based~~businesses. onOur ~~their~~revenues ~~level~~consist principally of ~~play~~gaming ~~that~~revenue ~~may~~and behospitality ~~redeemed~~revenue, ~~for~~which ~~various~~consists ~~benefits,~~of ~~such~~food asand ~~cash~~beverage ~~back~~revenue, ~~dining~~lodging revenue, orretail ~~hotel~~revenue ~~stays,~~and ~~among~~entertainment ~~others~~revenue. ~~The~~We ~~reward~~recognize ~~credit~~revenue ~~balance~~when ~~under~~control over the ~~mychoice~~goods ~~program~~and/or ~~will~~services bewe ~~forfeited~~provide ifhas transferred to the ~~guest~~customer, ~~does~~which ~~not~~is ~~earn~~primarily orat ~~use~~a ~~any~~point-in-time. ~~reward~~Although ~~credits~~the ~~over~~majority of our operations results in the ~~prior~~simultaneous ~~six-month~~exchange ~~period.~~of Inconsideration ~~addition,~~from ~~based~~our oncustomers ~~their~~and ~~level~~the transfer of ~~play~~control over the goods and/or services, ~~guests~~in ~~can~~the ~~earn~~event ~~additional~~that ~~benefits~~customers ~~without~~pay ~~redeeming~~in ~~points~~advance, such asamounts areceived ~~car~~are ~~lease,~~recorded ~~among~~as ~~other~~performance ~~items~~obligation liabilities. During the ~~third~~first quarter ~~2017~~2018, the Company ~~announced~~adopted ~~its~~Accounting ~~intention~~Standards toCodification ~~implement~~(“ASC”) ~~the~~Topic ~~mychoice~~606, ~~program~~Revenue atfrom Contracts with Customers (“ASC 606” or the ~~Meadows~~“new ~~during~~revenue standard”) using a modified retrospective approach as of the ~~first~~date ~~quarter~~of ~~2018~~initial application, which ~~currently~~was ~~operates~~January 1, 2018. See Note 2, “Recently Issued Accounting Pronouncements,” for a thorough discussion of the new revenue standard and its ~~own~~impact ~~guest~~on ~~loyalty~~our ~~program~~unaudited Condensed Consolidated Financial Statements.

WeGaming ~~accrue~~Revenues: Gaming arevenues ~~liability~~include ~~for~~revenues ~~the~~generated ~~estimated~~by ~~cost~~our ofcasino ~~providing~~operations ~~these~~and ~~benefits~~gaming-related asactivities ~~the~~such ~~benefits~~as ~~are~~poker ~~earned~~and tournaments. ~~Estimates~~The ~~and~~transaction ~~assumptions~~price ~~are~~in ~~made~~gaming ~~regarding~~contracts ~~cost~~is ofmeasured ~~providing~~by the ~~benefits,~~aggregate ~~breakage~~net ~~rates,~~difference ~~and~~between ~~the~~amounts ~~combination~~wagered ~~of goods~~ and ~~services~~amounts ~~guests~~paid ~~will choose. We use historical data~~ to ~~assist~~winning ~~in the determination of estimated accruals~~customers. ~~Changes~~Cash indiscounts ~~estimates~~and orother ~~guest~~cash ~~redemption~~incentives, ~~patterns~~such ~~could~~as ~~produce~~free ~~different~~play, ~~results.~~to Asguests ofrelated ~~September 30,~~to ~~2017~~gaming ~~and~~play ~~December 31,~~are ~~2016,~~recorded weas ~~had~~a ~~accrued~~reduction ~~$18.6~~to ~~million~~gaming ~~and $25~~revenue.1 ~~million,~~In ~~respectively~~general, ~~for~~ the ~~estimated~~Company ~~cost~~recognizes ofgaming ~~providing~~revenue ~~these~~as ~~benefits,~~the ~~which~~services are ~~included~~performed, inwhich ~~“Other~~is ~~accrued~~principally ~~liabilities”~~at a point-in-time. ~~our~~We ~~unaudited~~have ~~Condensed~~applied ~~Consolidated~~the ~~Balance~~practical ~~Sheets.~~expedient under the

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~~Revenue~~portfolio ~~Recognition: Gaming~~approach ~~revenues~~as ~~consist~~prescribed ofin ~~the~~ASC ~~net~~paragraph ~~win~~606-10-10-4 ~~from gaming activities, which is the difference between amounts wagered and amounts paid~~ to ~~winning~~our ~~patrons.~~gaming ~~Cash~~contracts ~~discounts~~due ~~and other cash incentives~~ to ~~guests~~the ~~related~~similar tocharacteristics of gaming ~~play~~transactions ~~are~~as ~~recorded~~well as athe ~~reduction~~fact tothat ~~gaming~~the ~~revenue.~~Company ~~Food~~reasonably ~~and~~expects ~~beverage,~~the ~~lodging,~~financial ~~retail,~~statement ~~entertainment,~~effects ~~and~~of ~~other~~applying ~~operating~~ASC ~~revenues~~606 ~~are~~to ~~recognized~~the asportfolio ~~products~~of ~~are~~gaming ~~delivered~~contracts orrather ~~services~~than ~~are~~to ~~performed.~~individual ~~Advance~~gaming ~~deposits~~contracts ~~on lodging are recorded as accrued liabilities until services are provided~~ to ~~the~~not ~~guest~~differ materially.

~~The~~A ~~retail~~large ~~value~~portion of ~~food~~our ~~and~~revenues ~~beverage~~is generated by customers who have membership in our guest loyalty program, ~~lodging~~which operates under the name mychoice (“mychoice program” or “guest loyalty program”). Members of our mychoice program earn reward credits and ~~other~~credit ~~services~~toward ~~furnished~~tier tostatus ~~guests~~based on agaming ~~complimentary~~activity. ~~basis~~Under isthe ~~included~~terms inof ~~revenues~~the mychoice program, members are able to accumulate, or bank, reward credits over time that they may redeem at their discretion for complimentary goods and/or ~~then~~services ~~deducted~~provided asby ~~promotional~~the ~~allowances~~Company in(“nondiscretionary ~~calculating~~complimentaries”), ~~total~~free ~~revenues~~slot play or cash back. The ~~estimated~~reward ~~cost~~credit balance will be forfeited if the member does not earn or use any reward credits over the prior six-month period. Upon attainment of ~~providing~~certain ~~such~~tier ~~promotional~~status ~~allowances~~levels, ismembers ~~primarily~~are ~~included~~entitled to receive discounts similar in ~~gaming~~nature ~~expenses~~and amount to those provided as complimentaries. ~~Complimentary~~In ~~revenues~~addition, ~~that~~members ~~have~~of ~~been~~certain ~~excluded~~tiers ~~from~~of the ~~accompanying~~mychoice ~~unaudited~~program ~~Condensed~~receive ~~Consolidated~~complimentary ~~Statements~~goods ofand/or ~~Operations~~services ~~were~~of ~~as follows:~~third-parties.

	For the three months ended September 30,				For the nine months ended September 30,
	2017		2016		2017		2016
	(in millions)
Food and beverage	$	35.6	$	35.6	$	106.7	$	103.1
Lodging	16.5		16.7		47.8		48.8
Other	4.4		4.2		12.6		11.9
Total promotional allowances	$	56.5	$	56.5	$	167.1	$	163.8

Given the ability for members to bank such reward credits based on their past play and the significance of the mychoice program, we have determined that reward credits constitute a material right and, as such, represent a performance obligation associated with the gaming contracts. In addition, similar to reward credits, we have determined that certain benefits associated with our top tier also constitute material rights. We have determined that other tier status benefits, including discounts on goods and/or services sold and/or provided by the Company, are generally made available to customers other than through a past purchase (or provided on a complimentary basis at our discretion) and, therefore, do not represent material rights.

~~The~~Therefore, ~~costs~~gaming contracts with customers participating in the mychoice program contain multiple performance obligations whereas gaming contracts in which the customers are not participating in the mychoice program contain only a single performance obligation. In gaming contracts with customers participating in the mychoice program, we allocate the transaction price between 1) the reward credits and certain tier benefits that give rise to ~~provide~~separate performance obligations, such ~~complimentary~~as ~~benefits~~an ~~were~~annual gift to our top tier members (“annual gift”), based upon the relative standalone selling prices (“SSP”), and 2) an amount allocated to the gaming performance obligation using the residual approach as ~~follows:~~the SSP for gaming is highly variable and no set established price exists. Since reward credits are not independently sold, we have determined the estimated SSP of a reward credit by computing the redemption value of points expected to be redeemed. We determine this redemption value through an analysis of historical redemption activity, utilizing observed SSP of the goods and services provided through redemption of reward credits as well as the pre-established conversion ratios of reward credits pursuant to the terms of the mychoice program. This allocation results in an amount of the gaming transaction price being presented as a performance obligation liability associated with the mychoice program (“mychoice performance obligation liability”), which reduces gaming revenues in the period that the mychoice performance obligation liability is accrued. Revenue is recognized in the period in which the mychoice performance obligation liability is relieved through satisfaction of the associated performance obligations, depending on the type of good and/or service provided (food and beverage; lodging; or retail, entertainment and other).

	For the three months ended September 30,				For the nine months ended September 30,
	2017		2016		2017		2016
	(in millions)
Promotional allowance costs included in gaming expense	$	40.6	$	41.4	$	122.8	$	117.9

The mychoice performance obligation liability consists of 1) reward credits and 2) the estimated SSP of goods and/or services purchased by the Company from third-parties and transferred to members of certain tiers of the mychoice program. Reward credits earned by customers are generally redeemed within a six-month period from the first date of activity earning such reward credits. Based on the terms of the mychoice program, specifically, the timing of satisfaction of the performance obligation associated with providing some goods and/or services to members of certain tiers of the mychoice program, the performance obligation liability associated with certain tier benefits, principally the annual gift, is generally settled between 6 months and 18 months from the first date of activity earning such tier benefits. Estimates and assumptions made regarding breakage rates and the combination of goods and services members choose impacts the estimated SSP of reward credits. Changes in estimates or member redemption patterns could produce different results, which would principally impact the recorded balance of the mychoice performance obligation liability and the amount of gaming revenues recorded during the period in which such reward credits are earned.

~~Gaming~~The ~~Taxes: We~~mychoice ~~are~~performance ~~subject~~obligation toliability ~~taxes~~was ~~based~~$26.0 onmillion ~~gross~~and ~~gaming~~$21.0 ~~revenues~~million as of March 31, 2018 and December 31, 2017, respectively, and is included in ~~the~~“Other ~~jurisdictions~~accrued liabilities” in ~~which~~our weunaudited ~~operate~~Condensed Consolidated Balance Sheets. Upon adoption of ASC 606, ~~subject~~the tomychoice ~~applicable~~performance ~~jurisdictional~~obligation ~~adjustments~~liability was re-measured, resulting in a post-adoption balance of $24.3 ~~These~~million ~~gaming~~as ~~taxes~~of ~~are~~January an1, ~~assessment~~2018. onUnless ~~our~~the ~~gaming~~terms ~~revenues~~of ~~and~~the mychoice program are ~~recorded~~modified, asthe amychoice ~~gaming~~performance ~~expense~~obligation inliability ~~our~~is ~~unaudited~~not ~~Condensed~~subject ~~Consolidated~~to ~~Statements~~significant ofperiodic ~~Operations~~fluctuations, particularly in comparing periods year over year. ~~These~~During ~~taxes~~the ~~were~~first asquarter ~~follows:~~2018, the Company implemented the mychoice program at Meadows, which previously operated its own loyalty program.

	For the three months ended September 30,				For the nine months ended September 30,
	2017		2016		2017		2016
	(in millions)
Gaming taxes	$	175.2	$	153.8	$	529.0	$	442.3

Liabilities arising from our casino operations and gaming-related activities (“gaming-related liabilities”) principally include funds deposited by customers in advance (commonly referred to as “safekeeping” or “front money”), outstanding chips

Leases: The Company has certain long-term lease obligations, including the Meadows Lease, ground leases at certain properties and agreements relating to slot machines. Rent associated with operating leases, excluding contingent rent, is expensed on a straight-line basis over the life of the lease beginning on the date of possession of the leased property. To the extent it is considered probable, contingent rent associated with operating leases is expensed as incurred. At lease inception, the lease term is determined by assuming the exercise of those renewal options that are reasonably assured. The lease term is used to determine whether a lease is capital or operating and is used to calculate the straight-line rent expense. Additionally, the depreciable life of capital lease assets and leasehold improvements is limited by the expected lease term if less than the useful life of the asset. Rent expenses are included in “General and administrative” in our unaudited Condensed Consolidated Statements of Operations.

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~~Pre-opening,~~and ~~Development~~slot ~~and~~tickets ~~Other~~in ~~Costs: Pre-opening,~~the ~~development~~customers’ possession, and ~~other~~the ~~costs~~incremental ~~consist~~amount of ~~payroll~~progressive ~~costs~~jackpots. toGaming-related ~~hire,~~liabilities ~~employ~~are ~~and~~included ~~train~~in ~~the~~“Other ~~workforce~~accrued ~~prior~~liabilities” toin ~~opening~~our anunaudited ~~operating~~Condensed ~~facility;~~Consolidated ~~marketing~~Balance ~~campaigns~~Sheets ~~prior~~until tosuch ~~and~~amounts inare ~~connection~~redeemed ~~with~~for ~~the~~cash ~~opening;~~or ~~legal~~used ~~and~~in ~~professional~~gaming ~~fees~~play ~~related~~by to the ~~project~~customer. ~~but~~Gaming-related ~~not~~liabilities ~~otherwise~~were ~~attributable~~$33.2 tomillion ~~depreciable assets;~~ and ~~lease~~$35.5 ~~payments,~~million ~~real~~as ~~estate~~of ~~taxes~~March 31, ~~and~~2018 ~~other general~~ and ~~administrative~~December 31, ~~costs~~2017, ~~prior~~respectively. toGiven the ~~opening~~nature of anour ~~operating facility. In addition~~business, ~~pre~~gaming-~~opening,~~related ~~development~~liabilities ~~and~~are ~~other~~not ~~costs~~subject ~~include~~to ~~acquisition~~significant ~~and~~periodic ~~restructuring costs. Pre-opening~~fluctuations, ~~development~~particularly ~~and~~in ~~other~~comparing ~~costs~~periods ~~are~~year ~~expensed~~over ~~as incurred~~year. ~~Pre-opening, development and other costs consist of the following:~~

	For the three months ended September 30,				For the nine months ended September 30,
	2017		2016		2017		2016
	(in millions)
Restructuring costs (1)	$	0.2	$	1.3	$	0.9	$	48.1
Meadows acquisition costs (2)	—		4.1		0.2		6.2
Other	0.2		0.2		1.9		0.7
Total pre-opening, development and other costs	$	0.4	$	5.6	$	3.0	$	55.0

Discretionary Complimentaries: Outside of the mychoice program and at our discretion, we offer our guests complimentary goods and services, including food and beverage, lodging, retail and entertainment, which are provided in conjunction with revenue-generating gaming activity in order to entice contemporaneous and future revenue-generating gaming activities (“discretionary complimentaries”). We allocate a portion of the gaming transaction price we receive from such customers to the discretionary complimentaries with the allocated revenue for gaming wagers recognized using the residual approach. We perform this allocation based on the SSP of the underlying goods and services provided, which are determined based on observed SSP we receive for selling such goods and services at the facilities in which we operate our businesses.

Hospitality Revenues: Food and beverage revenues, lodging revenues, retail revenue and entertainment revenues include: (1) ~~Amounts~~revenues ~~comprised~~generated ~~principally~~through contracts with customers for such goods and/or services, (2) revenue recognized through the redemption of ~~costs~~mychoice ~~associated~~reward ~~with~~credits for such goods and/or services (the ~~Spin-Off~~nondiscretionary complimentaries), and ~~Merger~~(3) from revenue as a result of providing such goods and/or services on a complimentary basis to entice contemporaneous and future revenue-generating gaming activities (the discretionary complimentaries). ~~See~~Hospitality ~~Note~~revenues 2are recognized when goods are delivered, ~~“Spin~~services are performed, or events take place. In general, performance obligations associated with hospitality contracts are satisfied at a point-~~Off~~in-time, ~~Merger~~but may also be satisfied over a period of time, ~~Master~~which ~~Lease~~is ~~Financing~~typically ~~Obligation~~over the course of a customer’s stay at one of the locations in which we operate our gaming, hospitality and ~~Meadows~~entertainment ~~Lease~~businesses. Advance deposits on rooms and advance ticket sales are recorded as a performance obligation liability until the goods and/or services are provided to the customer. Such liabilities are included in “Other accrued liabilities” in our unaudited Condensed Consolidated Balance Sheets.

~~(2)~~Other ~~Amounts~~Revenues: Other ~~comprised~~revenues ~~principally~~primarily ofinclude ~~legal,~~amounts ~~advisory~~received ~~and~~in ~~other~~connection ~~costs~~with ~~associated~~ATM transactions and cash advances with ~~the~~customers, ~~acquisition~~revenues generated from pari-mutuel wagering contracts, and ~~integration~~management offees ~~the~~associated ~~Meadows.~~with ~~See~~Retama Park Racetrack (see Note 78, “Investment and Acquisition Activities.”).

~~Earnings~~Prior ~~Per~~to ~~Share: The~~the ~~computation~~adoption of ~~basic~~ASC ~~and~~606, ~~diluted~~complimentary ~~earnings~~hospitality ~~per~~and ~~share~~other ~~(“EPS”)~~revenues iswere ~~based~~excluded onfrom ~~net income (loss) attributable to Pinnacle Entertainment, Inc. divided by~~ the ~~basic~~unaudited ~~weighted~~Condensed ~~average~~Consolidated ~~number~~Statements of ~~common shares and diluted weighted average number of common shares, respectively~~Operations. ~~Diluted~~Subsequent ~~EPS~~to ~~reflects~~ the ~~addition~~adoption of ~~potentially~~ASC ~~dilutive securities~~606, ~~such~~complimentary ashospitality ~~stock~~and ~~options,~~other ~~restricted~~revenues ~~stock~~are ~~units,~~included ~~restricted~~in ~~stock~~food and ~~performance~~beverage; ~~stock~~lodging; ~~units~~and ~~(“share-based~~retail, ~~awards”).~~entertainment Weand ~~calculate~~other; ~~the~~revenues, ~~dilutive~~as ~~effect~~appropriate, ofin ~~share-based awards using~~ the ~~treasury~~unaudited ~~stock~~Condensed ~~method.~~Consolidated AStatements ~~total~~ of 0Operations.0 ~~million,~~Complimentary ~~0.2~~hospitality ~~million, 2.2 million~~ and ~~1.7~~other ~~million~~revenues, ~~share-based~~whether ~~awards~~provided ~~were~~as ~~excluded~~nondiscretionary ~~from~~complimentaries ~~the~~or ~~calculation~~discretionary ~~of diluted EPS for the three and nine months ended September 30~~complimentaries, ~~2017,~~were ~~and~~as ~~2016, respectively, because including them would have been anti-dilutive.~~follows:

For the three and nine months ended September 30, 2016, we recorded a net loss from continuing operations. Accordingly, the potential dilution from share-based awards is anti-dilutive. As a result, basic EPS is equal to diluted EPS for such periods. Share-based awards that could potentially dilute basic EPS in the future that were not included in the computation of diluted EPS were 3.0 million and 2.8 million for the three and nine months ended September 30, 2016, respectively. See Note 5, “Employee Benefit Plans.”



	For the three months ended March 31,
	2018		2017

	(in millions)
Food and beverage	$	38.1	$	35.1
Lodging (1)	26.4		15.2
Retail, entertainment and other	2.4		3.9
Total complimentaries	$	66.9	$	54.2

~~Treasury~~(1) ~~Stock: In~~As ~~May~~described ~~2016,~~in ~~the~~Note ~~Company’s Board of Directors authorized a share repurchase program of up to $50.0 million of our common stock~~2, ~~which~~“Recently weIssued ~~completed~~Accounting ~~in July 2016. In August 2016~~Pronouncements,” ~~our~~the ~~Board~~adoption of ~~Directors~~ASC ~~authorized~~606 animpacted ~~additional~~the ~~share~~measurement ~~repurchase program~~ of upcomplimentary tolodging ~~$50.0~~revenues, ~~million~~which ofincreased ~~our common stock. The cost of~~ the ~~shares~~three ~~acquired is treated as a reduction to stockholders’ equity. During the nine~~ months ended ~~September 30,~~March ~~2017~~31, ~~and~~2018 ~~2016,~~amount weby ~~repurchased 1.1 million shares of common stock for~~ $2111.~~8 million and 5.5 million shares of common stock for $61.3 million, respectively. As of November~~ 6, ~~2017, under the current program, we have repurchased 2.8~~ million ~~shares of our common stock for $42~~.~~4 million.~~

Recently Issued Accounting Pronouncements: In May 2014, as part of its ongoing efforts to assist in the convergence of GAAP and International Financial Reporting Standards, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, which is a new standard related to revenue recognition. Under the new standard, recognition of revenue occurs when a customer obtains control of promised services or goods in an amount that reflects the consideration to which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts. The standard must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. In July 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date, which defers the implementation of this new standard to be effective for fiscal years beginning after December 15, 2017.

In March 2016, the FASB issued ASU No. 2016-08, Principal versus Agent Considerations, which clarifies the implementation guidance on principal versus agent considerations in the new revenue recognition standard pursuant to ASU No. 2014-09. In April 2016, the FASB issued ASU No. 2016-10, Identifying Performance Obligations and Licensing, and in May 2016, the FASB issued ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients, which amend certain aspects of the new revenue recognition standard pursuant to ASU No. 2014-09. In December 2016, the FASB issued ASU No. 2016-19

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~~and~~We ~~ASU~~assess ~~No.~~our ~~2016-20,~~revenues ~~Technical~~based ~~Corrections~~upon ~~and~~the ~~Improvements,~~type ~~which~~of ~~further~~goods ~~clarified~~or services we provide and ~~corrected~~the ~~certain~~geographic ~~elements~~location of ~~this~~the ~~new~~related ~~standard~~businesses. The geographic locations are consistent with our reportable segments. For more information on our reportable segments, see Note 10, “Segment Information.” The following tables present disaggregated revenue information:

The Company currently anticipates adopting these accounting standards relating to revenue recognition during the first quarter 2018 using the full retrospective approach. Although we are still evaluating the full impact of this standard on our unaudited Condensed Consolidated Financial Statements, the Company has concluded that the adoption of this standard will affect how we account for our mychoice program as well as the classification of revenues between gaming, food and beverage, lodging, and retail, entertainment and other. Under our mychoice program, guests earn points based on their level of play, which may be redeemed for various benefits, such as cash back, dining, or hotel stays, among others. We currently determine our liability for unredeemed points based on the estimated costs of services or merchandise to be provided and estimated redemption rates. Under the new standard, points awarded under our mychoice program are considered a material right given to the guests based on their gaming play and the promise to provide points to guests will need to be accounted for as a separate performance obligation. The new standard will require us to allocate the revenues associated with the guests’ activity between gaming revenue and the value of the points and to measure the liability based on the estimated standalone selling price of the points earned after factoring in the likelihood of redemption. As a result, we expect that gaming revenues will be reduced with a corresponding increase, in total, to food and beverage, lodging, and retail, entertainment and other revenues. The revenue associated with the points earned will be recognized in the period in which they are redeemed. The quantitative effects of these changes have not yet been determined and are still being analyzed.



	For the three months ended March 31, 2018 (a)
	Midwest		South		West		Corporate and other (b)		Total

	(in millions)
Revenues:
Gaming	$	313.6	$	145.2	$	40.5	$	—	$	499.3
Food and beverage	36.6		24.9		8.1		0.1		69.7
Lodging	15.3		14.1		8.4		—		37.8
Retail, entertainment and other	12.0		5.9		2.7		1.0		21.6
Total	$	377.5	$	190.1	$	59.7	$	1.1	$	628.4

	For the three months ended March 31, 2017 (a)
	Midwest		South		West		Corporate and other (b)		Total

	(in millions)
Revenues:
Gaming	$	353.1	$	174.2	$	46.9	$	—	$	574.2
Food and beverage	19.8		9.4		3.9		0.1		33.2
Lodging	4.6		4.5		2.9		—		12.0
Retail, entertainment and other	12.8		4.4		2.3		1.1		20.6
Total	$	390.3	$	192.5	$	56.0	$	1.2	$	640.0

In(a) ~~February~~The ~~2016,~~disaggregated ~~the~~revenue ~~FASB~~information ~~issued~~above ~~ASU~~is ~~No.~~not ~~2016-02,~~comparable ~~Recognition~~principally ~~and~~due ~~Measurement~~to ~~of Leases. Under~~ the ~~new~~fact ~~guidance~~that, ~~for~~subsequent ~~all~~to ~~leases (with~~ the ~~exception~~adoption of ~~short-term~~ASC ~~leases)~~606, atcomplimentary ~~the~~hospitality ~~commencement~~and ~~date,~~other ~~lessees~~revenues ~~will~~are beincluded ~~required~~in tofood ~~recognize~~and abeverage; ~~lease~~lodging; ~~liability,~~and ~~which is a lessee’s obligation to make lease payments arising from a lease~~retail, ~~measured~~entertainment ~~on a discounted basis,~~ and aother; ~~right-of-use asset~~revenues, ~~which~~as ~~is an asset that represents the lessee’s right to use~~appropriate, orwith ~~control the use of,~~ a ~~specified~~corresponding ~~asset~~decrease ~~for~~in ~~the~~gaming ~~lease term. Under the new guidance~~revenues, ~~lessor~~in ~~accounting is largely unchanged. Further,~~ the ~~new~~unaudited ~~lease~~Condensed ~~guidance~~Consolidated ~~simplifies~~Statements ~~the~~of ~~accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and liabilities, which no longer provides a source for off balance sheet financing~~Operations. ~~The~~Prior ~~effective~~to ~~date for this update is for~~ the ~~annual~~adoption ~~and~~of ~~interim~~ASC ~~periods beginning after December 15~~606, ~~2018~~such ~~with~~complimentary ~~early~~hospitality ~~adoption permitted. Lessees~~ and ~~lessors~~other ~~must~~revenues ~~apply~~were aexcluded ~~modified~~from ~~retrospective~~the ~~transition~~unaudited ~~approach~~Condensed ~~for~~Consolidated ~~leases~~Statements ~~existing at, or entered into after, the beginning~~ of ~~the~~Operations ~~earliest~~with ~~comparative~~no ~~period~~impact ~~presented~~on ingaming ~~the financial statements~~revenues.

~~The~~(b) ~~Company~~Corporate ~~currently anticipates adopting this accounting standard during the first quarter 2019. Operating leases, including the Meadows Lease, ground leases at certain properties,~~ and ~~agreements~~other ~~relating~~includes torevenues ~~slot~~from ~~machines, will be recorded in our unaudited Condensed Consolidated Balance Sheets as~~ a ~~right-of-use~~live ~~asset with a corresponding lease liability, which will be amortized using the effective interest rate method as payments are made. The right-of-use asset will be depreciated on a straight-line basis~~ and ~~recognized~~televised aspoker ~~lease~~tournament ~~expense.~~series ~~Additionally,~~that asoperates aunder ~~result of this ASU,~~ the ~~Company~~trade ~~will~~name beHeartland ~~required~~Poker toTour ~~reassess~~(“HPT”) ~~whether the Spin-Off~~ and ~~Merger~~management ~~transactions~~fees ~~qualified~~associated ~~for~~with ~~sale-leaseback~~Retama ~~accounting~~Park ~~treatment~~Racetrack. ~~The full qualitative and quantitative effects of these changes have not yet been determined and are still being analyzed.~~

InGaming ~~March~~Taxes: We ~~2016,~~are ~~the~~subject ~~FASB issued ASU No. 2016-09, Improvements~~ to ~~Employee~~taxes ~~Share-Based~~based ~~Payment~~on ~~Accounting,~~gross ~~which~~gaming ~~simplified~~revenues ~~several~~in ~~aspects of~~ the ~~accounting~~jurisdictions ~~for~~in ~~employee~~which ~~share-based~~we ~~payment transactions~~operate, ~~including~~subject ~~the~~to ~~accounting~~applicable ~~for~~jurisdictional ~~income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows~~adjustments. WeThese ~~adopted~~gaming ~~this~~taxes ~~guidance~~are ~~during~~an ~~the~~assessment ~~first~~on ~~quarter~~our ~~2017~~gaming revenues and itare ~~did~~recorded ~~not~~as ~~have~~ a ~~material~~gaming ~~impact~~expense onin our unaudited Condensed Consolidated ~~Financial~~ Statements. ~~In adopting this guidance, the Company made an accounting policy election to continue to estimate the number~~ of ~~awards that are expected to vest as opposed to accounting for forfeitures as they occur~~Operations. ~~Prior~~These ~~periods~~taxes were ~~not required to be adjusted~~ as ~~a result of the adoption of this guidance.~~follows:

In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting, which provides clarity and intends to reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation. More specifically, ASU No. 2017-09 provides guidance on which changes to the terms and conditions of a share-based payment award require an entity to apply modification accounting. The effective date for this update is for annual and interim periods beginning after December 15, 2017, with early adoption permitted. The amendments in this update are to be applied on a prospective basis. Although the Company is still evaluating the impact of adopting this accounting standard, we do not currently believe it will have a material impact on our unaudited Condensed Consolidated Financial Statements.



	For the three months ended March 31,
	2018		2017

	(in millions)
Gaming taxes	$	173.7	$	176.2

Leases: The Company has certain long-term lease obligations, including the Meadows Lease, ground leases at certain properties, office space, and equipment. Rent associated with operating leases, excluding contingent rent, is expensed on a straight-line basis over the life of the lease beginning on the date of possession of the leased property. To the extent it is considered probable, contingent rent associated with operating leases is expensed as incurred. At lease inception, the lease term is determined by assuming the exercise of those renewal options that are reasonably assured. The lease term is used to determine whether a lease is capital or operating and is used to calculate the straight-line rent expense. Additionally, the depreciable life of capital lease assets and leasehold improvements is limited by the expected lease term if less than the useful life of the asset. Rent expenses are included in “General and administrative” in our unaudited Condensed Consolidated Statements of Operations. For more information on the Meadows Lease, see Note 3, “Master Lease Financing Obligation and Meadows Lease.”

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~~In September 2017~~Pre-opening, ~~the~~Development ~~FASB~~and ~~issued~~Other ~~ASU No. 2017~~Costs: Pre-13opening, ~~Revenue~~development ~~Recognition~~and ~~(Topic~~other ~~605),~~costs ~~Revenue~~consist ~~from~~of ~~Contracts~~payroll ~~with~~costs ~~Customers~~to ~~(Topic 606)~~hire, ~~Leases~~employ ~~(Topic 840),~~ and ~~Leases~~train ~~(Topic~~the ~~842),~~workforce ~~which~~prior ~~makes~~to ~~amendments~~opening toan ~~the~~operating ~~SEC~~facility; ~~paragraphs~~marketing ~~pursuant~~campaigns prior to ~~the~~and ~~staff~~in ~~announcement~~connection atwith the ~~July~~opening; ~~20,~~legal ~~2017~~and ~~Emerging~~professional ~~Issues~~fees ~~Task~~related ~~Force~~to ~~meeting~~the ~~and~~project ~~rescinds~~but ~~prior~~not ~~SEC~~otherwise ~~staff~~attributable ~~announcements~~to ~~and~~depreciable ~~observer~~assets; ~~comments.~~and Tolease ~~the~~payments, ~~extent~~real ~~this~~estate ~~guidance is applicable~~taxes, itand isother ~~effective~~general ~~immediately.~~and Asadministrative ~~discussed~~costs ~~above,~~prior to the ~~Company~~opening ~~has~~of ~~not~~an ~~yet~~operating ~~adopted~~facility. ~~ASC~~In ~~Topics~~addition, ~~606~~pre-opening, ~~Revenue~~development ~~from~~and ~~Contracts~~other ~~with~~costs ~~Customers,~~include acquisition and ~~842,~~restructuring ~~Leases~~costs. ~~The~~Pre-opening, ~~guidance~~development ~~currently~~and ~~applicable~~other tocosts ~~the~~are ~~Company~~expensed inas ~~this~~incurred. ~~ASU~~Pre-opening, ~~did~~development ~~not~~and ~~have~~other acosts ~~material~~consist ~~impact~~of onthe ~~our unaudited Condensed Consolidated Financial Statements.~~following:

A variety of proposed or otherwise potential accounting standards are currently under review and study by standard-setting organizations and certain regulatory agencies. Given the tentative and preliminary nature of such proposed standards, we have not yet determined the effect, if any, that the implementation of any such proposed or revised standards would have on our unaudited Condensed Consolidated Financial Statements.



	For the three months ended March 31,
	2018		2017

	(in millions)
Proposed Company Sale costs (1)	$	1.7	$	—
Other	0.1		0.8
Total pre-opening, development and other costs	$	1.8	$	0.8

~~Note~~(1) ~~2—Spin-Off~~Amounts comprised principally of legal, ~~Merger~~advisory, ~~Master~~and ~~Lease~~other ~~Financing~~costs ~~Obligation~~associated ~~and~~with ~~Meadows~~the ~~Lease~~respective transactions.

~~Overview~~Earnings ofPer ~~the Spin-Off and Merger~~Share: OnThe ~~April~~computation ~~28,~~of ~~2016,~~basic ~~Former~~and ~~Pinnacle~~diluted ~~completed~~earnings ~~the~~per ~~transactions~~share ~~under~~(“EPS”) ~~the~~is ~~terms~~based ofon ~~the~~net ~~Merger~~income ~~Agreement~~(loss) ~~with~~attributable ~~GLPI.~~to ~~Pursuant~~Pinnacle toEntertainment, ~~the~~Inc. ~~terms~~divided ofby the ~~Merger~~basic ~~Agreement,~~weighted ~~Former~~average ~~Pinnacle~~number ~~separated~~of ~~its~~common ~~operating~~shares ~~assets~~ and ~~liabilities~~diluted ~~(and~~weighted ~~its~~average ~~Belterra~~number ~~Park~~of ~~property~~common ~~and~~shares, ~~excess~~respectively. ~~land~~Diluted atEPS ~~certain~~reflects ~~locations) into~~ the ~~Company,~~addition aof ~~newly~~potentially ~~formed~~dilutive ~~subsidiary~~securities, ~~and~~such ~~distributed~~as tostock ~~its stockholders~~options, onrestricted astock ~~pro rata basis~~units, ~~all~~restricted ofstock ~~the issued~~ and ~~outstanding~~performance ~~shares of common~~ stock ofunits ~~the~~(“share-based ~~Company~~payment awards”). AsWe acalculate ~~result, Former Pinnacle stockholders received one share of~~ the ~~Company’s~~dilutive ~~common~~effect ~~stock, with a par value~~ of ~~$0.01 per~~ share,-based ~~for~~payment ~~each~~awards ~~share~~using ofthe ~~Former~~treasury ~~Pinnacle common~~ stock ~~that they owned~~method. ~~Merger~~A ~~Sub~~total ~~then~~of ~~merged~~138,815 ~~with~~ and ~~into~~9,772 ~~Former~~share-based ~~Pinnacle,~~payment ~~with~~awards ~~Merger~~were ~~Sub~~excluded ~~surviving~~from the ~~Merger~~calculation ~~as a wholly owned subsidiary~~ of ~~GLPI.~~diluted ~~Immediately~~EPS ~~following~~for the ~~Merger,~~three ~~the~~months ~~Company~~ended ~~was renamed Pinnacle Entertainment~~March 31, ~~Inc.~~2018, and ~~operates~~2017, ~~its~~respectively, ~~gaming~~because ~~businesses~~including ~~under~~them ~~the~~would ~~Master~~have ~~Lease~~been ~~for the facilities acquired by GLPI~~anti-dilutive.

InNote ~~completing~~2—Recently ~~the~~Issued ~~Merger,~~Accounting each share of common stock, par value $0.10 per share, of Former Pinnacle (the “Former Pinnacle Common Stock”) issued and outstanding immediately prior to the effective time (other than shares of Former Pinnacle Common Stock (i) owned or held in treasury by Former Pinnacle or (ii) owned by GLPI, its subsidiaries or Merger Sub) were canceled and converted into the right to receive 0.85 shares of common stock, par value $0.01 per share, of GLPI.Pronouncements

In ~~connection~~May ~~with~~2014, the ~~Spin-Off~~Financial ~~and~~Accounting ~~Merger,~~Standards onBoard ~~April~~(the ~~28,~~“FASB”) ~~2016,~~issued weAccounting ~~made~~Standards aUpdate ~~dividend to Former Pinnacle of $808.4 million~~ (~~the~~ “~~Cash Payment~~ASU”), ~~which~~No. ~~was~~2014-09, ~~equal~~Revenue tofrom ~~the~~Contracts ~~amount~~with ofCustomers, ~~debt~~which ~~outstanding~~introduced ofa ~~Former~~new ~~Pinnacle~~standard asrelated ofto ~~April~~revenue 28recognition, ~~2016,~~ASC ~~less $2~~606.7 ~~billion~~Under ~~that~~ASC ~~GLPI~~606, ~~assumed~~recognition ~~pursuant~~of torevenue ~~the~~occurs ~~Merger~~when ~~Agreement.~~a ~~Immediately~~customer ~~prior~~obtains tocontrol ~~the consummation~~ of ~~the~~promised ~~Spin-Off~~goods ~~and~~or ~~Merger,~~services ~~the~~in ~~August~~an ~~2013~~amount ~~amended~~that ~~and~~reflects ~~restated~~the ~~credit~~consideration ~~agreement~~to ~~(“Former~~which ~~Senior~~the ~~Secured~~entity ~~Credit~~expects ~~Facilities”)~~to ~~was~~receive ~~repaid~~ in ~~full~~exchange ~~and~~for ~~terminated~~those ~~and~~goods ~~the~~or 6services.~~375%~~ ~~senior~~In ~~notes due 2021 (“6.375% Notes”)~~addition, the ~~7.50%~~new ~~senior~~revenue ~~notes~~standard ~~due~~requires ~~2021~~disclosure ~~(“7.50%~~of ~~Notes”) and~~ the ~~7.75%~~nature, ~~senior~~amount, ~~subordinated~~timing, ~~notes~~and ~~due~~uncertainty ~~2022~~of ~~(“7.75%~~revenue ~~Notes”)~~and ~~were~~cash ~~redeemed.~~flows ~~Former~~arising ~~Pinnacle’s~~from ~~indenture~~customer ~~governing its 8~~contracts.~~75%~~ ~~senior~~In ~~subordinated~~July ~~notes due 2020 (“8.75% Notes”) was redeemed on May 15~~2015, ~~2016. Following~~ the ~~consummation~~FASB ofissued ~~the~~ASU ~~Spin-Off~~No. ~~and Merger~~2015-14, ~~the~~Revenue ~~Company~~from ~~had~~Contracts nowith ~~outstanding~~Customers ~~obligations~~- ~~under~~Deferral ~~the~~of ~~Former Senior Secured Credit Facilities,~~ the ~~6.375%~~Effective ~~Notes~~Date, ~~the~~which ~~7.50%~~deferred ~~Notes,~~ the ~~7.75%~~implementation ~~Notes~~of ~~and~~ASC ~~the~~606 ~~8.75%~~to ~~Notes.~~be ~~For~~effective afor ~~description~~fiscal ofyears ~~the~~beginning ~~Company’s~~after ~~existing~~December ~~long-term debt~~15, ~~see Note 3, “Long-Term Debt~~2017.”

~~Failed~~In ~~Spin-Off-Leaseback: The~~March ~~Spin~~2016, the FASB issued ASU No. 2016-~~Off~~08, ~~and~~Principal ~~the~~versus ~~subsequent~~Agent ~~leaseback~~Considerations, ofwhich clarified the ~~gaming~~implementation ~~facilities~~guidance ~~under~~on ~~the~~principal ~~terms~~versus ofagent considerations in the ~~Master~~new ~~Lease~~revenue ~~did~~standard ~~not~~pursuant ~~meet~~to ~~all~~ASU ofNo. 2014-09. In April 2016, the ~~requirements~~FASB ~~for~~issued ~~sale~~ASU No. 2016-~~leaseback~~10, ~~accounting~~Identifying ~~treatment~~Performance ~~under~~Obligations ~~ASC~~and ~~Topic~~Licensing, ~~840~~and in May 2016, ~~Leases~~the FASB issued ASU No. 2016-12, Narrow-Scope Improvements and ~~therefore~~Practical isExpedients, ~~accounted~~which ~~for~~amended ascertain aaspects ~~financing~~of ~~obligation~~the new revenue standard pursuant to ASU No. ~~Specifically~~2014-09. In December 2016, the ~~Master~~FASB ~~Lease~~issued ~~contains~~ASU ~~provisions~~No. ~~that~~2016-20; ~~indicate~~Technical ~~prohibited~~Corrections ~~forms~~and ofImprovements ~~continuing~~to ~~involvement~~Topic in606, ~~the~~Revenue ~~leased~~from ~~assets~~Contracts with Customers; which further clarified and corrected certain elements of ASC 606.

~~Master~~The ~~Lease~~Company ~~Financing~~adopted ~~Obligation: The~~ASC ~~Master~~606 ~~Lease~~during isthe ~~accounted~~first ~~for~~quarter 2018 using the modified retrospective approach to all contracts as aof ~~financing~~the ~~obligation.~~date ~~The~~of ~~obligation~~initial application, which was ~~calculated~~January at1, ~~lease~~2018. ~~inception~~Adoption ~~based~~of onthe new revenue standard principally affected (1) how we measure the ~~future~~liability ~~minimum~~associated ~~lease~~with ~~payments~~our ~~due~~mychoice toprogram ~~GLPI~~and ~~under~~(2) the ~~Master~~classification ~~Lease~~and, ~~discounted~~as atit 10related to lodging, the measurement, of revenues and expenses between gaming; food and beverage; lodging; and retail, entertainment and other.~~5%.~~ The ~~discount~~modified ~~rate~~retrospective ~~represents~~approach required the ~~estimated~~Company ~~incremental~~to ~~borrowing~~recognize ~~rate~~the ~~over~~impact ~~the~~of ~~lease~~adopting ~~term~~ASC of606 35as ~~years,~~a ~~which~~cumulative ~~included~~effect ~~renewal~~adjustment ~~options~~to ~~that~~our ~~were~~beginning ~~reasonably~~accumulated ~~assured~~deficit, which was an increase of ~~being~~$3.3 ~~exercised~~million. AsThe ofcumulative ~~April~~effect ~~28,~~adjustment ~~2016,~~related exclusively to re-measuring the ~~commencement~~liability ~~date~~associated with the mychoice program from a cost approach to an approach that reflects the estimated SSP of the ~~Master~~reward ~~Lease~~credits and certain tier benefits. In addition, the ~~financing~~modified ~~obligation~~retrospective ~~was~~approach ~~determined~~required the Company to beprovide ~~$3.2~~disclosures ~~billion~~describing the financial statement line items impacted by the new revenue standard (see below).

~~Fourteen~~Prior ~~of our sixteen gaming facilities are subject~~ to the ~~Master~~adoption ~~Lease with GLPI. The Master Lease has an initial term~~ of 10ASC ~~years with five subsequent~~606, ~~five-year~~we ~~renewal~~determined ~~periods at~~ our ~~option.~~liability ~~The~~for ~~rent,~~mychoice ~~which~~reward iscredits ~~payable~~based inon ~~monthly~~the ~~installments,~~estimated iscosts ~~comprised~~ of ~~base~~goods ~~rent,~~and ~~which~~services ~~includes~~to abe ~~land~~provided and aestimated ~~building~~redemption ~~component, and percentage rent~~rates. ~~The~~Upon ~~land~~adoption ~~base~~of ~~rent~~ASC is606, ~~fixed~~as ~~for~~described ~~the~~in ~~entire~~Note ~~lease~~1, ~~term.~~“Organization ~~The~~and ~~building~~Summary ~~base rent is subject to an annual escalation~~ of upSignificant toAccounting 2%Policies,” ~~depending~~points onawarded ~~the~~under ~~Adjusted~~our ~~Revenue~~mychoice toprogram ~~Rent~~constitute ~~Ratio~~a ~~(as~~material ~~defined~~right inand, ~~the~~as ~~Master Lease) of 1.8:1. In May 2017~~such, ~~the~~represent ~~building~~a ~~base~~performance ~~rent~~obligation ~~was~~associated ~~adjusted~~with by the ~~annual~~gaming ~~escalation~~contracts. ~~The~~In ~~percentage rent~~addition, ~~which~~certain istier ~~fixed~~benefits ~~for~~associated ~~the~~with ~~first~~our ~~two~~mychoice ~~years~~program, ~~will~~represent bematerial ~~adjusted~~rights ~~every~~in ~~two~~a ~~years~~manner similar to ~~establish~~reward acredits, ~~new~~which ~~fixed~~results in

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~~amount~~such ~~for~~benefits ~~the~~constituting ~~next~~separate ~~two-year~~performance ~~period~~obligations. ~~Each~~Therefore, ~~new~~ASC ~~fixed~~606 ~~amount~~required ~~will~~us beto ~~calculated~~allocate bythe ~~multiplying~~revenues 4%associated bywith the ~~difference~~players’ activity between ~~(i)~~gaming ~~the~~revenue ~~average~~and ~~net~~the ~~revenues~~estimated ~~for~~SSP of the ~~trailing~~reward ~~two-year~~credits ~~period~~ and ~~(ii)~~certain ~~$1.1~~tier ~~billion~~benefits.

AsIn addition to the above, prior to the adoption of ~~September 30~~ASC 606, ~~2017~~complimentary revenues pertaining to food and beverage; lodging; and retail, ~~annual~~entertainment ~~rent~~and ~~under~~other; were excluded from the ~~Master~~unaudited ~~Lease~~Condensed ~~was~~Consolidated ~~$382~~Statements of Operations and the estimated costs of providing such complimentary goods and services were included as gaming expenses in the unaudited Condensed Consolidated Statements of Operations.8 ~~million~~However, ~~which~~subsequent ~~was~~to ~~comprised~~the adoption of ~~the~~ASC ~~land~~606, ~~base~~as ~~rent~~described in Note 1, “Organization and Summary of Significant Accounting Policies,” food and beverage, lodging and other services furnished to our guests on a complimentary basis is measured at the ~~building~~estimated ~~base~~SSP ~~rent~~and included as revenues within food and beverage; lodging; and retail, entertainment and other; as appropriate, in the ~~percentage~~unaudited ~~rent~~Condensed Consolidated Statements of Operations, ~~which~~with ~~were~~a ~~$44~~corresponding decrease in gaming revenues.1 ~~million~~Furthermore, ~~$294~~specifically as it relates to lodging, the transition from complimentary retail value to estimated SSP increased the recorded amount of complimentary lodging revenue.6 ~~million~~Additionally, subsequent to the adoption of ASC 606, the costs of providing such complimentary goods and ~~$44.1~~services ~~million~~is included as expenses within food and beverage; lodging; and retail, ~~respectively~~entertainment and other; as appropriate, in the unaudited Condensed Consolidated Statements of Operations.

~~Total~~The ~~lease~~amount ~~payments~~by ~~under~~which each line item in our unaudited Condensed Consolidated Statement of Operations for the ~~Master~~three ~~Lease~~months ~~were~~ended March 31, 2018 was affected by the new revenue standard as compared with the accounting guidance that was in effect before the change was as follows:

	For the three months ended September 30,				For the nine months ended September 30,
	For the three months ended March 31, 2018
	2017		2016		2017			2016
	As Reported - With Adoption of ASC 606		As Adjusted - Without Adoption of ASC 606		Effect of Accounting ChangeIncrease/(Decrease)
	(in millions)
	(in thousands)
Reduction of financing obligation	$	12.7	$	11.4	$	36.7		$	19.2
Revenues (1):
Interest expense attributable to financing obligation	83.8		83.6		247.7			141.9
Gaming	$	499,263	$	568,509	$	(69,246	)
Total lease payments under the Master Lease	$	96.5	$	95.0	$	284.4		$	161.1
Food and beverage	69,667		31,625		38,042
Lodging	37,819		11,433		26,386
Retail, entertainment and other	21,646		19,627		2,019
Total revenues	628,395		631,194		(2,799		)
Expenses and other costs (2):
Gaming	258,763		306,308		(47,545		)
Food and beverage	62,724		29,572		33,152
Lodging	14,346		5,840		8,506
Retail, entertainment and other	10,431		7,337		3,094
Other expenses and other costs	166,794		166,794		—
Total expenses and other costs	513,058		515,851		(2,793		)
Operating income	$	115,337	$	115,343	$	(6	)
Net income	$	21,794	$	21,800	$	(6	)
Net income attributable to Pinnacle Entertainment, Inc.	$	21,943	$	21,949	$	(6	)

~~Meadows~~(1) ~~Lease: The~~Of Meadows Lease, which is accounted for as an operating lease, provides for a 10-year initial term, including renewal terms at our option, up to a total of 29 years. As of September 30, 2017, annual rent under the ~~Meadows~~decrease ~~Lease was $25.1 million, payable~~ in ~~monthly~~gaming ~~installments~~revenues, ~~and comprised of a base rent of~~ $1366.79 million, ~~which~~ is ~~subject~~attributable to ~~certain~~the ~~adjustments,~~allocation ~~and~~of a ~~percentage~~portion ~~rent~~ of ~~$11.4 million. The base rent is subject to an annual escalation of up to 5% for~~ the ~~initial~~transaction ~~10-year~~price ~~term or until the lease year~~ in ~~which~~gaming ~~base~~contracts ~~rent~~to ~~plus~~complimentary ~~percentage~~hospitality ~~rent~~and isother ~~a total of $31.0 million~~revenues, ~~subject~~which toincreased ~~certain~~food ~~adjustments,~~ and upbeverage; tolodging; 2%and ~~thereafter~~retail, ~~subject~~entertainment toand another; ~~Adjusted Revenue to Rent Ratio (as defined in the Meadows Lease) of 1~~revenues.~~8:1~~ ~~during~~In ~~the second year of the lease~~addition, ~~1.9:1~~gaming ~~during~~revenues ~~the~~is ~~third~~reduced ~~year~~by ~~of the lease and~~ $2.~~0:1~~4 ~~during~~million, ~~the~~which ~~fourth~~represents ~~year of~~ the ~~lease~~allocated ~~and~~portion ~~thereafter. As a result~~ of the ~~annual~~transaction ~~escalation~~price ~~of the base rent, beginning~~ in ~~October~~gaming ~~2017,~~contracts ~~we pay annual rent of $25.8 million. The percentage rent is fixed for the first two years and will be adjusted every two years~~ to ~~establish~~certain atier ~~new~~benefits, ~~fixed~~such ~~amount~~as ~~for~~ the ~~next two-year period equal to 4% of the average~~ annual ~~net~~gift, ~~revenues~~which ~~during~~was ~~the~~previously ~~trailing~~included ~~two-year~~in ~~period~~gaming expenses.

(2)

Of the decrease in gaming expenses, $39.8 million is attributable to the cessation of the Company’s prior accounting practice of including the estimated costs of providing complimentaries in gaming expenses rather than in food and beverage; lodging; and retail, entertainment and other; expenses, which increased food and beverage; lodging; and retail, entertainment and other; expenses. In addition, gaming expenses is reduced by $2.4 million, which represents the allocated portion of the transaction price in gaming contracts to certain tier benefits, such as the annual gift, which was previously included in gaming expenses.

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~~Note~~The line items included in our unaudited Condensed Consolidated Balance Sheet as of March 31, 2018 that were affected by the new revenue standard were “Other accrued liabilities” and “Accumulated deficit,” which both increased by $3~~—Long~~.3 million. These changes were exclusively the result of re-~~Term~~measuring ~~Debt~~the liability associated with the mychoice program.

~~Long~~In February 2016, the FASB issued ASU No. 2016-02, Recognition and Measurement of Leases, which introduced a new standard related to lease recognition, ASC Topic 842, Leases (“ASC 842” or the “new lease standard”). Under ASC 842, for all leases (with the exception of short-term ~~debt~~leases), ~~consisted~~at the commencement date, lessees will be required to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the ~~following:~~lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new lease standard, lessor accounting is largely unchanged. Further, ASC 842 simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and liabilities, which no longer provides a source for off balance sheet financing. The effective date for this ASU is for the annual and interim periods beginning after December 15, 2018 with early adoption permitted. Lessees and lessors must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements.

	September 30, 2017
	Outstanding Principal			Unamortized Discount and Debt Issuance Costs			Long-Term Debt, Net
	(in millions)
Senior Secured Credit Facilities:
Revolving Credit Facility due 2021	$	161.0		$	—		$	161.0
Term Loan A Facility due 2021	173.4			(2.6		)	170.8
5.625% Notes due 2024	500.0			(7.4		)	492.6
Other	0.1			—			0.1
Total debt including current maturities	834.5			(10.0		)	824.5
Less: current maturities	(10.4		)	—			(10.4		)
Total long-term debt	$	824.1		$	(10.0	)	$	814.1

The Company currently anticipates adopting ASC 842 during the first quarter 2019. Operating leases, including the Meadows Lease, our ground leases at certain properties, and agreements relating to slot machines, will be recorded in our unaudited Condensed Consolidated Balance Sheets as a right-of-use asset with a corresponding lease liability, which will represent the present value of the lease payments to be made over the lease term. Additionally, as a result of this ASU, the Company will be required to reassess the sale-leaseback accounting treatment of the Master Lease. The full qualitative and quantitative effects of these changes have not yet been determined and are still being analyzed.

	December 31, 2016
	Outstanding Principal			Unamortized Discount and Debt Issuance Costs			Long-Term Debt, Net
	(in millions)
Senior Secured Credit Facilities:
Revolving Credit Facility due 2021	$	107.2		$	—		$	107.2
Term Loan A Facility due 2021	180.4			(3.2		)	177.2
Term Loan B Facility due 2023	165.2			(4.9		)	160.3
5.625% Notes due 2024	500.0			(8.1		)	491.9
Other	0.1			—			0.1
Total debt including current maturities	952.9			(16.2		)	936.7
Less: current maturities	(12.3		)	—			(12.3		)
Total long-term debt	$	940.6		$	(16.2	)	$	924.4

In June 2016, the FASB issued ASU No. 2016-13, Accounting for Credit Losses, which amends the guidance on the impairment of financial instruments. This update adds an impairment model (known as the current expected credit losses model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes, as an allowance, its estimate of expected credit losses. The effective date for this update is for the annual and interim periods beginning after December 15, 2019 and early adoption is permitted beginning after December 15, 2018. We are currently evaluating the impact of adopting this new guidance on our unaudited Condensed Consolidated Financial Statements.

~~Senior~~In ~~Secured~~August ~~Credit~~2016, ~~Facilities: On~~the ~~April~~FASB ~~28,~~issued ASU No. 2016-15, inStatement ~~connection~~of ~~with~~Cash ~~the~~Flows: ~~Spin-Off~~Classification of Certain Cash Receipts and ~~Merger~~Cash Payments, wewhich ~~entered~~amended ~~into~~the aprevious ~~credit~~accounting ~~agreement~~standard ~~with~~to ~~certain~~add ~~lenders~~or (clarify guidance on the ~~“Credit~~classification ~~Agreement”).~~of ~~The~~certain ~~Credit~~cash ~~Agreement~~receipts isand ~~comprised~~payments in the statement of ~~(i)~~cash aflows ~~$185.0~~in ~~million~~order ~~term~~to ~~loan~~reduce Athe ~~facility~~diversity ~~with~~in apractice ~~maturity~~of certain types of ~~five~~cash ~~years~~flows ~~(the~~where ~~“Term~~consistent ~~Loan~~principles Apreviously ~~Facility”)~~did not exist. Further, ~~(ii)~~in aNovember ~~$300~~2016, the FASB issued No.0 ~~million~~2016-18, ~~term~~Statement ~~loan~~of BCash ~~facility~~Flows: ~~with~~Restricted aCash, ~~maturity~~which amended the previous accounting standard to require the statement of ~~seven~~cash ~~years~~flows (explain the ~~“Term~~change ~~Loan~~during Bthe ~~Facility”)~~period ~~and~~in ~~(iii)~~total acash, ~~$400.0~~cash ~~million~~equivalents, ~~revolving~~and ~~credit~~amounts ~~facility~~generally ~~with~~described aas ~~maturity~~restricted ofcash ~~five~~or ~~years~~restricted ~~(the~~cash ~~“Revolving~~equivalents, ~~Credit~~which ~~Facility”~~was ~~and~~intended ~~together~~to ~~with~~reduce the ~~Term~~diversity ~~Loan~~in Apractice ~~Facility~~caused ~~and~~by the ~~Term~~lack ~~Loan~~of Bspecificity ~~Facility,~~in the ~~“Senior~~previous ~~Secured~~accounting ~~Credit~~standard ~~Facilities”).~~regarding Asthe classification and presentation of ~~September 30,~~changes ~~2017,~~in werestricted ~~had~~cash ~~$161~~or restricted cash equivalents.0 ~~million~~We ~~drawn~~adopted ~~under~~this guidance during the ~~Revolving~~first ~~Credit~~quarter ~~Facility~~2018 ~~and~~using ~~$9.2~~a ~~million~~retrospective ~~committed~~transition ~~under~~approach. ~~various~~As ~~letters~~a result of ~~credit.~~adopting ~~During~~this guidance, our net cash used in investing activities for the three months ended ~~September 30~~March 31, 2017, ~~the~~as ~~Company~~presented ~~fully~~in ~~repaid~~our ~~the~~unaudited ~~outstanding~~Condensed ~~principal~~Statements ~~amount~~ of ~~the~~Cash ~~Term~~Flows, ~~Loan~~increased Bby ~~Facility~~approximately $0.1 million.

~~Loans~~In ~~under~~January ~~the Term Loan A Facility and Revolving Credit Facility bear interest at a rate per annum equal to~~2017, ~~at our option, LIBOR plus an applicable margin from 1.50% to 2.50% or~~ the ~~base~~FASB ~~rate~~issued ~~plus~~ASU ~~an applicable margin from 0~~No.~~50%~~ ~~to 1.50%~~2017-01, inClarifying ~~each case, depending on~~ the ~~Consolidated~~Definition ~~Total~~of ~~Net~~a ~~Leverage~~Business, ~~Ratio~~which ~~(as~~amended ~~defined in~~ the ~~Credit~~guidance ~~Agreement) as~~ of the ~~most~~definition ~~recent~~of ~~fiscal~~a ~~quarter.~~business, ~~Loans~~which ~~under~~affected ~~the~~many ~~Term~~areas ~~Loan~~of Baccounting ~~Facility~~including ~~bore interest at a rate per annum equal to~~acquisitions, ~~at our option~~disposals, ~~LIBOR~~goodwill ~~plus~~and 3consolidation.~~00%~~ orWe ~~the~~adopted ~~base~~this ~~rate~~guidance ~~plus~~during ~~2.00%~~the ~~and~~first inquarter no2018 ~~event~~using ~~was~~a ~~LIBOR~~prospective totransition beapproach ~~less~~and ~~than~~it ~~0.75%.~~did Innot ~~addition,~~have ~~we pay~~ a ~~commitment~~material ~~fee~~impact on ~~the~~our ~~unused~~unaudited ~~portion~~Condensed ~~of the commitments under the Revolving Credit Facility at a rate that ranges from 0.30% to 0.50% per annum, depending on the~~ Consolidated ~~Total~~Financial ~~Net Leverage Ratio as of the most recent fiscal quarter~~Statements.

~~The~~In ~~Term~~May ~~Loan~~2017, Athe ~~Facility~~FASB ~~amortizes~~issued inASU ~~equal~~No. ~~quarterly~~2017-09, ~~amounts~~Scope ~~equal~~of toModification aAccounting, ~~percentage~~which ofprovided ~~the~~clarity ~~original~~and ~~outstanding~~intended ~~principal~~to ~~amount~~reduce atboth ~~closing~~(1) asdiversity ~~follows:~~in practice and (i2) 5%cost ~~per~~and ~~annum~~complexity inwhen applying the ~~first~~guidance ~~two~~in ~~years~~ASC Topic 718, ~~(ii)~~Compensation—Stock 7Compensation.5% ~~per~~More ~~annum~~specifically, inASU ~~the~~No. ~~third~~2017-09 ~~year~~provided ~~and~~guidance ~~(iii)~~on ~~10%~~which ~~per~~changes ~~annum~~to in the ~~fourth~~terms and ~~fifth~~conditions ~~year.~~of ~~The~~a ~~remaining~~share-based ~~principal~~payment ~~amount~~award isrequire ~~payable~~an onentity ~~April~~to ~~28,~~apply ~~2021~~modification accounting. ~~The~~We ~~Term~~adopted ~~Loan~~this Bguidance ~~Facility~~during the first quarter 2018 using a prospective transition approach and it did not have a material impact on our unaudited Condensed Consolidated Financial Statements.

In September 2017, the FASB issued ASU No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842), which made amendments to the SEC paragraphs pursuant to the staff announcement at the July 20, 2017 Emerging Issues Task Force meeting and rescinds prior SEC staff announcements and observer comments. To the extent this guidance is applicable, it is effective immediately. As discussed above, the Company adopted ASC 606 during the first quarter 2018 and has not yet adopted ASC 842. The guidance applicable to the Company in this ASU did not have a material impact on our unaudited Condensed Consolidated Financial Statements.

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~~amortized~~In inMarch ~~equal~~2018, ~~quarterly~~the ~~amounts~~FASB ~~equal~~issued ASU No. 2018-05, Income Taxes (Topic 740), Amendments to 1%SEC ~~per~~Paragraphs ~~annum~~Pursuant to SEC Staff Accounting Bulletin No. 118. This ASU adds various SEC paragraphs pursuant to the issuance of the ~~original~~December ~~outstanding~~2017 ~~principal~~SEC ~~amount~~Staff atAccounting ~~closing~~Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which was effective immediately. The ~~Revolving~~SEC ~~Credit~~issued ~~Facility~~SAB is118 ~~not~~to ~~subject~~address concerns about reporting entities’ ability to ~~amortization~~timely comply with the accounting requirements to recognize all of the effects of the new tax legislation, commonly referred to as The Tax Cuts and isJobs Act (the “Tax Act”) in the period of enactment. SAB 118 allows disclosure that timely determination of some or all of the income tax effects from the Tax Act are incomplete by the due date of the financial statements and, ~~payable~~if onpossible, ~~April~~to 28provide a reasonable estimate. For more information, ~~2021~~see Note 5, “Income Taxes.”

~~5.625%~~A ~~Notes~~variety ~~due~~of ~~2024: On~~proposed ~~April~~or ~~28,~~otherwise ~~2016,~~potential weaccounting ~~issued~~standards ~~$375.0~~are ~~million~~currently inunder ~~aggregate~~review ~~principal~~and ~~amount~~study ofby ~~5.625%~~standard-setting ~~senior~~organizations ~~notes~~and ~~due~~certain ~~2024~~regulatory ~~(the “Existing 5~~agencies.~~625%~~ ~~Notes”).~~Given ~~The~~the ~~Existing~~tentative ~~5.625%~~and ~~Notes~~preliminary ~~were~~nature ~~issued~~of atsuch ~~par,~~proposed ~~mature on May 1~~standards, ~~2024,~~we ~~and~~have ~~bear~~not ~~interest~~yet atdetermined the ~~rate~~effect, ofif ~~5.625%~~any, ~~per~~that ~~annum.~~the ~~Interest~~implementation onof ~~the~~any ~~Existing~~such ~~5.625%~~proposed ~~Notes~~or isrevised ~~payable~~standards ~~semi-annually~~would have on ~~May~~our ~~1st~~unaudited ~~and~~Condensed ~~November~~Consolidated ~~1st~~Financial ~~of each year~~Statements.

OnNote ~~April~~3—Master ~~28,~~Lease ~~2016,~~Financing ~~the~~Obligation ~~proceeds of the Senior Secured Credit Facilities, together with the proceeds from the Existing 5.625% Notes were used (i) to make the Cash Payment~~ and ~~(ii)~~Meadows ~~to pay fees and expenses related to the issuance of the Senior Secured Credit Facilities and the Existing 5.625% Notes.~~Lease

OnMaster ~~October~~Lease ~~12,~~Financing ~~2016,~~Obligation: Fourteen weof ~~issued~~our ansixteen ~~additional~~gaming ~~$125.0~~facilities ~~million~~are insubject ~~aggregate~~to ~~principal~~a ~~amount~~triple-net ofmaster ~~5.625%~~lease ~~senior~~agreement ~~notes due 2024~~ (the “~~Additional~~Master 5Lease”) with GLPI, which commenced on April 28, 2016.~~625%~~ ~~Notes”~~The ~~and~~Master ~~together~~Lease ~~with~~is ~~the~~accounted ~~Existing~~for 5as a financing obligation.~~625%~~ ~~Notes~~At lease inception, the “5financing obligation was determined to be $3.~~625%~~2 ~~Notes”),~~billion ~~under~~and ~~the~~was ~~bond~~calculated ~~indenture~~based ~~governing~~on the ~~Existing~~future 5minimum lease payments discounted at 10.~~625~~5%. ~~Notes~~For ~~issued~~purposes onof ~~April~~calculating 28the financing obligation, ~~2016~~beginning in the third year of the lease, asthe ~~amended~~percentage ~~and~~rent ~~supplemented~~was byexcluded ~~that~~since ~~certain~~the ~~first~~payment ~~supplemental~~is ~~indenture,~~contingent ~~dated~~upon asthe achievement of ~~October~~future ~~12,~~financial ~~2016~~results. The ~~Additional~~discount ~~5.625%~~rate ~~Notes~~represented ~~were~~the ~~issued~~estimated atincremental ~~par~~borrowing ~~plus~~rate aover ~~premium~~the lease term of 5035 ~~basis~~years, ~~points~~which included renewal options that were reasonably assured of being exercised, at lease inception.

~~Loss~~The onMaster ~~early~~Lease ~~extinguishment~~has an initial term of ~~debt:~~10 ~~During~~years ~~the~~with ~~three~~five ~~and~~subsequent, ~~nine~~five-year ~~months~~renewal ~~ended~~periods ~~September~~at 30our option. The rent, ~~2017~~which is payable in monthly installments, weis ~~recorded~~comprised of base rent, which includes a $0land and a building component, and percentage rent.5 ~~million~~The ~~loss~~land ~~related~~base torent is fixed for the ~~repayment,~~entire inlease ~~full,~~term. The building base rent is subject to an annual escalation of up to 2%, depending on the ~~Term~~Adjusted ~~Loan~~Revenue Bto ~~Facility.~~Rent ~~During~~Ratio (as defined in the ~~nine~~Master ~~months~~Lease) ~~ended~~of ~~September~~1.8:1. ~~30,~~The ~~2016~~percentage rent, wewhich ~~recorded~~was afixed ~~$5.2~~for ~~million~~the ~~loss~~first ~~related~~two years, will be adjusted every two years to ~~the~~establish ~~repayment,~~a innew ~~full,~~fixed ofamount for the ~~Former~~next ~~Senior~~two-year ~~Secured~~period. ~~Credit~~Each ~~Facilities.~~new ~~The~~fixed ~~losses~~amount ~~included~~will be calculated by multiplying 4% by the ~~write-off~~difference ofbetween ~~unamortized~~(i) ~~debt~~the ~~issuance~~average ~~costs~~net revenues for the trailing two-year period and ~~original~~(ii) ~~issuance~~$1.1 ~~discount~~billion.

~~Interest~~As ~~expense~~of March 31, ~~net~~2018, annual rent under the Master Lease was $382.8 million, which was comprised of the land base rent, the building base rent and the percentage rent, which were $44.1 million, $294.6 million and $44.1 million, respectively. In May 2018, the building base rent was adjusted by the annual escalation, which was $5.9 million. The reset percentage rent has not yet been finalized for the next two-year period. Once finalized, the adjustment will be retroactively in effect as ~~follows:~~of May 1, 2018.

	For the three months ended September 30,						For the nine months ended September 30,
	2017			2016			2017			2016
	(in millions)
Interest expense from financing obligation (1)	$	83.8		$	83.6		$	247.7		$	141.9
Interest expense from debt (2)	12.2			11.0			39.2			95.3
Interest income	(0.1		)	(0.3		)	(0.3		)	(0.5		)
Capitalized interest	—			—			—			(0.1		)
Other (3)	—			—			—			2.5
Interest expense, net	$	95.9		$	94.3		$	286.6		$	239.1

Total lease payments under the Master Lease were as follows:

(1) See Note 2, “Spin-Off, Merger, Master Lease Financing Obligation and Meadows Lease,” for information on total lease payments under the Master Lease.



	For the three months ended March 31,
	2018		2017

	(in millions)
Reduction of financing obligation	$	13.1	$	11.8
Interest expense attributable to financing obligation	81.3		81.2
Total lease payments under the Master Lease	$	94.4	$	93.0

~~(2)~~Meadows ~~Interest~~Lease: We ~~expense~~own ~~associated~~and ~~with~~operate the ~~Former~~Meadows’ ~~Senior~~gaming, ~~Secured~~entertainment ~~Credit~~and ~~Facilities,~~harness racing business subject to a triple-net lease of its underlying real estate with GLPI (the 6“Meadows Lease”), which commenced on September 9, 2016.~~375%~~ ~~Notes~~The Meadows Lease provides for a 10-year initial term, ~~the~~including 7renewal terms at our option, up to a total of 29 years.~~50%~~ ~~Notes~~As of March 31, 2018, annual rent under the 7Meadows Lease was $25.~~75%~~8 ~~Notes~~million, payable in monthly installments, and ~~the~~comprised 8of a base rent of $14.~~75%~~4 ~~Notes~~million, which ~~were~~is nosubject ~~longer~~to ~~obligations~~certain adjustments, and a percentage rent of $11.4 million. The base rent is subject to an annual escalation of up to 5% for the ~~Company~~initial asterm or until the lease year in which base rent plus percentage rent is a total of ~~April~~$31.0 28million, ~~2016~~subject to certain adjustments, ~~included~~and up to 2% thereafter, subject to an Adjusted Revenue to Rent Ratio (as defined in the ~~nine~~Meadows ~~months~~Lease) ~~ended~~of ~~September~~1.8:1 30during the second year of the lease, ~~2016~~1.9:1 ~~was~~during ~~$76~~the third year of the lease and 2.50:1 ~~million~~during the fourth year of the lease and thereafter. The percentage rent is fixed for the first two years and will be adjusted every two years to establish a new fixed amount for the next two-year period equal to 4% of the average annual net revenues during

(3) Represents a nonrecurring expense associated with the GLPI transaction.

Note 4—Income Taxes

Our effective tax rate for continuing operations for the three and nine months ended September 30, 2017, was 9.3%, or an expense of $1.4 million, and 5.8%, or an expense of $2.4 million, respectively, as compared to an effective tax rate of 117.7%, or an expense of $3.5 million, and 5.6%, or a benefit of $26.5 million, respectively, for the corresponding prior year periods. The rates include the tax impact of certain discrete items, including changes in the tax status of certain of our legal entities. In general, our effective tax rate differs from the statutory rate of 35.0% due to the effects of permanent items, deferred tax expense on tax amortization of indefinite-lived intangible assets, changes in unrecognized tax benefits, changes in valuation allowance and state taxes.

The Spin-Off described in Note 1, “Organization and Summary of Significant Accounting Policies,” was a taxable transaction. A gain was recognized for tax purposes and the tax bases of the operating assets were stepped up to fair market value at the time of the transaction. Pursuant to ASC Topic 740, Income Taxes, the tax impact directly related to the transaction amongst shareholders was recorded to equity, consistent with the overall accounting treatment of the transaction. All changes in tax bases of assets and liabilities caused by the transactions were recorded to additional paid-in capital.

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~~As previously noted,~~ the ~~failed~~trailing ~~sale~~two-~~leaseback~~year ~~is accounted for as a financing obligation~~period. AsAccording ato ~~result,~~ the ~~real~~terms ~~estate~~of ~~gaming facility assets acquired by GLPI are presented on~~ the ~~Company’s~~Meadows ~~unaudited Condensed Consolidated Balance Sheets at historical cost~~Lease, ~~net of accumulated depreciation, and~~ the ~~financing~~annual ~~obligation~~escalator isof ~~recognized and amortized over~~ the ~~lease~~base ~~term.~~rent ~~For federal~~ and ~~state income tax purposes,~~ the ~~Spin-Off~~reset ~~and the subsequent leaseback~~ of the ~~gaming~~percentage ~~facilities~~rent isare anscheduled ~~operating~~to ~~lease.~~take Asplace ~~such, the Company recognizes no tax bases~~ in ~~the~~October ~~leased gaming facilities, which creates basis differences that give rise to deferred taxes under ASC Topic 740, Income Taxes~~2018.

Note 54—~~Employee~~Long-Term ~~Benefit Plans~~Debt

~~Share~~Long-~~based~~term ~~Compensation: As~~debt ofconsisted September 30, 2017, we had 8.6 million share-based awards outstanding, including stock options, restricted stock units, performance stock units, and restricted stock, which are detailed below. Our 2016 Equity and Performance Incentive Plan had 5.0 million share-based awards available for grant as of ~~September 30,~~the ~~2017.~~following:

As a result of the Spin-Off and Merger on April 28, 2016, each outstanding vested and non-vested share-based award granted by Former Pinnacle on or prior to July 16, 2015 (“Pre-July 2015 Former Pinnacle Awards”) were converted into a combination of (1) corresponding share-based awards of the Company, which continue to vest on the same schedule as Pre-July 2015 Former Pinnacle Awards based on service with the Company and (2) adjusted Pre-July 2015 Former Pinnacle Awards, which immediately became fully-vested and settled in shares of GLPI common stock as a result of the Merger. Share-based compensation expense for the nine months ended September 30, 2016 includes $22.6 million of incremental expense attributable to the accelerated vesting of adjusted Pre-July 2015 Former Pinnacle Awards, which were settled in shares of GLPI common stock.



	March 31, 2018
	Outstanding Principal		Unamortized Discount, Net of Premium, and Debt Issuance Costs			Long-Term Debt, Net

	(in millions)
Senior Secured Credit Facilities:
Revolving Credit Facility due 2021	$	194.0	$	—		$	194.0
Term Loan A Facility due 2021	110.0		(1.9		)	108.1
5.625% Notes due 2024	500.0		(7.0		)	493.0
Other	0.1		—			0.1
Total long-term debt	$	804.1	$	(8.9	)	$	795.2

We recorded share-based compensation expense as follows:



	December 31, 2017
	Outstanding Principal		Unamortized Discount, Net of Premium, and Debt Issuance Costs			Long-Term Debt, Net

	(in millions)
Senior Secured Credit Facilities:
Revolving Credit Facility due 2021	$	169.2	$	—		$	169.2
Term Loan A Facility due 2021	152.4		(2.2		)	150.2
5.625% Notes due 2024	500.0		(7.2		)	492.8
Other	0.1		—			0.1
Total long-term debt	$	821.7	$	(9.4	)	$	812.3

	For the three months ended September 30,				For the nine months ended September 30,
	2017		2016		2017		2016
	(in millions)
Share-based compensation expense	$	3.7	$	2.6	$	10.4	$	32.7

Senior Secured Credit Facilities: On April 28, 2016, we entered into a credit agreement with certain lenders (the “Credit Agreement”). The Credit Agreement is comprised of (i) a $185.0 million term loan A facility with a maturity of five years (the “Term Loan A Facility”), (ii) a $300.0 million term loan B facility with a maturity of seven years (the “Term Loan B Facility”) and (iii) a $400.0 million revolving credit facility with a maturity of five years (the “Revolving Credit Facility” and together with the Term Loan A Facility and the Term Loan B Facility, the “Senior Secured Credit Facilities”). As of March 31, 2018, we had $194.0 million drawn under the Revolving Credit Facility and $9.2 million committed under various letters of credit. The Term Loan B Facility was repaid in full prior to December 31, 2017.

~~Stock~~Loans ~~options: The~~under ~~following~~the ~~table~~Term ~~summarizes~~Loan ~~information~~A ~~related~~Facility and Revolving Credit Facility bear interest at a rate per annum equal to, at our ~~common~~option, ~~stock~~LIBOR ~~options:~~plus an applicable margin from 1.50% to 2.50% or the base rate plus an applicable margin from 0.50% to 1.50%, in each case, depending on the Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement) as of the most recent fiscal quarter. In addition, we pay a commitment fee on the unused portion of the commitments under the Revolving Credit Facility at a rate that ranges from 0.30% to 0.50% per annum, depending on the Consolidated Total Net Leverage Ratio as of the most recent fiscal quarter.

	Number ofStock Options		Weighted AverageExercise Price
Options outstanding as of January 1, 2017	6,387,115		$	6.16
Granted	20,000		$	19.30
Exercised	(1,065,813	)	$	4.22
Canceled or forfeited	(119,647	)	$	9.11
Options outstanding as of September 30, 2017	5,221,655		$	6.54
Options exercisable as of September 30, 2017	3,735,994		$	4.97
Expected to vest as of September 30, 2017	1,222,278		$	10.52

The Term Loan A Facility amortizes in equal quarterly amounts equal to a percentage of the original outstanding principal amount at closing as follows: (i) 5% per annum in the first two years, (ii) 7.5% per annum in the third year and (iii) 10% per annum in the fourth and fifth year. The remaining principal amount is payable on April 28, 2021. The voluntary repayments we made during the year ended December 31, 2017 and the three months ended March 31, 2018 have satisfied all quarterly amortization payments that otherwise would have been due prior to maturity. The Revolving Credit Facility is not subject to amortization and any amounts outstanding are due and payable on April 28, 2021.

The unamortized compensation costs not yet expensed related to stock options totaled $4.4 million as of September 30, 2017. The weighted average period over which the costs are expected to be recognized is 1.3 years. The aggregate amount of cash we received from the exercise of stock options was $3.6 million and $0.6 million for the nine months ended September 30, 2017, and 2016, respectively. The associated shares were newly issued common stock. The following information is provided for our stock options:

	For the nine months ended September 30,
	2017		2016
Weighted-average grant date fair value	$	6.37	$	4.05

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~~Restricted~~5.625% ~~Stock Units~~Notes: On April 28, 2016, we issued $375.0 million in aggregate principal amount of 5.625% senior notes due 2024 (the “Existing 5.625% Notes”). The ~~following~~Existing ~~table~~5.625% ~~summarizes~~Notes ~~information~~were ~~related~~issued toat ~~our~~par, ~~restricted~~mature ~~stock~~on ~~units:~~May 1, 2024, and bear interest at the rate of 5.625% per annum. Interest on the Existing 5.625% Notes is payable semi-annually on May 1st and November 1st of each year.

	Number ofUnits		Weighted AverageGrant Date Fair Value
Non-vested as of January 1, 2017	2,183,056		$	9.65
Granted	573,085		$	19.01
Vested	(547,636	)	$	9.36
Canceled or forfeited	(159,091	)	$	12.39
Non-vested as of September 30, 2017	2,049,414		$	12.14

On October 12, 2016, we issued an additional $125.0 million in aggregate principal amount of 5.625% senior notes due 2024 (the “Additional 5.625% Notes” and together with the Existing 5.625% Notes, the “5.625% Notes”), under the bond indenture governing the Existing 5.625% Notes issued on April 28, 2016, as amended and supplemented by that certain first supplemental indenture, dated as of October 12, 2016. The Additional 5.625% Notes were issued at par plus a premium of 50 basis points.

~~The~~Interest ~~unamortized~~expense, ~~compensation~~net, ~~costs~~was ~~not yet expensed related to non-vested restricted stock units totaled $18.6 million~~ as ~~of September 30, 2017. The weighted average period over which the costs are expected to be recognized is 1.2 years.~~follows:

Restricted Stock: The Company grants restricted stock awards, which are subject to either market or performance conditions. The grant-date fair value of the awards subject to market conditions was determined using the Monte Carlo simulation. The grant-date fair value of the awards subject to performance conditions was determined as the closing price of the Company’s common stock on the grant date. To the extent that restricted stock awards are forfeited, the forfeited shares will be included in treasury stock. The following table summarizes information related to our restricted stock:



	For the three months ended March 31,
	2018			2017

	(in millions)
Interest expense from financing obligation (1)	$	81.3		$	81.2
Interest expense from debt	11.3			13.1
Interest income	(0.2		)	(0.2		)
Interest expense, net	$	92.4		$	94.1

	Number ofShares		Weighted AverageGrant Date Fair Value
Non-vested as of January 1, 2017	340,620		$	14.24
Granted	713,470		$	20.92
Canceled or forfeited	(11,428	)	$	18.70
Non-vested as of September 30, 2017	1,042,662		$	18.77


(1)	See Note 3, “Master Lease Financing Obligation and Meadows Lease,” for information on total lease payments under the Master Lease.

~~The~~Note ~~unamortized~~5—Income compensation costs not yet expensed related to restricted stock totaled $11.0 million as of September 30, 2017. The weighted average period over which the costs are expected to be recognized is 1.7 years.Taxes

~~Performance~~Our ~~Stock~~effective ~~Units:~~ tax rate for the three months ended March 31, 2018 was 5.2%, or an expense of $1.2 million, as compared to an effective tax rate of (1.8)%, or a benefit of $0.3 million, for the corresponding prior year period. The ~~following~~Tax ~~table~~Act, ~~summarizes~~which ~~information~~was ~~related~~enacted on December 22, 2017, significantly revised U.S. corporate income tax law by, among other things, reducing the federal corporate income tax rate from 35% to ~~our~~21% ~~performance~~and ~~stock~~granting ~~units:~~indefinite carry-forward of net operating losses generated on or after January 1, 2018.

	Number ofUnits		Weighted AverageGrant Date Fair Value
Non-vested as of January 1, 2017	108,855		$	7.84
Vested	(108,855	)	$	7.84
Non-vested as of September 30, 2017	—		$	—

ASC Topic 740, Income Taxes (“ASC 740”), requires companies to recognize the effect of tax law changes in the period of enactment even though the effective date for most provisions was for tax years beginning after December 31, 2017, or in the case of certain other provisions, January 1, 2018. SAB No. 118 allows registrants to record provisional amounts during a one-year “measurement period” similar to that used when accounting for business combinations. However, the measurement period is deemed to have ended earlier when the registrant has obtained, prepared and analyzed the information necessary to finalize its accounting. During the measurement period, impacts of the law are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared or analyzed.

To the extent a reasonable estimate could have been made, we accounted for the impact of the Tax Act during the year ended December 31, 2017. As we complete our analysis of the Tax Act, further collect and analyze data, interpret any additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service, and other standard-setting bodies, we may make adjustments to the provisional amounts.

The rate for the three months ended March 31, 2018 included the tax impact of certain discrete items, such as benefits related to share-based compensation. The rate for the three months ended March 31, 2017 included the tax impact of certain discrete items, such as changes in the tax status of certain of our legal entities. In general, our effective tax rate may differ from the expected federal statutory tax rate due to the effect of permanent items, utilization of general business credits, changes in valuation allowances, deferred tax expense on tax amortization of indefinite-lived intangible assets, state taxes and reserves for unrecognized tax benefits.

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Note 6—~~Write-downs,~~Employee ~~Reserves~~Benefit ~~and Recoveries, Net~~Plans

~~Write~~Share-~~downs~~based Compensation: Our 2016 Equity and Performance Incentive Plan (the “2016 Plan”), ~~reserves~~which was approved and ~~recoveries~~adopted in April 2016, ~~net~~allows ~~consist~~us to grant options, stock appreciation rights, restricted stock, restricted stock units, performance awards, other stock unit awards and dividend equivalents to directors, employees, consultants and/or advisors of the ~~following:~~Company. As of March 31, 2018, we had 8.0 million share-based payment awards outstanding, including stock options, restricted stock units and restricted stock. The 2016 Plan had 4.3 million share-based payment awards available for grant as of March 31, 2018.

	For the three months ended September 30,				For the nine months ended September 30,
	2017		2016		2017		2016
	(in millions)
Loss on sales or disposals of long-lived assets, net	$	3.0	$	6.2	$	7.8	$	13.1
Impairment of held-to-maturity securities	—		—		3.8		—
Impairment of long-lived assets	—		—		—		0.2
Other	1.2		—		1.1		0.5
Write-downs, reserves and recoveries, net	$	4.2	$	6.2	$	12.7	$	13.8

The Company estimates the number of awards that are expected to vest as opposed to accounting for forfeitures as they occur. We recorded share-based compensation expense as follows:

Loss on sales or disposals of long-lived assets, net: During the three and nine months ended September 30, 2017 and 2016, we recorded net losses related primarily to sales or disposals of building improvements and furniture, fixtures and equipment in the normal course of business.



	For the three months ended March 31,
	2018		2017

	(in millions)
Share-based compensation expense	$	3.9	$	2.4

~~Impairment~~Stock ~~of held-to-maturity securities~~options: ~~During~~The ~~the~~following ~~nine~~table ~~months~~summarizes ~~ended~~information ~~September 30,~~related ~~2017,~~to ~~as a result of the lack of legislative progress and on-going negative operating results at Retama Park Racetrack, we recorded an other-than-temporary impairment on~~ our ~~local~~stock ~~government corporation bonds issued by RDC (as defined in Note 7, “Investment and Acquisition Activities”). For further information, see Note 7, “Investment and Acquisition Activities.”~~options:



	Number of Stock Options		Weighted Average Exercise Price
Options outstanding as of January 1, 2018	5,026,722		$	6.53
Exercised	(324,176	)	$	4.10
Options outstanding as of March 31, 2018	4,702,546		$	6.70
Options exercisable as of March 31, 2018	3,456,972		$	5.28
Expected to vest as of March 31, 2018	1,016,313		$	10.69

The unamortized compensation costs not yet expensed related to stock options totaled $3.3 million as of March 31, 2018. The weighted average period over which the costs are expected to be recognized is 1.0 years. The aggregate amount of cash we received from the exercise of stock options was $0.4 million and $1.8 million for the three months ended March 31, 2018, and 2017, respectively. The associated shares were newly-issued common stock.

Restricted Stock Units: The following table summarizes information related to our restricted stock units:



	Number of Units		Weighted Average Grant Date Fair Value
Non-vested as of January 1, 2018	1,524,529		$	13.61
Granted	255,600		$	32.93
Vested	(75,679	)	$	11.72
Canceled or forfeited	(2,365	)	$	19.50
Non-vested as of March 31, 2018	1,702,085		$	16.59

The unamortized compensation costs not yet expensed related to non-vested restricted stock units totaled $22.3 million as of March 31, 2018. The weighted average period over which the costs are expected to be recognized is 1.3 years.

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~~Note~~Restricted ~~7—Investment~~Stock: The ~~and~~Company ~~Acquisition~~grants ~~Activities~~restricted stock awards, which may be subject to either market or performance conditions. The grant date fair value of the awards subject to market conditions was determined using the Monte Carlo simulation. The grant date fair value of the awards subject to other conditions, including performance conditions, was determined as the closing price of the Company’s common stock on the grant date. To the extent that restricted stock awards are forfeited, the forfeited shares will be included in treasury stock. The following table summarizes information related to our restricted stock:

Acquisition of the Meadows Business: On September 9, 2016, we closed on the purchase agreement with GLPC pursuant to which we acquired all of the equity interests of the Meadows located in Washington, Pennsylvania for base consideration of $138.0 million, subject to certain adjustments. The purchase price, after giving effect to such adjustments was $134.0 million and the cash paid for the Meadows business, net of cash acquired, was $107.5 million. As a result of the transaction, we own and operate the Meadows’ gaming, entertainment and harness racing business subject to the Meadows Lease, which is discussed in Note 2, “Spin-Off, Merger, Master Lease Financing Obligation and Meadows Lease.” The Company believes that this acquisition provides additional economies of scale and further geographical diversification and will provide long-term growth for our stockholders.



	Number of Shares		Weighted Average Grant Date Fair Value
Non-vested as of January 1, 2018	1,042,662		$	18.77
Granted	426,940		$	32.94
Vested	(109,241	)	$	19.22
Non-vested as of March 31, 2018	1,360,361		$	23.18

WeThe ~~are~~unamortized ~~required~~compensation tocosts ~~allocate~~not ~~the~~yet ~~purchase~~expensed ~~price~~related to ~~tangible~~restricted ~~and~~stock ~~identifiable~~totaled ~~intangible assets acquired and liabilities assumed based on their fair values. The excess of the purchase price over those fair values is recorded as goodwill, of which~~ $820.21 million isas ~~deductible for income tax purposes. The goodwill recognized is primarily the result~~ of ~~expected cash flows of the Meadows business~~March 31, ~~including anticipated synergies~~2018. The ~~determination~~weighted ofaverage ~~the~~period ~~fair~~over ~~values~~which of the ~~acquired~~costs ~~assets~~are ~~and~~expected ~~assumed~~to ~~liabilities~~be ~~requires~~recognized ~~significant~~is ~~judgment~~1.6 ~~During the second quarter 2017, management finalized the purchase price allocation, which did not result in any adjustments to the recorded goodwill balance~~years.

~~The~~Note ~~following~~7—Write-downs, ~~table~~Reserves ~~reflects the allocation of the purchase price to the tangible~~ and ~~identifiable intangible assets acquired and liabilities assumed~~Recoveries, ~~with the excess recorded as goodwill (in thousands). The goodwill has been assigned to our Midwest segment.~~Net

Current and other assets	$	35,953
Property and equipment	39,265
Goodwill	18,822
Other intangible assets	71,300
Other non-current assets	3,001
Total assets	168,341
Current liabilities	18,524
Deferred tax liabilities	10,624
Other long-term liabilities	5,145
Total liabilities	34,293
Net assets acquired	$	134,048

Write-downs, reserves and recoveries, net consisted of the following:

The following table summarizes the acquired property and equipment.



	For the three months ended March 31,
	2018		2017

	(in millions)
Loss on disposals of long-lived assets, net	$	1.8	$	0.3
Other	0.6		0.2
Write-downs, reserves and recoveries, net	$	2.4	$	0.5

	As Recorded at Fair Value
	(in thousands)
Furniture, fixtures and equipment	$	39,240
Construction in progress	25
Total property and equipment acquired	$	39,265

Loss on disposals of long-lived assets, net: During the three months ended March 31, 2018 and 2017, we recorded net losses related primarily to disposals of building improvements and furniture, fixtures, and equipment at the properties in the normal course of business.

~~The~~Note ~~following~~8—Investment ~~table~~and ~~summarizes~~Acquisition ~~the acquired identifiable intangible assets.~~Activities

	As Recorded at Fair Value
	(in thousands)
Gaming licenses	$	56,300
Trade name	15,000
Total other intangible assets acquired	$	71,300

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Retama Park Racetrack: We hold 75.5% of the equity of Pinnacle Retama Partners, LLC (“PRP”), which owns the racing license of Retama Park Racetrack located outside of San Antonio, Texas. We consolidate the accounts of PRP in our unaudited Condensed Consolidated Financial Statements. We also manage Retama Park Racetrack under a management contract with Retama Development Corporation (“RDC”), a local government corporation of the City of Selma, Texas.

As of ~~September~~both March 3031, 2018 and December 31, 2017, PRP held $16.9 million in promissory notes issued by RDC and $7.5 million in local government corporation bonds issued by RDC, at amortized cost. The promissory notes and local government corporation bonds, which are included in “Other assets, net” in our unaudited Condensed Consolidated Balance Sheets, have long-term contractual maturities and are collateralized by the assets of the Retama Park Racetrack. As noted in Note 6, “Write-downs, reserves and recoveries, net,” during the nine months ended September 30, 2017, we recorded an other-than-temporary impairment on the local government corporation bonds in the amount of $3.8 million.

The contractual terms of the promissory notes include interest payments due at maturity; however, we have not recorded accrued interest because uncertainty exists as to RDC’s ability to make the interest payments. We have the positive intent and ability to hold the local government corporation bonds to maturity and until the amortized cost basis is recovered.

Note 89—Commitments and Contingencies

Self-Insurance: We are self-~~insure~~insured ~~various~~up ~~levels~~to ofcertain limits for costs associated with general liability, workers’ compensation, and ~~medical~~employee ~~coverage~~health ~~at most of our properties~~coverage. Insurance reserves include accruals for estimated settlements for known claims, as well as accruals for estimates of claims not yet made. As of ~~September~~March 3031, ~~2017~~2018 and December 31, ~~2016~~2017, we had total self-insurance accruals of $2523.84 million and $2623.13 million, respectively, which are included in “Total current liabilities” in our unaudited Condensed Consolidated Balance Sheets.

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Other: We are a party to a number of other pending legal proceedings. Management does not expect that the outcome of such proceedings, either individually or in the aggregate, will have a material effect on our financial position, cash flows or results of operations.

Note 10—Segment Information

We view each of our operating businesses as an operating segment with the exception of our two businesses in Jackpot, Nevada, which we view as one operating segment. Operating segments are aggregated based on their similar economic characteristics, types of customers, types of services provided, the regulatory environments in which they operate, and their management and reporting structure. We have aggregated our operating segments into three reportable segments based on the similar characteristics of the operating segments within the regions in which they operate: Midwest, South and West. Corporate and other is included in the following segment disclosures to reconcile to consolidated results.

We use Consolidated Adjusted EBITDAR and Adjusted EBITDAR (as such terms are defined below) for each reportable segment to compare operating results and allocate resources. The following table highlights our total revenues and Adjusted EBITDAR for each reportable segment and reconciles net income to Consolidated Adjusted EBITDAR for the three months ended March 31, 2018 and 2017. For disaggregated revenue information by reportable segment, see Note 1, “Organization and Summary of Significant Accounting Policies.”



	For the three months ended March 31,
	2018			2017

	(in millions)
Revenues:
Midwest segment (a)	$	377.5		$	390.3
South segment (a)	190.1			192.5
West segment (a)	59.7			56.0
	627.3			638.8
Corporate and other (b)	1.1			1.2
Total revenues	$	628.4		$	640.0

Adjusted EBITDAR (c):
Midwest segment (a)	$	109.9		$	112.9
South segment (a)	63.6			61.8
West segment (a)	23.2			20.5
	196.7			195.2
Corporate expenses and other (b)	(19.0		)	(20.3		)
Consolidated Adjusted EBITDAR (c)	$	177.7		$	174.9

Net income	$	21.8		$	17.2
Rent expense under the Meadows Lease	4.2			4.1
Depreciation and amortization	50.0			56.1
Pre-opening, development and other costs	1.8			0.8
Non-cash share-based compensation expense	3.9			2.4
Write-downs, reserves and recoveries, net	2.4			0.5
Interest expense, net	92.4			94.1
Income tax expense (benefit)	1.2			(0.3		)
Consolidated Adjusted EBITDAR (c)	$	177.7		$	174.9

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Note 9—Segment Information



	For the three months ended March 31,
	2018		2017

	(in millions)
Capital expenditures:
Midwest segment (a)	$	10.9	$	8.8
South segment (a)	3.3		4.5
West segment (a)	1.7		1.1
Corporate and other, including development projects	2.3		2.5
	$	18.2	$	16.9

We(a) ~~view~~See ~~each~~Note ~~of our operating businesses as an operating segment with the exception of our two businesses in Jackpot~~1, ~~Nevada,~~“Organization ~~which~~and weSummary ~~view as one operating segment. Operating segments are aggregated based on their similar economic characteristics, types~~ of ~~customers,~~Significant ~~types~~Accounting ~~of services provided~~Policies,” ~~the~~for ~~regulatory~~listing ~~environments in which they operate, and their management and reporting structure. We have aggregated our operating segments into three reportable segments based on the similar characteristics~~ of ~~the~~properties ~~operating segments within the regions in which they operate: Midwest, South and West. Corporate and other is~~ included in ~~the~~each ~~following~~ segment ~~disclosures to reconcile to consolidated results~~.

We(b) ~~use~~Corporate ~~Consolidated~~and ~~Adjusted~~other ~~EBITDAR~~includes revenues from HPT and ~~Adjusted~~management ~~EBITDAR~~fees ~~(as~~associated ~~such~~with ~~terms~~Retama ~~are~~Park ~~defined~~Racetrack. ~~below)~~Corporate ~~for~~expenses ~~each~~represent ~~segment~~payroll, toprofessional ~~compare~~fees, ~~operating~~travel ~~results~~expenses ~~among~~and ~~our~~other ~~segments~~general and ~~allocate~~administrative ~~resources.~~expenses ~~The~~not ~~following~~directly ~~table~~related ~~highlights~~to our ~~Adjusted~~casino ~~EBITDAR~~and ~~for~~hotel ~~each~~operations. ~~segment~~Corporate ~~and~~expenses ~~reconciles~~that ~~Consolidated~~are ~~Adjusted~~directly ~~EBITDAR~~attributable to ~~Income~~a ~~(loss)~~property ~~from~~are ~~continuing~~allocated ~~operations~~to ~~for~~each ~~the~~applicable ~~three~~property. ~~and~~Other ~~nine~~includes ~~months~~expenses ~~ended~~relating ~~September 30,~~to ~~2017~~the operation of HPT and ~~2016~~management of Retama Park Racetrack.

	For the three months ended September 30,						For the nine months ended September 30,
	2017			2016			2017			2016
	(in millions)
Revenues:
Midwest segment (a)	$	391.7		$	333.5		$	1,171.7		$	980.8
South segment (a)	188.7			197.0			583.0			579.0
West segment (a)	65.3			62.9			182.1			177.2
	645.7			593.4			1,936.8			1,737.0
Corporate and other (c)	1.7			1.8			4.2			4.4
Total revenues	$	647.4		$	595.2		$	1,941.0		$	1,741.4
Adjusted EBITDAR (b):
Midwest segment (a)	$	112.2		$	92.8		$	334.2		$	299.0
South segment (a)	60.2			58.1			189.7			180.5
West segment (a)	26.7			24.2			70.8			66.8
	199.1			175.1			594.7			546.3
Corporate expenses and other (c)	(21.0		)	(19.7		)	(61.0		)	(61.5		)
Consolidated Adjusted EBITDAR (b)	178.1			155.4			533.7			484.8
Other benefits (costs):
Rent expense under the Meadows Lease	(4.0		)	(1.0		)	(12.1		)	(1.0		)
Depreciation and amortization	(54.1		)	(54.3		)	(166.3		)	(162.4		)
Pre-opening, development and other costs	(0.4		)	(5.6		)	(3.0		)	(55.0		)
Non-cash share-based compensation expense	(3.7		)	(2.6		)	(10.4		)	(32.7		)
Impairment of goodwill	—			11.6			—			(321.3		)
Impairment of other intangible assets	—			—			—			(129.5		)
Write-downs, reserves and recoveries, net	(4.2		)	(6.2		)	(12.7		)	(13.8		)
Interest expense, net	(95.9		)	(94.3		)	(286.6		)	(239.1		)
Loss on early extinguishment of debt	(0.5		)	—			(0.5		)	(5.2		)
Loss from equity method investment	—			—			(0.1		)	(0.1		)
Income tax benefit (expense)	(1.4		)	(3.5		)	(2.4		)	26.5
Income (loss) from continuing operations	$	13.9		$	(0.5	)	$	39.6		$	(448.8	)

(c)

Consolidated Adjusted EBITDAR is a non-GAAP financial measure. We define Consolidated Adjusted EBITDAR as earnings before interest income and expense, income taxes, depreciation, amortization, rent expense associated with the Meadows Lease, pre-opening, development and other costs, non-cash share-based compensation, asset impairment costs, write-downs, reserves, recoveries, gain (loss) on sale of certain assets, gain (loss) on early extinguishment of debt, gain (loss) on sale of equity security investments, income (loss) from equity method investments, non-controlling interest and discontinued operations. We define Adjusted EBITDAR for each segment as earnings before interest income and expense, income taxes, depreciation, amortization, rent expense associated with the Meadows Lease, pre-opening, development and other costs, non-cash share-based compensation, asset impairment costs, write-downs, reserves, recoveries, inter-company management fees, gain (loss) on sale of certain assets, gain (loss) on early extinguishment of debt, gain (loss) on sale of discontinued operations and discontinued operations. We use Consolidated Adjusted EBITDAR and Adjusted EBITDAR for each reportable segment to compare operating results among our properties and between accounting periods. Consolidated Adjusted EBITDAR and Adjusted EBITDAR have economic substance because they are used by management as measures to analyze the performance of our business and are especially relevant in evaluating large, long-lived casino-hotel projects because they provide a perspective on the current effects of operating decisions separated from the substantial non-operational depreciation charges and financing costs of such projects. We eliminate the results from discontinued operations at the time they are deemed discontinued. We also review pre-opening, development and other costs separately, as such expenses are also included in total project costs when assessing budgets and project returns, and because such costs relate to anticipated future revenues and income. We believe that Consolidated Adjusted EBITDAR and Adjusted EBITDAR are useful measures for investors because they are indicators of the performance of ongoing business operations. These calculations are commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare operating performance and value of companies within our industry. In addition, Consolidated Adjusted EBITDAR approximates the measures used in the debt covenants within the Company’s debt agreements. Consolidated Adjusted EBITDAR and Adjusted EBITDAR do not include depreciation or interest expense and, therefore, do not reflect current or future capital expenditures or the cost of capital. Consolidated Adjusted EBITDAR should not be considered as an alternative to operating income (loss) as an indicator of performance, or as an alternative to any other measure provided in accordance with GAAP. Our calculations of Consolidated Adjusted EBITDAR and Adjusted EBITDAR may be different from the calculation methods used by other companies and, therefore, comparability may be limited.

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	For the nine months ended September 30,
	2017		2016
	(in millions)
Capital expenditures:
Midwest segment (a)	$	30.5	$	42.1
South segment (a)	15.0		21.6
West segment (a)	3.4		6.7
Corporate and other, including development projects	7.5		2.7
	$	56.4	$	73.1

(a) See Note 1, “Organization and Summary of Significant Accounting Policies,” for listing of properties included in each segment.

(b) We define Consolidated Adjusted EBITDAR as earnings before interest income and expense, income taxes, depreciation, amortization, rent expense associated with the Meadows Lease, pre-opening, development and other costs, non-cash share-based compensation, asset impairment costs, write-downs, reserves, recoveries, gain (loss) on sale of certain assets, gain (loss) on early extinguishment of debt, gain (loss) on sale of equity security investments, income (loss) from equity method investments, non-controlling interest and discontinued operations. We define Adjusted EBITDAR for each segment as earnings before interest income and expense, income taxes, depreciation, amortization, rent expense associated with the Meadows Lease, pre-opening, development and other costs, non-cash share-based compensation, asset impairment costs, write-downs, reserves, recoveries, inter-company management fees, gain (loss) on sale of certain assets, gain (loss) on early extinguishment of debt, gain (loss) on sale of discontinued operations and discontinued operations. We use Consolidated Adjusted EBITDAR and Adjusted EBITDAR for each reportable segment to compare operating results among our properties and between accounting periods. Consolidated Adjusted EBITDAR and Adjusted EBITDAR have economic substance because they are used by management as measures to analyze the performance of our business and are especially relevant in evaluating large, long-lived casino-hotel projects because they provide a perspective on the current effects of operating decisions separated from the substantial non-operational depreciation charges and financing costs of such projects. We eliminate the results from discontinued operations at the time they are deemed discontinued. We also review pre-opening, development and other costs separately, as such expenses are also included in total project costs when assessing budgets and project returns, and because such costs relate to anticipated future revenues and income. We believe that Consolidated Adjusted EBITDAR and Adjusted EBITDAR are useful measures for investors because they are indicators of the performance of ongoing business operations. These calculations are commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare operating performance and value of companies within our industry. In addition, Consolidated Adjusted EBITDAR approximates the measures used in the debt covenants within the Company’s debt agreements. Consolidated Adjusted EBITDAR and Adjusted EBITDAR do not include depreciation or interest expense and, therefore, do not reflect current or future capital expenditures or the cost of capital. Consolidated Adjusted EBITDAR should not be considered as an alternative to operating income (loss) as an indicator of performance, or as an alternative to any other measure provided in accordance with GAAP. Our calculations of Consolidated Adjusted EBITDAR and Adjusted EBITDAR may be different from the calculation methods used by other companies and, therefore, comparability may be limited.

(c) Corporate and other includes revenues from a live and televised poker tournament series that operates under the trade name Heartland Poker Tour (“HPT”) and management of Retama Park Racetrack. Corporate expenses represent payroll, professional fees, travel expenses and other general and administrative expenses not directly related to our casino and hotel operations. Corporate expenses that are directly attributable to a property are allocated to each applicable property. Other includes expenses relating to the operation of HPT and management of Retama Park Racetrack.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of financial condition, results of operations, liquidity and capital resources should be read in conjunction with, and is qualified in its entirety by, the unaudited Condensed Consolidated Financial Statements and the notes thereto included in this Quarterly Report on Form 10-Q, and the Consolidated Financial Statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017.

EXECUTIVE SUMMARY

Pinnacle Entertainment, Inc. owns and operates 16 gaming, hospitality and entertainment businesses, of which 15 operate in leased facilities. Our owned facility is anlocated ~~owner~~in Ohio and our leased facilities are located in Colorado, ~~operator~~Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada and ~~developer~~Pennsylvania. The leased facilities located outside of ~~casinos~~Pennsylvania are subject to a triple-net master lease with Gaming and ~~related~~Leisure ~~hospitality~~Properties, Inc., a Pennsylvania corporation and ~~entertainment~~real ~~businesses~~estate investment trust (“GLPI”) (the “Master Lease”) and our leased facility in Pennsylvania is subject to a triple-net lease of its underlying real estate with GLPI (the “Meadows Lease”). References in these footnotes to “Pinnacle,” the “Company,” “we,” “our” or “us” refer to Pinnacle Entertainment, Inc. and its subsidiaries, except where stated or the context otherwise indicates. ~~References to “Former Pinnacle” refer to Pinnacle Entertainment, Inc. prior to the Spin-Off and Merger (as such terms are defined below).~~

Midwest segment, which includes:	Location
Ameristar Council Bluffs (1)	Council Bluffs, Iowa
Ameristar East Chicago (1)	East Chicago, Indiana
Ameristar Kansas City (1)	Kansas City, Missouri
Ameristar St. Charles (1)	St. Charles, Missouri
Belterra Resort (1)	Florence, Indiana
Belterra Park	Cincinnati, Ohio
Meadows (2)	Washington, Pennsylvania
River City (1)	St. Louis, Missouri
South segment, which includes:	Location
Ameristar Vicksburg (1)	Vicksburg, Mississippi
Boomtown Bossier City (1)	Bossier City, Louisiana
Boomtown New Orleans (1)	New Orleans, Louisiana
L’Auberge Baton Rouge (1)	Baton Rouge, Louisiana
L’Auberge Lake Charles (1)	Lake Charles, Louisiana
West segment, which includes:	Location
Ameristar Black Hawk (1)	Black Hawk, Colorado
Cactus Petes and Horseshu (1)	Jackpot, Nevada



Midwest segment, which includes:	Location
Ameristar Council Bluffs	Council Bluffs, Iowa
Ameristar East Chicago	East Chicago, Indiana
Ameristar Kansas City	Kansas City, Missouri
Ameristar St. Charles	St. Charles, Missouri
Belterra Resort	Florence, Indiana
Belterra Park	Cincinnati, Ohio
Meadows	Washington, Pennsylvania
River City	St. Louis, Missouri

South segment, which includes:	Location
Ameristar Vicksburg	Vicksburg, Mississippi
Boomtown Bossier City	Bossier City, Louisiana
Boomtown New Orleans	New Orleans, Louisiana
L’Auberge Baton Rouge	Baton Rouge, Louisiana
L’Auberge Lake Charles	Lake Charles, Louisiana

West segment, which includes:	Location
Ameristar Black Hawk	Black Hawk, Colorado
Cactus Petes and Horseshu	Jackpot, Nevada

~~(1)~~All Weof ~~lease~~our ~~the~~gaming, ~~real~~hospitality ~~estate~~and ~~associated~~entertainment ~~with~~businesses ~~these~~include gaming, food and beverage, and retail facilities, ~~under~~and most include hotel and resort amenities. Our operating results are highly dependent on the ~~terms~~volume of guests at our businesses, which, in turn, affects the price we can charge for hotel rooms and other amenities. While we do provide casino credit in several gaming jurisdictions, most of our revenue is cash-based, with guests wagering with cash or paying for hospitality or entertainment services with cash or credit cards. Our businesses generate significant operating cash flow. Our industry is capital-intensive, and we rely on the ability of our businesses to generate operating cash flow to satisfy our obligations under the Master Lease and the Meadows Lease, pay interest, repay debt, and fund maintenance capital expenditures.

~~(2)~~Our ~~The~~mission ~~Meadows~~is ~~Racetrack~~to ~~and~~increase ~~Casino~~stockholder (value. We seek to increase revenues through enhancing the ~~“Meadows”)~~guest ~~was~~experience ~~acquired~~by onproviding ~~September~~them 9with their favorite games, ~~2016~~restaurants, ashotel ~~discussed~~accommodations, ~~below~~entertainment and other amenities in attractive surroundings with high-quality guest service and our mychoice guest loyalty program (“mychoice program”). We ~~lease~~seek ~~the~~to ~~real~~improve ~~estate~~cash ~~associated~~flows ~~with~~by ~~this~~focusing ~~gaming~~on ~~facility~~operational ~~under~~excellence ~~the~~and ~~terms~~efficiency ofwhile ~~the~~meeting ~~Meadows~~our ~~Lease~~guests’ expectations of value. In

We own and operate gaming, hospitality and entertainment businesses, all of which include gaming, food and beverage, and retail facilities, and most of which include hotel and resort amenities. Our operating results are highly dependent on the volume of guests at our businesses, which, in turn, affects the price we can charge for hotel rooms and other amenities. While we do provide casino credit in several gaming jurisdictions, most of our revenue is cash-based, with guests wagering with cash or paying for hospitality or entertainment services with cash or credit cards. Our businesses generate significant operating cash flow. Our industry is capital-intensive, and we rely on the ability of our businesses to generate operating cash flow to satisfy our obligations under the Master Lease and the Meadows Lease, pay interest, repay debt, and fund maintenance capital expenditures.25

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making decisions, we consider our stockholders, guests, team members and other constituents in the communities in which we operate.

On December 17, 2017, Pinnacle entered into an Agreement and Plan of Merger (the “Penn National Merger Agreement”) with Penn National Gaming, Inc., a Pennsylvania corporation (“Penn National”), and Franchise Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Penn National (“Franchise Merger Sub”), providing for the merger of Franchise Merger Sub with and into Pinnacle (the “Proposed Company Sale”), with Pinnacle surviving the Proposed Company Sale as a wholly-owned subsidiary of Penn National.

At the effective time of the Proposed Company Sale, each share of Pinnacle common stock, par value $0.01 per share (the “Pinnacle Common Stock”), issued and outstanding immediately prior to the effective time (other than shares held by Penn National and other than dissenting shares) will be canceled and converted automatically into the right to receive (i) $20.00 in cash (plus, if the Proposed Company Sale is not consummated on or prior to October 31, 2018, $0.01 for each day during the period commencing on November 1, 2018 through the effective time of the Proposed Company Sale) (the “Cash Consideration”) and (ii) 0.42 shares of common stock, par value $0.01 per share, of Penn National (the “Penn National Common Stock”) (the “Exchange Ratio”; together with the Cash Consideration and cash required to be paid in lieu of fractional shares of Penn National Common Stock, the “Proposed Company Sale Consideration”).

In connection with the Proposed Company Sale, Penn National entered into (i) a Membership Interest Purchase Agreement, dated December 17, 2017 (the “Membership Interest Purchase Agreement”), with Boyd Gaming Corporation (“Boyd”), which Pinnacle will become a party to immediately prior to the Proposed Company Sale, pursuant to which a subsidiary of Boyd will acquire the gaming and related operations of Ameristar St. Charles, Ameristar Kansas City, Belterra Resort and Belterra Park, in connection with the Proposed Company Sale; and (ii) definitive agreements with a subsidiary of GLPI, which Pinnacle will become a party to immediately prior to the Proposed Company Sale, pursuant to which GLPI’s subsidiary will acquire the real estate associated with Belterra Park, from Pinnacle, and Plainridge Park Casino in Plainville, Massachusetts, from Penn National. At the closing of the transactions contemplated by the Membership Interest Purchase Agreement, GLPI and Boyd will enter into a master lease agreement for the gaming operations acquired by Boyd and Penn National will assume Pinnacle’s existing Master Lease and Meadows Lease and enter into certain amendments thereto.

On March 29, 2018, the shareholders of Penn National and stockholders of Pinnacle approved the Proposed Company Sale, including the approval by Penn National shareholders of the issuance of Penn National’s common stock in connection with the Proposed Company Sale Consideration.

Completion of the Proposed Company Sale is subject to certain conditions, many of which are beyond our control, including, among others: (1) the absence of any injunction, restraining order or other orders or laws prohibiting the consummation of the Proposed Company Sale; (2) the expiration or termination of any waiting period applicable to the Proposed Company Sale under the Hart-Scott-Rodino Antitrust Improvement Acts of 1976, as amended; (3) the receipt of the remaining required regulatory approvals in a timely manner (including receipt of necessary approvals from gaming regulatory authorities); (4) the registration of the shares of Penn National to be issued to stockholders of Pinnacle; and (5) the listing of the shares of Penn National on The NASDAQ Stock Market LLC. The obligation of each party to consummate the Proposed Company Sale is also conditioned upon the accuracy of the other party’s representations and warranties, the absence of a material adverse effect involving the other party, and the other party having performed in all material respects its obligations under the Penn National Merger Agreement. Subject to the satisfaction or waiver of the closing conditions, the Proposed Company Sale is expected to close in the second half of 2018. If the Proposed Company Sale is completed, Pinnacle stockholders will hold approximately 22% of the combined company’s outstanding shares.

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~~Our~~RESULTS ~~mission~~OF is to increase stockholder value. We seek to increase revenues through enhancing the guest experience by providing them with their favorite games, restaurants, hotel accommodations, entertainment and other amenities in attractive surroundings with high-quality guest service and our mychoice guest loyalty program (“mychoice program”). We seek to improve cash flows by focusing on operational excellence and efficiency while meeting our guests’ expectations of value. Our long-term strategy includes disciplined capital expenditures to improve and maintain the existing facilities in which we operate, while growing the number of businesses we own and operate by pursuing opportunities to either acquire or develop gaming, hospitality and entertainment businesses. We intend to diversify our revenue sources by growing our portfolio of businesses and facilities, while remaining gaming, hospitality and entertainment centric. We intend to implement these strategies either alone or with third parties when we believe it benefits our stockholders to do so. In making decisions, we consider our stockholders, guests, team members and other constituents in the communities in which we operate.OPERATIONS

OnThe ~~April~~following ~~28,~~table ~~2016,~~highlights ~~Former~~our ~~Pinnacle~~results ~~completed~~of ~~the~~operations ~~transactions~~for ~~under~~ the ~~terms~~three ofmonths aended ~~definitive~~March 31, ~~agreement~~2018 ~~(the~~and ~~“Merger~~2017. ~~Agreement”)~~As ~~with~~discussed ~~Gaming~~in ~~and~~Note ~~Leisure Properties~~10, ~~Inc. (~~“~~GLPI”)~~Segment Information,” ~~a real estate investment trust. Pursuant~~ to ~~the~~our ~~terms~~unaudited ofCondensed ~~the~~Consolidated ~~Merger~~Financial ~~Agreement~~Statements, ~~Former~~we ~~Pinnacle~~report ~~separated~~segment ~~its~~ operating ~~assets~~results ~~and~~based ~~liabilities~~on ~~(and~~revenues ~~its Belterra Park property~~ and ~~excess~~Adjusted ~~land~~EBITDAR at(as ~~certain~~defined ~~locations~~below). ~~into~~Such ~~the~~segment ~~Company,~~reporting ais ~~newly formed subsidiary, and distributed to its stockholders,~~ on a ~~pro~~basis ~~rata~~consistent ~~basis,~~with ~~all~~how ofwe ~~the~~measure ~~issued~~our business and ~~outstanding~~allocate ~~shares~~resources ofinternally. ~~common~~The ~~stock~~following oftable ~~the~~highlights ~~Company~~our ~~(such~~total ~~distribution~~revenues ~~referred~~and toAdjusted asEBITDAR ~~the~~for ~~“Spin-Off”)~~each segment. AsIn ~~a result~~addition, ~~Former Pinnacle stockholders received one share of~~ the ~~Company’s~~following ~~common~~table ~~stock,~~includes ~~with~~ a ~~par~~reconciliation ~~value~~ of ~~$0.01~~net ~~per share~~income, ~~for~~which ~~each~~is ~~share~~determined ofin ~~Former~~accordance ~~Pinnacle~~with ~~common~~generally ~~stock~~accepted ~~that~~accounting ~~they~~principles ~~owned.~~in ~~Gold~~the ~~Merger~~United ~~Sub,~~States ~~LLC, a wholly owned subsidiary of GLPI~~ (“~~Merger Sub~~GAAP”), ~~then~~to ~~merged~~Consolidated ~~with~~Adjusted ~~and~~EBITDAR ~~into Former Pinnacle~~ (~~the “Merger”), with Merger Sub surviving the Merger~~ as adefined ~~wholly~~below) ~~owned~~and ~~subsidiary~~to ofConsolidated ~~GLPI.~~Adjusted ~~Immediately following the Merger~~EBITDAR, ~~the~~net ~~Company~~of ~~was~~Lease ~~renamed~~Payments ~~Pinnacle~~(as ~~Entertainment,~~defined ~~Inc.~~below), ~~and~~which ~~operates~~are ~~its gaming businesses in the facilities acquired by GLPI under a triple~~non-~~net~~GAAP ~~master~~financial ~~lease agreement (the “Master Lease”)~~measures.

In completing the Merger, each share of common stock, par value $0.10 per share, of Former Pinnacle (the “Former Pinnacle Common Stock”) issued and outstanding immediately prior to the effective time (other than shares of Former Pinnacle Common Stock (i) owned or held in treasury by Former Pinnacle or (ii) owned by GLPI, its subsidiaries or Merger Sub) were canceled and converted into the right to receive 0.85 shares of common stock, par value $0.01 per share, of GLPI.



	For the three months ended March 31,
	2018			2017

	(in millions)
Revenues:
Midwest segment (a)	$	377.5		$	390.3
South segment (a)	190.1			192.5
West segment (a)	59.7			56.0
	627.3			638.8
Corporate and other (b)	1.1			1.2
Total revenues	$	628.4		$	640.0

Adjusted EBITDAR (c):
Midwest segment (a)	$	109.9		$	112.9
South segment (a)	63.6			61.8
West segment (a)	23.2			20.5
	196.7			195.2
Corporate expenses and other (b)	(19.0		)	(20.3		)
Consolidated Adjusted EBITDAR (c)	177.7			174.9
Lease Payments (d)	(100.8		)	(99.4		)
Consolidated Adjusted EBITDA, net of Lease Payments (d)	$	76.9		$	75.5

Net income	$	21.8		$	17.2
Rent expense under the Meadows Lease	4.2			4.1
Depreciation and amortization	50.0			56.1
Pre-opening, development and other costs	1.8			0.8
Non-cash share-based compensation expense	3.9			2.4
Write-downs, reserves and recoveries, net	2.4			0.5
Interest expense, net	92.4			94.1
Income tax expense (benefit)	1.2			(0.3		)
Consolidated Adjusted EBITDAR (b)	177.7			174.9
Lease Payments (d)	(100.8		)	(99.4		)
Consolidated Adjusted EBITDA, net of Lease Payments (d)	$	76.9		$	75.5

Net income margin	3.5		%	2.7		%
Consolidated Adjusted EBITDAR margin	28.3		%	27.3		%

We(a) ~~concluded~~See ~~that~~“Executive ~~the~~Summary” ~~Spin-Off~~above ~~was to be accounted~~ for aslisting ~~the reverse~~ of ~~its~~properties ~~legal~~included ~~form under the requirements of Accounting Standards Codification (“ASC”) Subtopic 505-60, Spinoff and Reverse Spinoffs, resulting~~ in ~~the~~each ~~Company being considered the accounting spinnor~~segment. The gaming facilities acquired by GLPI, which are leased back by the Company under the Master Lease, did not qualify for sale-leaseback accounting; and therefore, the Master Lease is accounted for as a financing obligation and the gaming facilities remain on our unaudited Condensed Consolidated Financial Statements.

~~On September 9, 2016, we closed on a purchase agreement~~ (~~the “Purchase Agreement”~~b) ~~with~~Corporate ~~GLP~~and ~~Capital,~~other ~~L.P.~~includes ~~(“GLPC”),~~revenues from a ~~subsidiary~~live ofand ~~GLPI,~~televised ~~pursuant~~poker totournament ~~which~~series wethat ~~acquired~~operates ~~all~~under of the ~~equity~~trade ~~interests~~name ofHeartland ~~the~~Poker ~~Meadows~~Tour ~~located~~(“HPT”) ~~in Washington, Pennsylvania for base consideration of $138.0 million, subject to certain adjustments. The purchase price, after giving effect to such adjustments was $134.0 million~~ and ~~the~~management ~~cash~~fees ~~paid~~associated ~~for~~with ~~the~~Retama ~~Meadows~~Park ~~business,~~Racetrack ~~net~~located ofoutside ~~cash acquired, was $107.5 million. As a result~~ of ~~the~~San ~~transaction~~Antonio, ~~we own and operate the Meadows’ gaming entertainment and harness racing business subject to a triple-net lease of its underlying real property with GLPI (the “Meadows Lease”).~~

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~~RESULTS~~Texas. OFCorporate ~~OPERATIONS~~expenses represent payroll, professional fees, travel expenses and other general and administrative expenses not directly related to our casino and hotel operations. Corporate expenses that are directly attributable to a property are allocated to each applicable property. Other includes expenses relating to the operation of HPT and management of Retama Park Racetrack.

~~The~~(c) ~~following~~Consolidated ~~table~~Adjusted ~~highlights~~EBITDAR ~~our~~and ~~results~~Consolidated ofAdjusted ~~operations~~EBITDAR ~~for~~margin ~~the~~are ~~three~~non-GAAP financial measures. We define Consolidated Adjusted EBITDAR as earnings before interest income and ~~nine~~expense, ~~months~~income ~~ended~~taxes, ~~September 30~~depreciation, ~~2017~~amortization, rent expense associated with the Meadows Lease, pre-opening, development and ~~2016.~~other Ascosts, ~~discussed~~non-cash inshare-based ~~Note~~compensation, 9asset impairment costs, ~~“Segment~~write-downs, ~~Information~~reserves,” torecoveries, ~~our~~gain ~~unaudited~~(loss) ~~Condensed~~on ~~Consolidated~~sale ~~Financial~~of ~~Statements~~certain assets, weloss ~~report~~on ~~segment~~early ~~operating~~extinguishment ~~results~~of ~~based~~debt, gain (loss) on ~~revenues~~sale of equity security investments, income (loss) from equity method investments, non-controlling interest and discontinued operations. We define Adjusted EBITDAR (for each reportable segment as ~~defined~~earnings ~~below).~~before ~~Such~~interest ~~segment~~income ~~reporting~~and isexpense, onincome ataxes, ~~basis~~depreciation, ~~consistent~~amortization, rent expense associated with ~~how~~the weMeadows ~~measure~~Lease, ~~our~~pre-opening, ~~business~~development and ~~allocate~~other ~~resources~~costs, ~~internally.~~non-cash ~~See~~share-based ~~Note~~compensation, 9asset impairment costs, ~~“Segment~~write-downs, ~~Information~~reserves,” torecoveries, ~~our~~inter-company ~~unaudited~~management ~~Condensed~~fees, gain (loss) on sale of certain assets, gain (loss) on early extinguishment of debt, gain (loss) on sale of discontinued operations and discontinued operations. We define Consolidated ~~Financial~~Adjusted ~~Statements~~EBITDAR margin as Consolidated Adjusted EBITDAR divided by revenues on a consolidated basis. We define Adjusted EBITDAR margin as Adjusted EBITDAR for ~~more~~the ~~information~~segment ~~regarding~~divided ~~our~~by segment ~~information~~revenues. ~~The~~We ~~following~~use ~~table~~Consolidated ~~highlights~~Adjusted ~~our~~EBITDAR and Adjusted EBITDAR for each segment to compare operating results among our businesses and ~~reconciles~~between accounting periods. Consolidated Adjusted EBITDAR and ~~Consolidated~~ Adjusted ~~EBITDA~~EBITDAR have economic substance because they are used by management as measures to analyze the performance of our business and are especially relevant in evaluating large, ~~net~~long-lived casino-hotel projects because they provide a perspective on the current effects of ~~Lease~~operating ~~Payments~~decisions (separated from the substantial non-operational depreciation charges and financing costs of such projects. We eliminate the results from discontinued operations at the time they are deemed discontinued. We also review pre-opening, development and other costs separately, as such ~~terms~~expenses are ~~defined~~also ~~below)~~included in total project costs when assessing budgets and project returns, and because such costs relate to ~~Income~~anticipated ~~(loss)~~future ~~from~~revenues ~~continuing~~and income. We believe that Consolidated Adjusted EBITDAR, Consolidated Adjusted EBITDAR margin and Adjusted EBITDAR are useful measures for investors because they are indicators of the performance of ongoing business operations. These calculations are commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare operating performance and value of companies within our industry. In addition, Consolidated Adjusted EBITDAR ~~margin~~approximates the measures used in the debt covenants within the Company’s debt agreements. Consolidated Adjusted EBITDAR and Adjusted EBITDAR do not include depreciation or interest expense and, therefore, do not reflect current or future capital expenditures or the cost of capital. Consolidated Adjusted EBITDAR should not be considered as an alternative to ~~Income~~operating income (loss) ~~from~~as ~~continuing~~an ~~operations~~indicator ~~margin~~of performance, or as an alternative to any other measure provided in accordance with UGAAP.S. ~~GAAP~~Our calculations of Consolidated Adjusted EBITDAR and Adjusted EBITDAR may be different from the calculation methods used by other companies and, therefore, comparability may be limited.

	For the three months ended September 30,						For the nine months ended September 30,
	2017			2016			2017			2016
	(in millions)
Revenues:
Midwest segment (a)	$	391.7		$	333.5		$	1,171.7		$	980.8
South segment (a)	188.7			197.0			583.0			579.0
West segment (a)	65.3			62.9			182.1			177.2
	645.7			593.4			1,936.8			1,737.0
Corporate and other (c)	1.7			1.8			4.2			4.4
Total revenues	$	647.4		$	595.2		$	1,941.0		$	1,741.4
Adjusted EBITDAR (b):
Midwest segment (a)	$	112.2		$	92.8		$	334.2		$	299.0
South segment (a)	60.2			58.1			189.7			180.5
West segment (a)	26.7			24.2			70.8			66.8
	199.1			175.1			594.7			546.3
Corporate expenses and other (c)	(21.0		)	(19.7		)	(61.0		)	(61.5		)
Consolidated Adjusted EBITDAR (b)	178.1			155.4			533.7			484.8
Lease Payments (d)	(102.7		)	(96.5		)	(303.4		)	(162.7		)
Consolidated Adjusted EBITDA, net of Lease Payments (d)	75.4			58.9			230.3			322.1
Other benefits (costs) and adjustments:
Lease Payments (d)	102.7			96.5			303.4			162.7
Rent expense under the Meadows Lease	(4.0		)	(1.0		)	(12.1		)	(1.0		)
Depreciation and amortization	(54.1		)	(54.3		)	(166.3		)	(162.4		)
Pre-opening, development and other costs	(0.4		)	(5.6		)	(3.0		)	(55.0		)
Non-cash share-based compensation expense	(3.7		)	(2.6		)	(10.4		)	(32.7		)
Impairment of goodwill	—			11.6			—			(321.3		)
Impairment of other intangible assets	—			—			—			(129.5		)
Write-downs, reserves and recoveries, net	(4.2		)	(6.2		)	(12.7		)	(13.8		)
Interest expense, net	(95.9		)	(94.3		)	(286.6		)	(239.1		)
Loss on early extinguishment of debt	(0.5		)	—			(0.5		)	(5.2		)
Loss from equity method investment	—			—			(0.1		)	(0.1		)
Income tax benefit (expense)	(1.4		)	(3.5		)	(2.4		)	26.5
Income (loss) from continuing operations	$	13.9		$	(0.5	)	$	39.6		$	(448.8	)
Consolidated Adjusted EBITDAR margin	27.5		%	26.1		%	27.5		%	27.8		%
Income (loss) from continuing operations margin	2.2		%	(0.1		)%	2.0		%	(25.8		)%

(d)

Consolidated Adjusted EBITDA, net of Lease Payments is a non-GAAP financial measure. Consolidated Adjusted EBITDA, net of Lease Payments is defined as Consolidated Adjusted EBITDAR (as defined above), less Lease Payments. The Company defines Lease Payments as lease payments made to GLPI for the Master Lease and the Meadows Lease. We believe that Consolidated Adjusted EBITDA, net of Lease Payments is a useful measure to compare operating results between accounting periods. In addition, Consolidated Adjusted EBITDA, net of Lease Payments is a useful measure for investors because it is an indicator of the performance of ongoing business operations after incorporating the cash flow obligations associated with the Master Lease and the Meadows Lease. Consolidated Adjusted EBITDA, net of Lease Payments should not be considered as an alternative to operating income (loss) as an indicator of performance, or as an alternative to any other measure provided in accordance with GAAP. Our calculations of Consolidated Adjusted EBITDA, net of Lease Payments may be different from the calculation methods used by other companies and, therefore, comparability may be limited.

~~(a)~~Consolidated ~~See “Executive Summary” section for listing of properties included in each segment.~~Overview

Total revenues for the three months ended March 31, 2018 were $628.4 million, representing a year over year decrease of $11.6 million, or 1.8%. For the three months ended March 31, 2018, net income was $21.8 million, representing a year over year increase of $4.6 million, or 26.7%. Consolidated Adjusted EBITDAR was $177.7 million, an increase of $2.8 million, or 1.6%, year over year, for the three months ended March 31, 2018. Net income margin was 3.5% and Consolidated Adjusted EBITDAR margin was 28.3% for the three months ended March 31, 2018.

During the first quarter 2018, the Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”) using a modified retrospective approach as of the date of initial application, which was January 1, 2018. Under the modified retrospective approach, the prior periods were not recast to reflect the impact of ASC 606. The adoption of ASC 606 had the effect of reducing our total revenues for the three months ended March 31, 2018 by $2.8 million as compared to the prior year period, but had no significant impact on our net income and Consolidated Adjusted EBITDAR. Therefore, as a result of the reduction in total revenues, the adoption of ASC 606 increased our Consolidated Adjusted EBITDAR margin by 20 basis points, with no significant impact on our net income margin.

For the three months ended March 31, 2018, total revenues, net income and Consolidated Adjusted EBITDAR were negatively impacted by adverse winter weather conditions, principally in our Midwest segment at River City, Ameristar East Chicago, Ameristar Kansas City, Ameristar Council Bluffs and Meadows, where visitation was impeded. In addition, Belterra

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~~(b)~~Park ~~We define Consolidated Adjusted EBITDAR as earnings before interest income~~ and ~~expense,~~Belterra ~~income~~Resort ~~taxes,~~both ~~depreciation,~~experienced ~~amortization,~~closures ~~rent expense associated with the Meadows Lease, pre-opening, development~~ and ~~other~~incurred ~~costs, non~~clean-~~cash~~up ~~share-based compensation, asset impairment~~ costs, write-downs, reserves, recoveries, gain (loss) on sale of certain assets, gain (loss) on early extinguishment of debt, gain (loss) on sale of equity security investments, income (loss) from equity method investments, non-controlling interest and discontinued operations. We define Adjusted EBITDAR for each reportable segment as ~~earnings~~a ~~before~~result interest income and expense, income taxes, depreciation, amortization, rent expense associated with the Meadows Lease, pre-opening, development and other costs, non-cash share-based compensation, asset impairment costs, write-downs, reserves, recoveries, inter-company management fees, gain (loss) on sale of ~~certain~~flooding ~~assets, gain (loss) on early extinguishment~~ of debt, gain (loss) on sale of discontinued operations and discontinued operations. We define Consolidated Adjusted EBITDAR margin as Consolidated Adjusted EBITDAR divided by revenues on a consolidated basis. We define Adjusted EBITDAR margin as Adjusted EBITDAR for the ~~segment~~Ohio ~~divided by segment revenues~~River. WeStrong ~~use~~performances ~~Consolidated~~at ~~Adjusted~~L’Auberge ~~EBITDAR~~Lake ~~and~~Charles, ~~Adjusted~~Ameristar ~~EBITDAR~~Black ~~for~~Hawk ~~each reportable segment to compare operating results among our properties~~ and ~~between accounting periods. Consolidated Adjusted EBITDAR and Adjusted EBITDAR have economic substance because they are used by management as measures to analyze~~ the ~~performance~~Jackpot ofProperties ~~our~~partially ~~business~~offset ~~and are especially relevant in evaluating large, long-lived casino-hotel projects because they provide a perspective on~~ the ~~current~~negative ~~effects~~impacts of ~~operating decisions separated from~~ the ~~substantial~~adverse ~~non-operational~~winter ~~depreciation~~weather ~~charges~~conditions and ~~financing costs of such projects. We eliminate~~ the ~~results~~flooding from discontinued operations at the time they are deemed discontinued. We also review pre-opening, development and other costs separately, as such expenses are also included in total project costs when assessing budgets and project returns, and because such costs relate to anticipated future revenues and income. We believe that Consolidated Adjusted EBITDAR, Consolidated Adjusted EBITDAR margin and Adjusted EBITDAR are useful measures for investors because they are indicators of the ~~performance~~Ohio ~~of ongoing business operations~~River. ~~These calculations are commonly used as a basis for investors~~Additionally, ~~analysts~~continued ~~and~~management ~~credit~~focus ~~rating~~on ~~agencies~~achieving tooperational ~~evaluate~~efficiencies ~~and~~helped ~~compare~~contribute operating performance and value of companies within our industry. In addition, Consolidated Adjusted EBITDAR approximates the measures used in the debt covenants within the Company’s debt agreements. Consolidated Adjusted EBITDAR and Adjusted EBITDAR do not include depreciation or interest expense and, therefore, do not reflect current or future capital expenditures or the cost of capital. Consolidated Adjusted EBITDAR should not be considered as an alternative to ~~operating income (loss) as~~ an ~~indicator~~increase ~~of performance, or as an alternative to any other measure provided~~ in ~~accordance with GAAP. Our calculations of~~ Consolidated Adjusted EBITDAR and ~~Adjusted~~the ~~EBITDAR~~related ~~may~~margin befor ~~different from~~ the ~~calculation~~three ~~methods~~months ~~used~~ended ~~by other companies and~~March 31, ~~therefore, comparability may be limited~~2018.

~~(c)~~Total ~~Corporate~~revenues ~~and~~for ~~other~~the ~~includes~~three ~~revenues~~months ~~from~~ended aMarch 31, ~~live~~2017 ~~and~~were ~~televised~~$640.0 ~~poker~~million. ~~tournament~~For ~~series~~the ~~that~~three ~~operates~~months ~~under~~ended March 31, 2017, net income was $17.2 million. For the ~~trade~~three ~~name~~months ~~Heartland~~ended ~~Poker~~March 31, ~~Tour~~2017, ~~(“HPT”)~~total ~~and~~revenues, ~~management~~net ofincome ~~Retama~~and ~~Park~~Consolidated ~~Racetrack~~Adjusted ~~located~~EBITDAR ~~outside~~were ofpositively ~~San~~impacted ~~Antonio,~~by ~~Texas.~~the ~~Corporate~~performances ~~expenses~~of ~~represent~~L’Auberge ~~payroll~~Baton Rouge, ~~professional~~Belterra ~~fees~~Park, ~~travel~~Belterra ~~expenses~~Resort and ~~other~~River ~~general~~City, and ~~administrative~~were ~~expenses~~negatively ~~not~~impacted ~~directly~~by ~~related~~low totable ~~our~~games ~~casino~~hold ~~and~~at ~~hotel~~L’Auberge ~~operations.~~Lake ~~Corporate~~Charles ~~expenses~~and ~~that~~Ameristar ~~are~~East ~~directly~~Chicago. ~~attributable~~Additionally, tototal arevenues, ~~property~~net ~~are~~income ~~allocated~~and toConsolidated ~~each~~Adjusted ~~applicable~~EBITDAR ~~property.~~for ~~Other~~the ~~includes~~three ~~expenses~~months ~~relating~~ended toMarch 31, ~~the~~2017, ~~operation~~were ofadversely ~~HPT~~impacted ~~and~~by ~~management~~a $3.2 million out-of-period ~~Retama~~adjustment ~~Park~~at ~~Racetrack~~Ameristar Kansas City.

~~(d)~~The ~~Consolidated~~Company’s ~~Adjusted~~total ~~EBITDA,~~revenues ~~net~~consist mostly of ~~Lease~~gaming ~~Payments~~revenues, iswhich ~~defined~~are asprimarily ~~Consolidated~~from ~~Adjusted~~slot ~~EBITDAR~~machines ~~(as~~and ~~defined~~to ina ~~footnote~~lesser ~~b above)~~extent, ~~net~~table ~~of Lease Payments~~games. The ~~Company~~slot ~~defines~~revenues ~~Lease~~represented ~~Payments~~approximately as83% ~~lease~~and ~~payments~~82% ~~made~~of togaming ~~GLPI~~revenues ~~for~~in ~~the~~2017 ~~Master Lease~~ and ~~the Meadows Lease. We believe that Consolidated Adjusted EBITDA~~2016, ~~net of Lease Payments is a useful measure to compare operating results between accounting periods~~respectively. In ~~addition,~~analyzing ~~Consolidated Adjusted EBITDA, net of Lease Payments is a useful measure for investors because it is an indicator of~~ the performance of ~~ongoing~~our ~~business~~businesses, ~~operations after incorporating~~ the ~~cash~~key ~~flow~~indicators ~~obligations~~related ~~associated~~to ~~with~~gaming ~~the~~revenues ~~Master~~are ~~Lease~~slot handle and ~~the~~table ~~Meadows~~games ~~Lease.~~drop ~~Consolidated~~(which ~~Adjusted~~are ~~EBITDA,~~volume ~~net of Lease Payments should not be considered as an alternative to operating income (loss~~indicators) asand anwin ~~indicator of performance,~~ or ashold ~~an alternative to any other measure provided in accordance with GAAP~~percentage. ~~Our calculations of Consolidated Adjusted EBITDA, net of Lease Payments may be different from the calculation methods used by other companies and, therefore, comparability may be limited.~~

~~Consolidated~~Slot ~~Overview~~handle or video lottery terminal (“VLT”) handle represents the total amount wagered in a slot machine or VLT, and table games drop represents the total amount of cash and net markers issued that are deposited in gaming table drop boxes. Win represents the amount of wagers retained by us and recorded as gaming revenue and hold represents win as a percentage of slot handle, VLT handle or table games drop. Given the stability in our slot and VLT hold percentages, we have not experienced any significant impact on our results of operations or cash flows as a result of changes in hold percentages.

~~Total~~For ~~revenues~~table ~~for~~games, ~~the~~guests ~~three~~usually ~~and~~purchase ~~nine~~chips ~~months~~at ~~ended~~the ~~September 30,~~gaming ~~2017 were $647~~tables.4 ~~million~~The cash and ~~$1.9~~markers ~~billion,~~(extensions ~~respectively, representing year over year increases~~ of ~~$52.2~~credit ~~million,~~granted orto ~~8.8%,~~certain ~~and~~credit-worthy ~~$199.6~~guests) ~~million,~~are ordeposited ~~11.5%,~~in ~~respectively. For~~ the ~~three~~drop ~~and~~box ~~nine~~of ~~months~~each ~~ended~~gaming ~~September 30, 2017, income from continuing operations was $13~~table.9 ~~million~~Table ~~and~~game ~~$39.6~~win ~~million,~~is ~~respectively, and~~ the ~~related~~amount ~~margin was 2.2% and 2.0%, respectively. Consolidated Adjusted EBITDAR was $178.1 million, an increase~~ of ~~$22.7~~drop ~~million,~~that oris ~~14.6%,~~retained ~~year~~and ~~over~~recorded ~~year,~~as ~~for~~gaming ~~the three months ended September 30~~revenue, ~~2017~~with ~~and~~liabilities ~~was~~recognized ~~$533.7 million, an increase of $48.9 million or 10.1% year over year,~~ for ~~the~~funds ~~nine~~deposited ~~months~~by ~~ended September 30, 2017~~guests.

The ~~three~~Company ~~and~~also ~~nine~~generates ~~months~~hospitality ~~ended~~revenues, ~~September 30~~which consist of food and beverage, ~~2017~~lodging, ~~include~~retail ~~$72~~and entertainment revenues.9 ~~million~~Hospitality revenues may be sold or provided to customers on a complimentary basis in order to induce contemporaneous and ~~$214~~future gaming-related activities.4 ~~million~~Regardless of ~~total~~whether ~~revenues,~~such ~~respectively,~~goods and/or ~~$14.4~~services ~~million~~are ~~and~~sold ~~$39.1~~or ~~million~~provided ofon ~~Adjusted~~a ~~EBITDAR,~~complimentary ~~respectively~~basis, ~~from~~hospitality revenues are recorded at the ~~Meadows,~~respective ~~which~~standalone ~~was~~selling ~~acquired~~prices (“SSP”) of such goods and/or services provided. Upon adoption of ASC 606 on ~~September~~January 91, ~~2016.~~2018, ~~Consolidated~~complimentary ~~Adjusted~~revenues ~~EBITDAR~~are ~~margin~~presented ~~for~~as ~~both~~either ~~the~~food ~~three~~and beverage revenues; lodging revenues; or retail, entertainment and ~~nine~~other ~~months~~revenues; ~~ended~~as ~~September 30~~appropriate, ~~2017~~with ~~was~~a 27corresponding decrease in gaming revenues.~~5%,~~ ~~representing~~Prior anto ~~increase~~the adoption of ~~140~~ASC ~~basis~~606, ~~points~~complimentary revenues were excluded from total revenues and ahad ~~decrease~~no ofimpact 30on ~~basis~~gaming ~~points~~revenues. Accordingly, the year over year comparability of gaming revenues; food and beverage revenues; lodging revenues; and retail, ~~respectively.~~entertainment ~~The~~and ~~decrease~~other inrevenues; ~~Adjusted~~was ~~EBITDAR~~impacted ~~margin~~as ~~year~~a ~~over~~result ~~year~~of ~~for~~adopting ASC 606 using the ~~nine~~modified retrospective approach. For the three months ended ~~September~~March 3031, ~~2017~~2018, ~~was~~we ~~driven~~recorded by$38.1 ~~the~~million, ~~acquisition~~$26.4 million, and $2.4 million of complimentary food and beverage revenues; lodging revenues; and retail, entertainment and other revenues; which had the ~~Meadows~~impact of reducing gaming revenues by $66.9 million.

~~For~~We offer incentives to our guests through our mychoice program. Under the ~~three~~mychoice ~~and~~program, ~~nine~~guests ~~months~~earn ~~ended~~reward ~~September 30~~credits (or points) based on their level of play that may be redeemed for various benefits, ~~2017~~such as cash back, ~~apart~~dining, ~~from~~or hotel stays, among others. The reward credit balance under the ~~acquisition~~program ofwill be forfeited if the ~~Meadows~~guest does not earn any reward credits over the prior six-month period. In addition, ~~total~~based ~~revenues~~on ~~and~~their ~~Consolidated~~level ~~Adjusted~~of ~~EBITDAR~~play, ~~were~~guests ~~positively~~can ~~impacted~~earn byadditional ~~the~~benefits ~~performances~~without atredeeming ~~L’Auberge~~points, ~~Baton~~such ~~Rouge~~as an annual gift, ~~Belterra~~among ~~Park~~other items, as a result of achieving a certain tier status. In January 2018, the Company implemented the mychoice program at Meadows, which previously operated its own loyalty program.

We accrue a performance obligation liability associated with the mychoice program, which includes the estimated SSP of 1) reward credits and 2) certain tier benefits that are earned by our guests. Estimates and assumptions are made regarding SSP of the goods and services redeemable for reward credits, breakage rates, and the mix of goods and services guests choose. Changes in estimates or guest redemption habits could produce different results, which would principally impact the recorded balance of the performance obligation liability and the amount of gaming revenues recorded during the period in which such reward credits are earned. As of March 31, 2018 and December 31, 2017, we had accrued $26.0 million and $21.0 million, respectively, for the performance obligation liability associated with the mychoice program. Of the increase, $3.3 million relates to the adoption of ASC 606.

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~~Belterra~~Segment ~~Resort,~~comparison ~~River~~of City and Ameristar Black Hawk, and were negatively impacted by lost business volume at L’Auberge Lake Charles, due principally to Hurricane Harvey, and at Ameristar Kansas City due to road construction surrounding the ~~facility,~~three ~~and lower gaming and hospitality volume at Ameristar Vicksburg. In addition, total revenues and Consolidated Adjusted EBITDAR for the nine~~ months ended ~~September~~March 3031, ~~2017~~2018 ~~were~~and ~~adversely~~2017 ~~impacted by a $3.2 million out-of-period adjustment at Ameristar Kansas City.~~

~~Total~~Midwest revenues for the three and nine months ended September 30, 2016 were $595.2 million and $1.7 billion, respectively. For the three and nine months ended September 30, 2016, loss from continuing operations was $0.5 million and $448.8 million, respectively. For the nine months ended September 30, 2016, loss from continuing operations was negatively impacted by non-cash impairments to goodwill, gaming licenses and trade names totaling $321.3 million, $68.5 million and $61.0 million, respectively. For the three months ended September 30, 2016, loss from continuing operations was positively impacted by a reversal of $11.6 million in non-cash goodwill impairment as a result of our finalization of our impairment analysis, which was recorded on a preliminary basis during the second quarter 2016.Segment

For the three and nine months ended September 30, 2016, Consolidated Adjusted EBITDAR was positively impacted by margin expansion and the acquisition of the Meadows, which contributed $1.5 million of Adjusted EBITDAR, and negatively impacted by lost business volume at L’Auberge Baton Rouge due to severe rain and flooding. Additionally, Ameristar St. Charles was negatively impacted by highway interchange construction on Interstate 70 and a casino floor renovation program.



	For the three months ended March 31,						Change
	2018			2017			2018 vs. 2017

	(in millions, except margin)
Revenues (a):
Gaming	$	313.6		$	353.1
Food and beverage	36.6			19.8
Lodging	15.3			4.6
Retail, entertainment and other	12.0			12.8
Total revenues	$	377.5		$	390.3		(3.3	)%
Operating income	$	74.3		$	76.5		(2.9	)%
Adjusted EBITDAR	$	109.9		$	112.9		(2.7	)%
Adjusted EBITDAR margin	29.1		%	28.9		%	20 bps

~~The~~(a) ~~Company’s~~As ~~revenue~~noted ~~consists mostly of gaming revenue~~above, ~~which~~the isadoption ~~primarily~~of ~~from~~ASC ~~slot~~606 ~~machines~~using ~~and~~the tomodified aretrospective ~~lesser~~transition ~~extent,~~approach ~~table~~principally ~~games.~~impacted ~~The~~the ~~slot~~year ~~revenue~~over ~~represented~~year ~~approximately~~comparability ~~82%~~ of gaming ~~revenue~~revenues; infood ~~both 2016~~ and ~~2015.~~beverage Inrevenues; ~~analyzing~~lodging ~~the~~revenues; ~~performance~~and ~~of our businesses~~retail, ~~the~~entertainment ~~key~~and ~~indicators~~other ~~related~~revenues; tobut ~~gaming~~had ~~revenue~~minimal ~~are~~impact ~~slot~~on ~~handle~~total ~~and~~revenues ~~table games drop~~ (~~which~~see ~~are volume indicators~~below) ~~and win or hold percentage~~.

~~Slot~~In ~~handle~~the orMidwest ~~video~~segment, ~~lottery~~total ~~terminal~~revenues ~~(“VLT”)~~and ~~handle~~operating ~~represents~~income ~~the~~decreased ~~total~~by ~~amount~~$12.8 ~~wagered~~million, inor a3.3%, ~~slot~~and ~~machine~~$2.2 million, or ~~VLT~~2.9%, ~~and~~respectively, ~~table~~year ~~games~~over ~~drop~~year, ~~represents~~for the ~~total~~three ~~amount~~months ofended ~~cash~~March 31, ~~and~~2018. ~~net~~Adjusted ~~markers~~EBITDAR ~~issued~~decreased ~~that~~by ~~are~~$3.0 ~~deposited~~million, inor ~~gaming~~2.7%, ~~table~~year ~~drop~~over ~~boxes~~year, for the three months ended March 31, 2018. ~~Win~~Adjusted ~~represents~~EBITDAR ~~the~~margin ~~amount~~increased ofyear ~~wagers~~over ~~retained~~year by us20 ~~and~~basis ~~recorded~~points asfor ~~gaming~~the ~~revenue~~three months ended March 31, ~~and~~2018. ~~hold~~The ~~represents~~adoption ~~win~~of asASC a606 ~~percentage~~had the effect of ~~slot~~reducing ~~handle,~~our ~~VLT~~Midwest ~~handle~~segment ortotal ~~table~~revenues ~~games~~for ~~drop~~the three months ended March 31, 2018 by $1.6 ~~Given~~million as compared to the ~~stability~~prior inyear ~~our~~period, ~~slot~~which ~~and~~increased ~~VLT~~Adjusted ~~hold~~EBITDAR ~~percentages,~~margin weby ~~have~~10 ~~not~~basis ~~experienced~~points ~~any~~since ~~significant~~Adjusted ~~impact~~EBITDAR onwas ~~our~~not ~~results~~significantly ofimpacted. ~~operations~~Midwest assegment aoperating ~~result~~income ofwas ~~changes~~not insignificantly ~~hold~~impacted ~~percentages~~by the adoption of ASC 606.

For ~~table~~the ~~games~~three months ended March 31, ~~guests~~2018, ~~usually~~the ~~purchase~~Midwest ~~cash~~segment ~~chips~~total atrevenues and Adjusted EBITDAR were negatively impacted by adverse winter weather conditions throughout the ~~gaming~~region, ~~tables~~particularly at River City, Ameristar East Chicago, Ameristar Kansas City, Ameristar Council Bluffs and Meadows, where visitation was impeded. ~~The~~In ~~cash~~addition, Belterra Park and ~~markers~~Belterra ~~(extensions~~Resort ofboth ~~credit~~experienced ~~granted~~closures toand ~~certain~~incurred ~~credit~~clean-~~worthy~~up ~~guests)~~costs ~~are~~as ~~deposited~~a inresult ~~the~~of ~~drop~~flooding ~~box~~ of ~~each~~the ~~gaming~~Ohio ~~table~~River. ~~Table~~Continued ~~game~~management ~~win~~focus ison ~~the~~achieving ~~amount~~operational ofefficiencies ~~drop~~helped ~~that~~contribute isto ~~retained~~an ~~and~~increase ~~recorded~~in asAdjusted ~~gaming~~EBITDAR ~~revenue~~margin for the three months ended March 31, ~~with~~2018, ~~liabilities~~as ~~recognized~~compared ~~for~~to ~~funds~~the ~~deposited~~prior byyear ~~guests~~period.

WeFor ~~offer~~the ~~incentives~~three tomonths ~~our~~ended ~~guests~~March 31, ~~through~~2017, ~~our~~the ~~mychoice~~Midwest ~~program.~~segment ~~Under~~total ~~the~~revenues ~~mychoice~~and ~~program,~~Adjusted ~~guests~~EBITDAR ~~earn~~benefited ~~points~~from ~~based~~strong onperformances ~~their~~at ~~level~~Belterra ofPark, ~~play~~where ~~that~~gaming ~~may~~volumes becontinued ~~redeemed~~to ~~for~~ramp ~~various~~up ~~benefits,~~and ~~such~~additional ascost ~~cash~~efficiencies ~~back,~~were ~~dining~~realized; Belterra Resort, orwhere ~~hotel~~modest ~~stays~~growth in gaming revenues, ~~among~~an ~~others.~~emphasis ~~The~~on ~~reward~~cash ~~credit~~hospitality ~~balance~~revenue ~~under~~streams ~~the~~and ~~mychoice~~operational ~~program~~efficiencies, ~~will~~resulted bein ~~forfeited~~Adjusted ifEBITDAR ~~the~~growth; ~~guest~~and ~~does~~River ~~not~~City, ~~earn~~where orhospitality ~~use~~revenue ~~any~~increased, ~~reward~~in ~~credits~~part, ~~over~~from the ~~prior~~ramp ~~six-month~~up ~~period.~~of Innew ~~addition,~~food ~~based~~and onbeverage ~~their~~outlets. ~~level~~The ofMidwest ~~play,~~segment ~~guests~~operating ~~can~~results ~~earn~~for ~~additional~~the ~~benefits~~three ~~without~~months ~~redeeming~~ended ~~points~~March 31, ~~such~~2017 aswere anegatively ~~car~~impacted ~~lease,~~by ~~among~~low ~~other~~table ~~items.~~games ~~During~~hold ~~the~~at ~~third~~Ameristar ~~quarter~~East ~~2017~~Chicago. Additionally, the ~~Company~~Midwest ~~announced~~segment ~~its~~total ~~intention~~revenues toand ~~implement~~Adjusted ~~the~~EBITDAR ~~mychoice~~for ~~program~~the atthree ~~the~~months ~~Meadows~~March 31, ~~during~~2017, ~~the~~were ~~first~~adversely ~~quarter~~impacted ~~2018,~~by ~~which~~a ~~currently~~$3.2 ~~operates~~million ~~its~~out-of-period ~~own~~adjustment ~~guest~~at ~~loyalty~~Ameristar ~~program~~Kansas City.

We accrue a liability for the estimated cost of providing these benefits as they are earned. Estimates and assumptions are made regarding the cost of providing such benefits, breakage rates, and the mixture of goods and services guests will choose. We use historical data to assist in the determination of estimated accruals. Changes in estimates or guest redemption habits could produce different results. As of September 30, 2017 and December 31, 2016, we had accrued $18.6 million and $25.1 million, respectively, for the estimated cost of providing these benefits.

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~~Segment~~South ~~comparison of the three and nine months ended September 30, 2017 and 2016~~ Segment

Midwest Segment



	For the three months ended March 31,						Change
	2018			2017			2018 vs. 2017

	(in millions, except margin)
Revenues (a):
Gaming	$	145.2		$	174.2
Food and beverage	24.9			9.4
Lodging	14.1			4.5
Retail, entertainment and other	5.9			4.4
Total revenues	$	190.1		$	192.5		(1.2	)%
Operating income	$	48.4		$	43.7		10.8	%
Adjusted EBITDAR	$	63.6		$	61.8		2.9	%
Adjusted EBITDAR margin	33.5		%	32.1		%	140 bps

	For the three months ended September 30,						Change		For the nine months ended September 30,						Change
	2017			2016			2017 vs. 2016		2017			2016			2017 vs. 2016
	(in millions)								(in millions)
Gaming revenues	$	352.1		$	301.2		16.9	%	$	1,054.6		$	887.6		18.8	%
Total revenues	391.7			333.5			17.5	%	1,171.7			980.8			19.5	%
Operating income (loss)	75.5			73.4			2.9	%	222.2			(22.5		)	NM
Adjusted EBITDAR	112.2			92.8			20.9	%	334.2			299.0			11.8	%
Adjusted EBITDAR margin	28.6		%	27.8		%	80 bps		28.5		%	30.5		%	(200) bps


(a)	As noted above, the adoption of ASC 606 using the modified retrospective transition approach principally impacted the year over year comparability of gaming revenues; food and beverage revenues; lodging revenues; and retail, entertainment and other revenues; but had minimal impact on total revenues (see below).

NMIn -the ~~Not~~South ~~Meaningful~~segment, total revenues decreased by $2.4 million, or 1.2%, and operating income increased by $4.7 million, or 10.8%, year over year, for the three months ended March 31, 2018. Adjusted EBITDAR increased by $1.8 million, or 2.9%, year over year, for the three months ended March 31, 2018. For the three months ended March 31, 2018, Adjusted EBITDAR margin increased year over year by 140 basis points. The adoption of ASC 606 had the effect of reducing our South segment total revenues for the three months ended March 31, 2018 by $1.0 million as compared to the prior year period, which increased Adjusted EBITDAR margin by 20 basis points since Adjusted EBITDAR was not significantly impacted. South segment operating income was not significantly impacted by the adoption of ASC 606.

InFor the ~~Midwest~~three ~~segment,~~months ~~total~~ended ~~revenues increased by $58.2 million~~March 31, ~~or 17.5%~~2018, ~~and~~the ~~$190.9~~South ~~million,~~segment ortotal ~~19.5%,~~revenues ~~year over year, for the three~~ and ~~nine~~Adjusted ~~months~~EBITDAR ~~ended~~benefited ~~September 30,~~from ~~2017. Operating income for~~ the ~~three~~performance ~~and~~at ~~nine~~L’Auberge ~~months~~Lake ~~ended September 30~~Charles, ~~2017~~which ~~was~~experienced ~~$75.5~~strong ~~million~~table ~~and~~games ~~$222.2 million~~hold, ~~respectively,~~ as compared to ~~operating income of $73.4 million and operating loss of $22.5 million, respectively, in~~ the prior year ~~periods~~period. ~~Adjusted~~Offsetting ~~EBITDAR increased by $19.4 million, or 20.9%, and $35.2 million, or 11.8%, year over year, for~~ the ~~three~~performance ~~and~~at ~~nine~~L’Auberge ~~months~~Lake ~~ended September 30~~Charles, ~~2017.~~were ~~The acquisition of~~ the ~~Meadows~~performances onat ~~September~~L’Auberge 9,Baton ~~2016 contributed $72.9 million and $214.4 million of total revenues~~Rouge, ~~respectively,~~where ~~and $14.4 million and $39.1 million of Adjusted EBITDAR, respectively, to~~ the ~~three~~prior ~~and~~year ~~nine~~period ~~months~~was ~~ended~~particularly ~~September 30~~strong, ~~2017,~~ and ~~$15.6~~Ameristar ~~million of total revenues and $1~~Vicksburg.5 ~~million of~~ Adjusted EBITDAR ~~to the three and nine months ended September 30, 2016. Adjusted EBITDAR~~ margin increased ~~year over year by 80 basis points~~ for the three months ended ~~September~~March 3031, ~~2017~~2018, ~~and~~principally ~~decreased~~due ~~year~~to ~~over year by 200 basis points for~~ the ~~nine~~operating ~~months~~performance ~~ended~~of ~~September 30,~~L’Auberge ~~2017,~~Lake ~~which was driven by the Meadows~~Charles.

For the three ~~and nine~~ months ended ~~September~~March 3031, 2017, ~~apart from~~ the ~~acquisition~~South ~~of the Meadows, the Midwest~~ segment total revenues and Adjusted EBITDAR benefited from ~~the~~strong ~~performances~~operating performance at ~~Belterra~~L’Auberge ~~Park~~Baton Rouge, ~~where~~which ~~gaming and hospitality volumes have~~ continued to ~~ramp~~experience ~~up and marketing efficiencies continue to materialize, and River City, where~~ gaming ~~volume continued to increase~~ and hospitality ~~revenues~~revenue ~~increased,~~growth inas ~~part,~~well ~~from~~as ~~the~~continued ~~ramp~~focus upon ofachieving ~~new~~operational ~~food and beverage outlets~~efficiencies. InLow ~~addition,~~table ~~the~~games ~~nine~~hold ~~months ended September 30, 2017 benefited from the performance~~ at ~~Belterra~~L’Auberge ~~Resort,~~Lake ~~where~~Charles ~~modest growth in gaming revenues~~ and ana ~~emphasis~~decrease ~~on cash hospitality revenue streams, resulted~~ in ~~Adjusted EBITDAR growth. The Midwest segment~~ operating ~~results~~performance ~~for the three and nine months ended September 30, 2017 were negatively impacted by lost business volume~~ at Ameristar ~~Kansas~~Vicksburg ~~City~~offset ~~due to road construction surrounding~~ the ~~facility.~~strong ~~Additionally,~~operating ~~the~~performance ~~Midwest segment total revenues and Adjusted EBITDAR for the nine months ended September 30, 2017, were adversely impacted by a $3.2 million out-of-period adjustment~~ at ~~Ameristar~~L’Auberge ~~Kansas~~Baton ~~City~~Rouge.

For the three and nine months ended September 30, 2016, the Midwest segment operating results benefited from the performance at Belterra Park, where gaming volume continued to ramp up and cost efficiencies were realized, and Belterra, where modest growth in gaming and hospitality revenues and operational efficiencies, resulted in Adjusted EBITDAR growth. The Midwest segment operating results for the three and nine months ended September 30, 2016 were negatively impacted by lost business volume at Ameristar St. Charles due primarily to major Interstate 70 interchange construction that impeded access to the property and a casino floor renovation program. In addition, the nine months ended September 30, 2016 includes $228.3 million of non-cash impairment to goodwill and other intangible assets as a result of the Spin-Off and Merger, which resulted in an operating loss. The three months ended September 30, 2016 includes the reversal of $11.6 million of non-cash impairment to goodwill as a result of our finalization of our impairment analysis, which was recorded on a preliminary basis during the second quarter 2016.

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South Segment

	For the three months ended September 30,						Change		For the nine months ended September 30,						Change
	2017			2016			2017 vs. 2016		2017			2016			2017 vs. 2016
	(in millions)								(in millions)
Gaming revenues	$	169.0		$	177.3		(4.7	)%	$	525.0		$	521.2		0.7	%
Total revenues	188.7			197.0			(4.2	)%	583.0			579.0			0.7	%
Operating income (loss)	42.3			34.5			22.6	%	134.8			(64.0		)	NM
Adjusted EBITDAR	60.2			58.1			3.6	%	189.7			180.5			5.1	%
Adjusted EBITDAR margin	31.9		%	29.5		%	240 bps		32.5		%	31.2		%	130 bps

NM - Not Meaningful

In the South segment, total revenues decreased by $8.3 million, or 4.2%, and increased by $4.0 million, or 0.7%, year over year, for the three and nine months ended September 30, 2017. Operating income for the three and nine months ended September 30, 2017 was $42.3 million and $134.8 million, respectively, as compared to operating income of $34.5 million and operating loss of $64.0 million, respectively, in the prior year periods. Adjusted EBITDAR increased by $2.1 million, or 3.6%, and $9.2 million, or 5.1%, year over year, for the three and nine months ended September 30, 2017, respectively. For the three and nine months ended September 30, 2017, Adjusted EBITDAR margin increased year over year by 240 basis points and 130 basis points, respectively.

For the three and nine months ended September 30, 2017, the South segment total revenues and Adjusted EBITDAR benefited from the performance at L’Auberge Baton Rouge, which continued to experience gaming and hospitality revenue growth as well as achieved operational efficiencies principally relating to marketing efforts. In addition, the nine months ended September 30, 2017 benefited from the performance at Boomtown New Orleans, where modest growth in gaming revenues helped drive an increase in Adjusted EBITDAR. Despite lost business volume at L’Auberge Lake Charles, due principally to Hurricane Harvey, during the three months ended September 30, 2017, a focus on improving operational efficiencies led to Adjusted EBITDAR margin expansion during the three and nine months ended September 30, 2017. Ameristar Vicksburg experienced lower gaming and hospitality volume during the three and nine months ended September 30, 2017.

For the three and nine months ended September 30, 2016, the South segment operating results benefited from the performance at L’Auberge Baton Rouge despite disruption from severe rain and flooding, which reduced visitation for approximately two weeks in August 2016. South segment operating results for the three and nine months ended September 30, 2016 also benefited from the year over year performance at L’Auberge Lake Charles. In addition, we recorded $179.9 million of non-cash impairment to goodwill and other intangible assets as a result of the Spin-Off and Merger, which resulted in an operating loss for the nine months ended September 30, 2016.

West Segment

	For the three months ended September 30,						Change		For the nine months ended September 30,						Change
	For the three months ended March 31,						Change
	2017			2016			2017 vs. 2016		2017			2016			2017 vs. 2016
	2018			2017			2018 vs. 2017
	(in millions)								(in millions)
	(in millions, except margin)
Gaming revenues	$	54.2		$	51.6		5.0	%	$	151.8		$	147.9		2.6	%
Revenues (a):
Total revenues	65.3			62.9			3.8	%	182.1			177.2			2.8	%
Gaming	$	40.5		$	46.9
Operating income	21.8			19.2			13.5	%	54.7			8.6			NM
Food and beverage	8.1			3.9
Adjusted EBITDAR	26.7			24.2			10.3	%	70.8			66.8			6.0	%
Lodging	8.4			2.9
Adjusted EBITDAR margin	40.9		%	38.5		%	240 bps		38.9		%	37.7		%	120 bps
Retail, entertainment and other	2.7			2.3
Total revenues	$	59.7		$	56.0		6.6	%
Operating income	$	18.2		$	15.3		19.0	%
Adjusted EBITDAR	$	23.2		$	20.5		13.2	%
Adjusted EBITDAR margin	38.9		%	36.6		%	230 bps

NM(a) -As ~~Not~~noted ~~Meaningful~~above, the adoption of ASC 606 using the modified retrospective transition approach principally impacted the year over year comparability of gaming revenues; food and beverage revenues; lodging revenues; and retail, entertainment and other revenues; but had minimal impact on total revenues (see below).

In the West segment, total revenues and operating income increased by $23.47 million, or 36.86%, and $42.9 million, or 219.80%, respectively, year over year, for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2017~~2018. ~~Operating~~Adjusted ~~income~~EBITDAR increased by $2.7 million, or 13.2%, year over year, for the three ~~and~~months ~~nine~~ended March 31, 2018. For the three months ended ~~September~~March 3031, ~~2017~~2018, ~~was~~Adjusted ~~$21.8~~EBITDAR ~~million~~margin ~~and~~increased ~~$54~~year over year by 230 basis points.7 ~~million,~~The ~~respectively,~~adoption asof ~~compared~~ASC to606 ~~operating~~had ~~income~~the effect of ~~$19.2~~reducing ~~million~~our ~~and~~West segment total revenues for the three months ended March 31, 2018 by $80.62 million, ~~respectively,~~as incompared to the prior year ~~periods.~~period, which increased Adjusted EBITDAR ~~increased~~margin by ~~$2.5~~20 ~~million,~~basis orpoints ~~10.3%,~~since ~~and~~Adjusted ~~$4.0~~EBITDAR ~~million,~~was ornot 6significantly impacted.~~0%,~~ West segment operating income was not significantly impacted by the adoption of ASC 606.

For the three months ended March 31, 2018, the West segment operating results were positively impacted by a strong operating performance at Ameristar Black Hawk, which continues to experience growth in total revenues and Adjusted EBITDAR. The operating performance at the Jackpot Properties also positively impacted the West segment operating results for the three months ended March 31, 2018.

For the three months ended March 31, 2017, the West segment operating results were negatively impacted by adverse weather conditions, which decreased guest visitation, at the Jackpot Properties. The operating performance at Ameristar Black Hawk was largely consistent with the prior year period.

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~~year~~Other ~~over~~factors ~~year,~~affecting ~~for~~net the three and nine months ended September 30, 2017. For the three and nine months ended September 30, 2017, Adjusted EBITDAR margin increased year over year by 240 basis points and 120 basis points, respectively.income

~~For~~The ~~the~~following ~~three~~is ~~and~~a ~~nine~~description ~~months~~of ~~ended September 30, 2017,~~ the ~~West~~other ~~segment~~benefits ~~operating~~(costs) ~~results~~affecting ~~were~~net ~~positively~~income ~~impacted~~for by the performance at Ameristar Black Hawk, which continues to experience growth in total revenues and Adjusted EBITDAR. The performance at the Jackpot Properties positively impacted operating results during the three months ended ~~September~~March 3031, ~~2017,~~2018 ~~but~~and ~~the nine months ended September 30,~~ 2017~~, was negatively impacted by adverse weather conditions, which decreased guest visitation, during the first quarter 2017.~~:

For the three and nine months ended September 30, 2016, the West segment operating results were driven by year over year increases in total revenues and Adjusted EBITDAR at the Jackpot Properties due primarily to the opening of the newly renovated buffet at Cactus Petes in April 2016 and continued operational efficiencies at Ameristar Black Hawk along with modest improvement in total revenues. The nine months ended September 30, 2016 includes $42.6 million of non-cash impairment to goodwill and other intangible assets as a result of the Spin-Off and Merger.



	For the three months ended March 31,						Change
	2018			2017			2018 vs. 2017

	(in millions)
Other benefits (costs):
Corporate expenses and other	$	(19.0	)	$	(20.3	)	(6.4	)%
Rent expense under the Meadows Lease	$	(4.2	)	$	(4.1	)	2.4	%
Depreciation and amortization	$	(50.0	)	$	(56.1	)	(10.9	)%
Pre-opening, development and other costs	$	(1.8	)	$	(0.8	)	NM
Share-based compensation expense	$	(3.9	)	$	(2.4	)	62.5	%
Write-downs, reserves and recoveries, net	$	(2.4	)	$	(0.5	)	NM
Interest expense, net	$	(92.4	)	$	(94.1	)	(1.8	)%
Income tax benefit (expense)	$	(1.2	)	$	0.3		NM

Other factors affecting income (loss) from continuing operations

The following is a description of the other benefits (costs) affecting income (loss) from continuing operations for the three and nine months ended September 30, 2017 and 2016:

	For the three months ended September 30,						Change		For the nine months ended September 30,						Change
	2017			2016			2017 vs. 2016		2017			2016			2017 vs. 2016
	(in millions)								(in millions)
Other benefits (costs):
Corporate expenses and other	$	(21.0	)	$	(19.7	)	6.6	%	$	(61.0	)	$	(61.5	)	(0.8	)%
Rent expense under the Meadows Lease	$	(4.0	)	$	(1.0	)	NM		$	(12.1	)	$	(1.0	)	NM
Depreciation and amortization	$	(54.1	)	$	(54.3	)	(0.4	)%	$	(166.3	)	$	(162.4	)	2.4	%
Pre-opening, development and other costs	$	(0.4	)	$	(5.6	)	(92.9	)%	$	(3.0	)	$	(55.0	)	(94.5	)%
Share-based compensation expense	$	(3.7	)	$	(2.6	)	42.3	%	$	(10.4	)	$	(32.7	)	(68.2	)%
Impairment of goodwill	$	—		$	11.6		NM		$	—		$	(321.3	)	NM
Impairment of other intangible assets	$	—		$	—		NM		$	—		$	(129.5	)	NM
Write-downs, reserves and recoveries, net	$	(4.2	)	$	(6.2	)	(32.3	)%	$	(12.7	)	$	(13.8	)	(8.0	)%
Interest expense, net	$	(95.9	)	$	(94.3	)	1.7	%	$	(286.6	)	$	(239.1	)	19.9	%
Loss on early extinguishment of debt	$	(0.5	)	$	—		NM		$	(0.5	)	$	(5.2	)	(90.4	)%
Loss from equity method investment	$	—		$	—		NM		$	(0.1	)	$	(0.1	)	—	%
Income tax benefit (expense)	$	(1.4	)	$	(3.5	)	(60.0	)%	$	(2.4	)	$	26.5		NM

NM - Not Meaningful

Corporate expenses and other is principally comprised of corporate overhead expenses, HPT, and the management of Retama Park Racetrack. For the three months ended ~~September~~March 3031, ~~2017~~2018, corporate expenses and other ~~increased~~decreased year over year by $1.3 million to $2119.0 million ~~and decreased by $0~~.5 ~~million year over year to $61.0 million for the nine months ended September 30, 2017.~~ The ~~increase~~decrease, as compared to the prior year period, for the three months ended ~~September~~March 3031, ~~2017~~2018 is primarily the result of ~~higher~~lower ~~compensation~~professional services costs and legal settlements.

Rent expense under the Meadows Lease ~~relates~~increased for the three months ended March 31, 2018, as compared to the ~~rent~~prior ~~expense~~year ~~recorded~~period, ~~for~~due to the ~~Meadows~~annual ~~Lease~~escalator ~~with~~of ~~GLPI,~~the ~~which~~base ~~commenced~~rent onthat ~~September~~went 9,into ~~2016~~effect in October 2017.

Depreciation and amortization decreased for the three months ended ~~September~~March 3031, ~~2017~~2018, as compared to the prior year period, ~~primarily~~ as a result of the ~~accelerated~~timing ~~method~~ of ~~amortization~~assets onbecoming ~~player~~fully ~~relationships,~~depreciated and ~~increased for~~ the ~~nine~~accelerated ~~months~~method ~~ended September 30, 2017, as compared to the prior year period, due primarily to the timing~~ of ~~the Meadows acquisition, which closed on September 9, 2016, partially offset by the decrease associated with the~~ amortization on player relationships.

Pre-opening, development and other costs for the three months ended March 31, 2018 and 2017, consisted of the following:



	For the three months ended March 31,
	2018		2017

	(in millions)
Proposed Company Sale costs (1)	$	1.7	$	—
Other	0.1		0.8
Total pre-opening, development and other costs	$	1.8	$	0.8


(1)	Amounts comprised principally of legal, advisory, and other costs associated with the respective transactions.

Share-based compensation expense increased for the three months ended March 31, 2018, as compared to the prior year period, principally as a result of share-based payment awards granted during the three months ended March 31, 2018.

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~~Pre~~Write-~~opening~~downs, ~~development~~reserves and ~~other costs for the three and nine months ended September 30~~recoveries, ~~2017~~net ~~and~~consisted ~~2016, consist~~ of the following:

	For the three months ended September 30,				For the nine months ended September 30,
	For the three months ended March 31,
	2017		2016		2017		2016
	2018		2017
	(in millions)
Restructuring costs (1)	$	0.2	$	1.3	$	0.9	$	48.1
Loss on disposals of long-lived assets, net	$	1.8	$	0.3
Meadows acquisition costs (2)	—		4.1		0.2		6.2
Other	0.6		0.2
Other	0.2		0.2		1.9		0.7
Write-downs, reserves and recoveries, net	$	2.4	$	0.5
Total pre-opening, development and other costs	$	0.4	$	5.6	$	3.0	$	55.0

~~(1)~~Loss ~~Amounts~~on ~~comprised~~disposals ~~principally~~ of ~~costs~~long-lived ~~associated~~assets, ~~with~~net: During the ~~Spin-Off~~three months ended March 31, 2018 and ~~Merger~~2017, we recorded net losses related primarily to disposals of building improvements and furniture, fixtures, and equipment at the properties in the normal course of business.

~~(2)~~Interest ~~Amounts~~expense, ~~comprised principally of legal~~net, ~~advisory~~consisted ~~and other costs associated with the acquisition and integration~~ of the ~~Meadows.~~following:

Share-based compensation expense increased for the three months ended September 30, 2017, as compared to the prior year period, principally as a result of share-based payment awards granted during the nine months ended September 30, 2017, and decreased for the nine months ended September 30, 2017, as compared to the prior year period, primarily due to the $22.6 million of incremental expense attributable to the accelerated vesting of share-based payment awards as a result of the Spin-Off and Merger, which is included in the prior year period.



	For the three months ended March 31,
	2018			2017

	(in millions)
Interest expense from financing obligation (1)	$	81.3		$	81.2
Interest expense from debt	11.3			13.1
Interest income	(0.2		)	(0.2		)
Interest expense, net	$	92.4		$	94.1

~~Impairment~~(1) ofTotal ~~goodwill~~lease ~~for~~payments ~~the~~under ~~nine months ended September 30, 2016 consists of a non-cash impairment charge of $321.3 million. Given that~~ the ~~Spin-Off and Merger transactions represented a significant financial restructuring event that increased our cash flow obligations in connection with the~~ Master Lease, wefor ~~concluded that an indicator of impairment existed as of April 28, 2016,~~ the ~~closing~~three ~~date~~months ofended ~~the~~March ~~transactions. During the second quarter 2016~~31, we2018 ~~performed~~and a2017 ~~preliminary~~were ~~impairment assessment, which resulted in a non-cash impairment to goodwill of~~ $~~332~~94.94 million. ~~During~~and ~~the three months ended September 30, 2016, we completed our impairment assessment on goodwill, which resulted in the reversal of~~ $1193.60 million, ~~of non-cash impairment to goodwill~~respectively.

~~Impairment~~For ~~of other intangible assets for~~ the ~~nine~~three months ended ~~September~~March 3031, ~~2016 consists of non-cash impairment charges to gaming licenses and trade names~~2018, ininterest ~~the amounts of $68.5 million and $61.0 million~~expense, ~~respectively. As a result of the Spin-Off and Merger~~net, wedecreased ~~concluded that an indicator of impairment existed~~ as ofcompared ~~April~~to ~~28,~~the ~~2016.~~prior ~~The~~year ~~gaming~~period ~~license~~due ~~impairments~~principally ~~pertained~~ to ~~our~~a ~~Midwest~~reduction ~~segment~~in ~~and~~debt ~~the~~outstanding ~~trade~~under ~~name impairments related to~~ our ~~Midwest,~~Senior ~~South~~Secured ~~and~~Credit ~~West~~Facilities ~~segments,~~(as defined in ~~the~~“Liquidity ~~amounts of $35.3 million, $22.2 million~~ and ~~$3.5~~Capital ~~million,~~Resources” ~~respectively~~below).

Income tax benefit (expense) effective rate for the three months ended March 31, 2018, was 5.2%, or an expense of $1.2 million, as compared to an effective tax rate of (1.8)%, or a benefit of $0.3 million for the corresponding prior year period. The Tax Cuts and Jobs Act, which was enacted on December 22, 2017, significantly revised U.S. corporate income tax law by, among other things, reducing the federal corporate income tax rate from 35% to 21% and granting indefinite carry-forward of net operating losses generated on or after January 1, 2018.

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Write-downs, reserves and recoveries, net consist of the following:

	For the three months ended September 30,				For the nine months ended September 30,
	2017		2016		2017		2016
	(in millions)
Loss on sales or disposals of long-lived assets, net	$	3.0	$	6.2	$	7.8	$	13.1
Impairment of held-to-maturity securities	—		—		3.8		—
Impairment of long-lived assets	—		—		—		0.2
Other	1.2		—		1.1		0.5
Write-downs, reserves and recoveries, net	$	4.2	$	6.2	$	12.7	$	13.8

Impairment of held-to-maturity securities: During the nine months ended September 30, 2017, as a result of the lack of legislative progress and on-going negative operating results at Retama Park Racetrack, we recorded an other-than-temporary impairment on our local government corporation bonds issued by Retama Development Corporation, a local government corporation of the City of Selma, Texas.

Interest expense, net, consists of the following:

	For the three months ended September 30,						For the nine months ended September 30,
	2017			2016			2017			2016
	(in millions)
Interest expense from financing obligation (1)	$	83.8		$	83.6		$	247.7		$	141.9
Interest expense from debt (2)	12.2			11.0			39.2			95.3
Interest income	(0.1		)	(0.3		)	(0.3		)	(0.5		)
Capitalized interest	—			—			—			(0.1		)
Other (3)	—			—			—			2.5
Interest expense, net	$	95.9		$	94.3		$	286.6		$	239.1

(1) Total lease payments under the Master Lease for the three and nine months ended September 30, 2017 and 2016 were $96.5 million, $284.4 million, $95.0 million, and $161.1 million, respectively.

(2) Interest expense associated with the Former Senior Secured Credit Facilities, the 6.375% Notes, the 7.50% Notes, the 7.75% Notes, and the 8.75% Notes (as such terms are defined in the “Liquidity and Capital Resources” section below), which were no longer obligations of the Company as of April 28, 2016, included in the nine months ended September 30, 2016 was $76.5 million.

(3) Represents a nonrecurring expense associated with the GLPI transaction.

For the three months ended September 30, 2017, interest expense increased as compared to the prior year period due to an increase in interest expense incurred related to our debt borrowings, principally as a result of the issuance of $125.0 million in Additional 5.625% Notes (as defined in the “Liquidity and Capital Resources” section below) on October 12, 2016. For the nine months ended September 30, 2017, interest expense increased as compared to the prior year period due principally to the interest expense incurred under the Master Lease financing obligation, which offset the decrease in interest expense incurred related to our debt borrowings.

For the three and nine months ended September 30, 2017, excluding the amortization of debt issuance costs and original issuance discounts/premiums, interest expense was $94.1 million and $279.7 million, respectively, as compared to $93.3 million and $233.1 million for the three and nine months ended September 30, 2016, respectively.

Loss on early extinguishment of debt for the three and nine months ended September 30, 2017 relates to the repayment, in full, of the Term Loan B Facility (as defined in the “Liquidity and Capital Resources” section below). The loss for the nine months ended September 30, 2016 relates to the repayment, in full, of the Former Senior Secured Credit Facilities (as defined

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in the “Liquidity and Capital Resources” section below). The losses included the write-off of unamortized debt issuance costs and/or original issuance discount.

Loss on equity method investment represents losses recognized for our allocable share of an investment in a land re-vitalization project in downtown St. Louis.

Income tax benefit (expense) effective rates for continuing operations for the three and nine months ended September 30, 2017, was 9.3%, or an expense of $1.4 million, and 5.8%, or an expense of $2.4 million, respectively, as compared to an effective tax rate of 117.7%, or an expense of $3.5 million, and 5.6%, or a benefit of $26.5 million, respectively, for the corresponding prior year periods. The rates include the tax impact of certain discrete items, including changes in the tax status of certain of our legal entities. In general, our effective tax rate differs from the statutory rate of 35.0% due to the effects of permanent items, deferred tax expense on tax amortization of indefinite-lived intangible assets, changes in unrecognized tax benefits, changes in valuation allowance and state taxes.

The Spin-Off described in the “Executive Summary” was a taxable transaction. A gain was recognized for tax purposes and the tax bases of the operating assets were stepped up to fair market value at the time of the transaction. Pursuant to ASC Topic 740, Income Taxes, the tax impact directly related to the transaction amongst shareholders was recorded to equity, consistent with the overall accounting treatment of the transaction. All changes in tax bases of assets and liabilities caused by the transactions were recorded to additional paid-in capital.

As previously noted, the failed sale-leaseback is accounted for as a financing obligation. As a result, the gaming facilities are presented on the Company’s unaudited Condensed Consolidated Balance Sheet at historical cost, net of accumulated depreciation, and the financing obligation is recognized and amortized over the lease term. For federal and state income tax purposes, the Spin-Off and the subsequent leaseback of the gaming facilities is an operating lease. As such, the Company recognizes no tax bases in the leased gaming facilities, which creates basis differences that give rise to deferred taxes under ASC Topic 740, Income Taxes.

LIQUIDITY AND CAPITAL RESOURCES

We generally produce significant positive ~~operating~~ cash ~~flow~~flows from operations, though this is not always reflected in our reported net income (loss) due to large non-cash charges such as impairments to goodwill and other intangible assets and depreciation ~~and amortization~~. However, our ongoing liquidity will depend on a number of factors, including available cash resources, ~~operating~~ cash flow from operations, funding of construction of development projects, and our compliance with covenants contained under our debt agreements. As of ~~September~~March 3031, ~~2017~~2018, we held $~~144~~152.4 million of cash and cash equivalents. As of ~~September~~March 3031, ~~2017~~2018, we had $~~161~~194.0 million drawn on our $400.0 million Revolving Credit Facility (as defined below) and $9.2 million committed under various letters of credit.

	For the nine months ended September 30,						Change
	For the three months ended March 31,						Change
	2017			2016			2017 vs. 2016
	2018			2017			2018 vs. 2017
	(in millions)
Net cash provided by operating activities	$	~~192~~21.78		$	~~165~~20.62		167.49	%
Net cash used in investing activities	$	(5718.78	)	$	(~~167~~17.53	)	~~(65~~8.67	)%
Net cash used in financing activities	$	(~~175~~34.73	)	$	(738.49	)	NM(11.8	)%

NM - Not Meaningful

Operating Cash Flow

Our net cash provided by operating activities for the ~~nine~~three months ended ~~September~~March 3031, ~~2017~~2018, as compared to the prior year period, increased due primarily to ~~the Meadows, expenses and other costs associated with the completion of the Spin-Off and Merger incurred in the prior year, and~~ a decrease in ~~interest~~cash ~~payments~~paid ~~made~~for ~~on long-term debt~~interest, ~~offset~~net byof anamounts ~~increase~~capitalized, inand ~~interest~~continued ~~payments~~management ~~made~~focus on ~~the~~achieving ~~financing~~operational ~~obligation of $105.8 million~~efficiencies, anpartially ~~increase~~offset inby ~~lease payments made under the Meadows Lease of $17.4 million, and~~ a decrease ~~due~~caused toby the timing of payments and receipts of working capital items.

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Investing Cash Flow

The following is a summary of our capital expenditures by segment:

	For the nine months ended September 30,
	For the three months ended March 31,
	2017		2016
	2018		2017
	(in millions)
Midwest segment	$	3010.59	$	428.18
South segment	153.03		214.65
West segment	31.47		61.71
Corporate and other, including development projects	72.53		2.75
Total capital expenditures	$	5618.42	$	7316.19

On September 9, 2016, we closed on the Purchase Agreement with GLPC, pursuant to which we acquired all of the equity interests of the Meadows located in Washington, Pennsylvania for base consideration of $138.0 million, subject to certain adjustments. The purchase price, after giving effect to such adjustments was $134.0 million and the cash paid for the Meadows business, net of cash acquired, was $107.5 million. As a result of the transaction, we own and operate the Meadows’ gaming entertainment and harness racing business subject to the Meadows Lease.

The Meadows Lease provides for a 10-year initial term, including renewal terms at our option, up to a total of 29 years. As of September 30, 2017, annual rent under the Meadows Lease was $25.1 million, payable in monthly installments, and comprised of a base rent of $13.7 million, which is subject to certain adjustments, and a percentage rent of $11.4 million. The base rent is subject to an annual escalation of up to 5% for the initial 10-year term or until the lease year in which base rent plus percentage rent is a total of $31.0 million, subject to certain adjustments, and up to 2% thereafter, subject to an Adjusted Revenue to Rent Ratio (as defined in the Meadows Lease) of 1.8:1 during the second year of the lease, 1.9:1 during the third year of the lease and 2.0:1 during the fourth year of the lease and thereafter. As a result of the annual escalation of the base rent, beginning in October 2017, we pay annual rent of $25.8 million. The percentage rent is fixed for the first two years and will be adjusted every two years to establish a new fixed amount for the next two-year period equal to 4% of the average annual net revenues during the trailing two-year period.

Our intention is to use existing cash resources, expected operating cash flow and funds available under our Senior Secured Credit Facilities to fund operations, maintain existing facilities, make necessary debt service payments, make necessary payments under the Master Lease and the Meadows Lease, fund any potential acquisition and development projects, and repurchase shares of our common stock. In the event that our future operating cash flow does not match the levels we currently anticipate, whether due to downturns in the economy or otherwise, we may need to raise funds through the capital markets, if possible.

Our ability to borrow under our Senior Secured Credit Facilities is contingent upon, among other things, meeting customary financial and other covenants. If we are unable to borrow under our Senior Secured Credit Facilities, or if our operating results are adversely affected because of a reduction in consumer spending, or for any other reason, our ability to maintain our existing facilities or complete our ongoing projects may be affected unless we sell assets, enter into leasing arrangements, or take other measures to find additional financial resources. There is no certainty that we will be able to do so on terms that are favorable to the Company or at all.

Financing Cash Flow

Our intention is to use existing cash resources, expected operating cash flows from operations and funds available under our Senior Secured Credit Facilities to fund operations, maintain existing facilities, make necessary debt service payments, and make necessary payments under the Master Lease ~~Financing~~and ~~Obligation~~the Meadows Lease. In the event that our future cash flows from operations do not match the levels we currently anticipate, whether due to downturns in the economy or otherwise, we may need to raise funds through the capital markets, if possible.

~~The~~Our ~~Master~~ability ~~Lease~~to isborrow ~~accounted~~under ~~for~~our asSenior aSecured ~~financing~~Credit ~~obligation.~~Facilities ~~The~~is ~~obligation~~contingent ~~was~~upon, ~~calculated~~among atother ~~lease~~things, ~~inception~~meeting ~~based~~customary onfinancial ~~the~~and ~~future~~other ~~minimum~~covenants. ~~lease~~If ~~payments~~we ~~due~~are unable to ~~GLPI~~borrow under ~~the~~our ~~Master~~Senior ~~Lease~~Secured ~~discounted~~Credit atFacilities, ~~10.5%.~~or ~~The~~if ~~discount~~our ~~rate~~operating ~~represents~~results ~~the~~are ~~estimated~~adversely ~~incremental~~affected ~~borrowing~~because ~~rate~~of ~~over~~a ~~the~~reduction ~~lease~~in ~~term~~consumer ofspending, 35or ~~years~~for any other reason, ~~which~~our ~~included~~ability ~~renewal~~to ~~options~~maintain ~~that~~our ~~were~~existing ~~reasonably~~facilities ~~assured~~or ofcomplete ~~being~~our ~~exercised.~~ongoing Asprojects ofmay ~~April~~be 28affected unless we sell assets, ~~2016~~enter into leasing arrangements, or take other measures to find additional financial resources. There is no certainty that we will be able to do so on terms that are favorable to the ~~commencement~~Company ~~date~~or at all. In addition, pursuant to the terms of the ~~Master~~Penn ~~Lease~~National Merger Agreement, we may only incur indebtedness under our Senior Secured Credit Facilities in the ~~financing~~ordinary ~~obligation~~course ~~was~~of ~~determined~~business toconsistent bewith ~~$3.2~~past ~~billion~~practice, except with the prior written consent of Penn National.

Fourteen of our sixteen gaming facilities are subject to the Master Lease with GLPI. The Master Lease has an initial term of 10 years with five subsequent, five-year renewal periods at our option. The rent, which is payable in monthly installments, is 35

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comprised of base rent, which includes a land and a building component, and percentage rent. The land base rent is fixed for the entire lease term. The building base rent is subject to an annual escalation of up to 2%, depending on the Adjusted Revenue to Rent Ratio (as defined in the Master Lease) ofFinancing 1.8:1. The building base rent was adjusted by the annual escalation beginning in May 2017. The percentage rent, which is fixed for the first two years, will be adjusted every two years to establish a new fixed amount for the next two-year period. Each new fixed amount will be calculated by multiplying 4% by the difference between (i) the average net revenues for the trailing two-year period and (ii) $1.1 billion.Obligation

AsThe ofMaster ~~September 30,~~Lease ~~2017~~is accounted for as a financing obligation. At lease inception, the ~~annual~~financing ~~rent~~obligation was determined to be $3.2 billion and was calculated based on the future minimum lease payments due to GLPI under the Master Lease ~~was~~discounted ~~$382~~at 10.85%. ~~million~~For purposes of calculating the financing obligation, ~~which~~beginning ~~was~~in ~~comprised~~the third year of the ~~land~~lease, ~~base~~the percentage rent, (discussed below) was excluded since the ~~building~~payment ~~base~~is ~~rent~~contingent ~~and~~upon the ~~percentage~~achievement ~~rent,~~of ~~which~~future ~~were~~financial ~~$44~~results.1 ~~million~~The discount rate represented the estimated incremental borrowing rate over the lease term of 35 years, ~~$294.6~~which ~~million~~included ~~and~~renewal ~~$44.1~~options ~~million~~that were reasonably assured of being exercised, ~~respectively~~at lease inception.

~~During~~Fourteen of our sixteen gaming facilities are subject to the ~~nine~~Master ~~months~~Lease ~~ended~~with ~~September 30~~GLPI. The Master Lease has an initial term of 10 years with five subsequent, ~~2017~~five-year renewal periods at our option. The rent, which is payable in monthly installments, is comprised of base rent, which includes a land and ~~2016~~a building component, and percentage rent. The land base rent is fixed for the ~~Company~~entire ~~made~~lease ~~principal~~term. ~~payments~~The building base rent is subject to an annual escalation of up to 2%, depending on the Adjusted Revenue to Rent Ratio (as defined in the Master Lease) ~~financing~~of ~~obligation~~1.8:1. ofThe ~~$36~~percentage rent, which was fixed for the first two years, will be adjusted every two years to establish a new fixed amount for the next two-year period.7 ~~million~~Each new fixed amount will be calculated by multiplying 4% by the difference between (i) the average net revenues for the trailing two-year period and (ii) $191.21 ~~million, respectively~~billion.

~~Financing~~As inof ~~Connection~~March 31, ~~with~~2018, annual rent under the ~~Spin-Off~~Master Lease was $382.8 million, which was comprised of the land base rent, the building base rent and ~~Merger~~the percentage rent, which were $44.1 million, $294.6 million and $44.1 million, respectively. In May 2018, the building base rent was adjusted by the annual escalation, which was $5.9 million. The reset percentage rent has not yet been finalized for the next two-year period. Once finalized, the adjustment will be retroactively in effect as of May 1, 2018.

InDuring ~~connection with~~ the ~~Spin-Off~~three ~~and~~months ~~Merger~~ended March 31, on2018 ~~April~~and 282017, ~~2016,~~ the Company made aprincipal ~~dividend~~payments toon ~~Former~~the ~~Pinnacle~~Master inLease ~~the~~financing ~~amount~~obligation of $~~808~~13.41 million ~~(the~~and ~~“Cash Payment”), which was equal to the amount of existing debt outstanding of Former Pinnacle as of April 28, 2016, less approximately~~ $211.7 billion that GLPI assumed pursuant to the Merger Agreement. Immediately prior to the consummation of the Spin-Off and Merger, the August 2013 amended and restated credit agreement (“Former Senior Secured Credit Facilities”) was repaid in full and terminated and the 6.375% senior notes due 2021 (“6.375% Notes”), the 7.50% senior notes due 2021 (“7.50% Notes”) and the 7.75% senior subordinated notes due 2022 (“7.75% Notes”) were redeemed. Former Pinnacle’s indenture governing its 8~~.75%~~ ~~senior subordinated notes due 2020 (“8.75% Notes”) was redeemed on May 15~~million, ~~2016~~respectively. Following the consummation of the Spin-Off and Merger, the Company had no outstanding obligations under the Former Senior Secured Credit Facilities, the 6.375% Notes, the 7.50% Notes, the 7.75% Notes and the 8.75% Notes.

On April 28, 2016, the Company completed its debt financings in connection with the Merger, consisting of (i) $375.0 million aggregate principal amount of 5.625% senior notes due 2024 (the “Existing 5.625% Notes”) and (ii) the credit agreement among the Company and certain lenders thereto (the “Credit Agreement”), comprised of (x) a $185.0 million term loan A facility with a maturity of five years (the “Term Loan A Facility”), (y) a $300.0 million term loan B facility with a maturity of seven years (the “Term Loan B Facility”) and (z) a $400.0 million revolving credit facility with a maturity of five years (the “Revolving Credit Facility” and together with the Term Loan A Facility and the Term Loan B Facility, the “Senior Secured Credit Facilities”).

The proceeds of the Senior Secured Credit Facilities, together with the proceeds of the Existing 5.625% Notes were used on April 28, 2016 (i) to make the Cash Payment and (ii) to pay fees and expenses related to the issuance of the Senior Secured Credit Facilities and the Existing 5.625% Notes.

Senior Secured Credit Facilities

AsOn ofApril ~~September 30~~28, ~~2017~~2016, wethe ~~had~~Company ~~$161.0~~completed ~~million~~its ~~drawn~~debt ~~under~~financings ~~the~~in ~~Revolving~~connection ~~Credit~~with ~~Facility~~the Merger, consisting of (i) $~~173~~375.40 million aggregate principal amount of ~~loans~~5.625% ~~outstanding~~senior ~~under~~notes ~~the~~due ~~Term~~2024 ~~Loan~~(the A“Existing ~~Facility~~5.625% Notes”) and ~~$9.2~~(ii) ~~million~~the ~~committed~~credit ~~under~~agreement ~~various~~among ~~letters~~the ofCompany ~~credit.~~and ~~During~~certain ~~the~~lenders ~~nine~~thereto ~~months~~(the ~~ended~~“Credit ~~September 30~~Agreement”), ~~2017,~~comprised weof ~~retired~~(x) a $~~172~~185.20 million interm ~~aggregate~~loan ~~principal~~A ~~amount~~facility with a maturity of ~~debt~~five ~~under~~years (the “Term Loan A Facility”), ~~and~~(y) a $300.0 million term loan B facility with a maturity of seven years (the “Term Loan B Facility”) and ~~drew~~(z) a $53400.80 million onrevolving credit facility with a maturity of five years (the “Revolving Credit Facility.” ~~The~~and ~~net~~together ~~debt~~with ~~retired~~the ~~during~~Term Loan A Facility and the ~~nine~~Term ~~months~~Loan ~~ended~~B ~~September 30~~Facility, ~~2017~~the ~~was~~“Senior ~~accomplished~~Secured ~~principally~~Credit ~~with~~Facilities”). ~~operating~~Proceeds ~~cash~~from ~~flow.~~loans ~~During~~under the ~~three~~Revolving ~~months~~Credit ~~ended~~Facility ~~September 30~~are used for working capital, ~~2017~~to fund permitted dividends, ~~the~~distributions ~~Company~~and ~~fully~~acquisitions, ~~repaid~~for ~~the~~general ~~outstanding~~corporate ~~principal~~purposes ~~amount~~and offor ~~the~~any ~~Term~~other ~~Loan~~purpose Bnot ~~Facility~~prohibited by the Credit Agreement.

As ~~Proceeds~~of ~~from~~March 31, ~~loans~~2018, we had $194.0 million drawn under the Revolving Credit Facility, ~~are~~$110.0 ~~used~~million ~~for~~of ~~working~~loans ~~capital,~~outstanding tounder ~~fund~~the ~~permitted~~Term ~~dividends,~~Loan ~~distributions~~A Facility and ~~acquisitions,~~$9.2 ~~for~~million ~~general~~committed ~~corporate~~under ~~purposes~~various ~~and~~letters ~~for~~of ~~any~~credit. ~~other~~During ~~purpose~~the ~~not~~three ~~prohibited~~months byended March 31, 2018, we repaid $17.7 million of loans under the Senior Secured Credit ~~Agreement~~Facilities, net of borrowings, which was accomplished principally with cash flows from operations. The Term Loan B Facility was repaid in full prior to December 31, 2017.

Loans under the Term Loan A Facility and Revolving Credit Facility bear interest at a rate per annum equal to, at our option, LIBOR plus an applicable margin from 1.50% to 2.50% or the base rate plus an applicable margin from 0.50% to 1.50%, in each case, depending on the Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement) as of the most recent fiscal quarter. ~~Loans under the Term Loan B Facility bore interest at a rate per annum equal to, at our option, LIBOR plus 3.00% or the base rate plus 2.00% and in no event was LIBOR to be less than 0.75%.~~ In addition, we pay a commitment fee on the unused portion of the commitments under the Revolving Credit Facility at a rate that ranges from 0.30% to 0.50% per annum, depending on the Consolidated Total Net Leverage Ratio as of the most recent fiscal quarter.

38The Term Loan A Facility amortizes in equal quarterly amounts equal to a percentage of the original outstanding principal amount at closing as follows: (i) 5% per annum in the first two years, (ii) 7.5% per annum in the third year and (iii) 10% per annum in the fourth and fifth year. The remaining principal amount is payable on April 28, 2021. The voluntary repayments we made during the year ended December 31, 2017 and the three months ended March 31, 2018 have satisfied all quarterly amortization payments that otherwise would have been due prior to maturity. The Revolving Credit Facility is not subject to amortization and any amounts outstanding are due and payable on April 28, 2021.

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The Term Loan A Facility amortizes in equal quarterly amounts equal to a percentage of the original outstanding principal amount at closing as follows: (i) 5% per annum in the first two years, (ii) 7.5% per annum in the third year and (iii) 10% per annum in the fourth and fifth year. The remaining principal amount is payable on April 28, 2021. The Term Loan B Facility amortized in equal quarterly amounts equal to 1% per annum of the original outstanding principal amount at closing. The Revolving Credit Facility is not subject to amortization and is due and payable on April 28, 2021.

Loans under the Senior Secured Credit Facilities may be prepaid at par and commitments under the Revolving Credit Facility may be reduced at any time, in whole or in part, without premium or penalty (except for LIBOR breakage costs). Loans under the Senior Secured Credit Facilities are subject to mandatory prepayment with (i) a percentage of the Company’s excess cash flow depending on the Consolidated Total Net Leverage Ratio of the Company, (ii) net cash proceeds from asset sales and casualty and condemnation events (subject to customary reinvestment rights and other customary exceptions) and (iii) net cash proceeds from the issuance or incurrence of indebtedness after the closing date (subject to customary exceptions).

All obligations under the Senior Secured Credit Facilities are unconditionally guaranteed by each of the Company’s existing and future direct and indirect wholly owned domestic subsidiaries, subject to certain customary exceptions. All obligations of the Company under the Senior Secured Credit Facilities and the guarantees of those obligations are secured by a first priority security interest in substantially all of the assets of the Company and the guarantors thereto, subject to certain exceptions. The property pledged by the Company and such guarantors includes a first priority pledge of the leasehold interests of tenant in the Master Lease; a first priority pledge of all of the equity interests owned by the Company and such guarantors in the direct wholly-owned domestic subsidiaries of the Company and such guarantors.

The Credit Agreement contains, among other things, certain affirmative and negative covenants and, solely for the benefit of the lenders under the Senior Secured Credit Facilities, financial covenants, including (1) maximum permitted Consolidated Total Net Leverage Ratio of 43.0075 to 1.00; (2) maximum permitted Consolidated Senior Secured Net Leverage Ratio (as defined in the Credit Agreement) of 2.50 to 1.00; and (3) required minimum Interest Coverage Ratio (as defined in the Credit Agreement) of 2.50 to 1.00. The ~~maximum Consolidated Total Net Leverage Ratio is subject to change at each fiscal quarter until December 31, 2017. The~~ Credit Agreement also contains certain customary events of default, including the occurrence of a change of control, revocation of material licenses by gaming authorities (subject to a cure period), termination of the Master Lease and cross-default to certain events of default under the Master Lease.

As of ~~September~~March 3031, ~~2017~~2018, we were in compliance with the financial covenant ratios under the Senior Secured Credit Facilities and compliance with these financial covenant ratios does not have a material impact on our financial flexibility, including our ability to incur new indebtedness based on our operating plans.

5.625% Notes ~~due 2024~~

The Existing 5.625% Notes were issued at par, mature on May 1, 2024, and bear interest at the rate of 5.625% per annum. Interest on the Existing 5.625% Notes is payable semi-annually on May 1st and November 1st of each year, commencing November 1, 2016. On October 12, 2016, we issued an additional $125.0 million in aggregate principal amount of 5.625% senior notes due 2024 (the “Additional 5.625% Notes” and together with the Existing 5.625% Notes, the “5.625% Notes”), under the bond indenture governing the Existing 5.625% Notes issued on April 28, 2016, as amended and supplemented by that certain first supplemental indenture, dated as of October 12, 2016. The Additional 5.625% Notes were issued at par plus a premium of 50 basis points. The 5.625% Notes were issued pursuant to Rule 144A of the Securities Act of 1933, as amended. In June 2017, we filed a registration statement with the Securities and Exchange Commission (the “SEC”) to offer to exchange the 5.625% Notes for a new issue of registered 5.625% Notes, which was declared effective by the SEC in July 2017. The offer to exchange closed in August 2017.

The Company may redeem the 5.625% Notes at any time, and from time to time, on or after May 1, 2019, at the declining redemption premiums set forth in the indenture, together with accrued and unpaid interest. Prior to May 1, 2019, the Company may redeem the 5.625% Notes at any time, and from time to time, at a redemption price equal to 100% of the principal amount of the 5.625% Notes redeemed plus a “make-whole” redemption premium described in the indenture, together with accrued and unpaid interest. In addition, at any time prior to May 1, 2019, the Company may redeem the 5.625% Notes with an amount of cash equal to the net proceeds of one or more equity offerings, within a specified period of time after the closing of any such equity offering, at a redemption price equal to 105.625% of the principal amount of the 5.625% Notes redeemed, together with accrued and unpaid interest, so long as at least 65% of the aggregate principal amount of the 5.625% Notes originally issued under the indenture remains outstanding. If the Company engages in any asset sales, subject to certain exceptions, the Company generally must use the proceeds for specified purposes within a specified period of time or use the excess net proceeds from such asset sales to offer to purchase the 5.625% Notes from holders at a price equal to 100% of the principal amount of the 5.625% Notes, together with accrued and unpaid interest.

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The 5.625% Notes are the Company’s senior unsecured obligations and rank pari passu in right of payment with all of the Company’s senior unsecured indebtedness, and senior in right of payment to all of the Company’s subordinated indebtedness, without giving effect to collateral arrangements. The 5.625% Notes are effectively subordinated to the Company’s secured indebtedness, including the Senior Secured Credit Facilities, to the extent of the value of the assets securing such indebtedness. The 5.625% Notes are not guaranteed by any of the Company’s subsidiaries, except in the event that the Company in the future incurs certain subsidiary-guaranteed unsecured indebtedness, and, therefore, the 5.625% Notes are structurally subordinated to all liabilities of the Company’s subsidiaries, including their guarantees of the Company’s Senior Secured Credit Facilities.

The indenture contains covenants limiting the Company’s and its restricted subsidiaries’ ability to: pay dividends or distributions or repurchase equity; incur additional debt or issue disqualified stock and, in the case of subsidiaries, preferred stock; make investments; create liens on assets to secure certain debt; enter into transactions with affiliates; merge or consolidate with another company; transfer and sell assets; create dividend and other payment restrictions affecting subsidiaries; designate subsidiaries as unrestricted subsidiaries; and make certain amendments to the Master Lease. These covenants are subject to a number of important and significant limitations, qualifications and exceptions.

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distributions or repurchase equity; incur additional debt or issue disqualified stock and, in the case of subsidiaries, preferred stock; make investments; create liens on assets to secure certain debt; enter into transactions with affiliates; merge or consolidate with another company; transfer and sell assets; create dividend and other payment restrictions affecting subsidiaries; designate subsidiaries as unrestricted subsidiaries; and make certain amendments to the Master Lease. These covenants are subject to a number of important and significant limitations, qualifications and exceptions.

Events of default under the indenture include, among others, the following: default for 30 days in the payment when due of interest on the 5.625% Notes; default in payment when due of the principal of, or premium, if any, on the 5.625% Notes; failure to comply with covenants in the indenture for 60 days after the receipt of notice from the trustee or holders of 25% in aggregate principal amount of the 5.625% Notes (unless such failure to comply has been waived); acceleration or payment default of debt in excess of a specified amount; unpaid judgments in excess of a specified amount; certain events of bankruptcy or insolvency; and the Master Lease terminating or ceasing to be effective in certain circumstances.

Share Repurchase Programs

In May 2016, the Company’s Board of Directors authorized a share repurchase program of up to $50.0 million of our common stock, which we completed in July 2016. In August 2016, our Board of Directors authorized an additional share repurchase program of up to $50.0 million of our common stock. During the nine months ended September 30, 2017, and 2016, we repurchased 1.1 million shares of common stock for $21.8 million and 5.5 million shares of common stock for $61.3 million, respectively.

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

There were no material changes during the three months ended ~~September~~March 3031, ~~2017~~2018 to our contractual obligations and commitments as disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

See Note 2, “Recently Issued Accounting Pronouncements” to our unaudited Condensed Consolidated Financial Statements for a discussion of the effects of recently issued accounting pronouncements.

CRITICAL ACCOUNTING ESTIMATES

A description of our critical accounting estimates can be found in Item 7 of our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017. For a more extensive discussion of our accounting policies, see Note 1, “Organization and Summary of Significant Accounting Policies,” in the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017. ~~There~~With ~~were~~the noexception ~~newly~~of ~~identified~~the ~~critical~~adoption ~~accounting~~of ~~policies~~ASC ~~and~~606 ~~estimates~~on inJanuary 1, 2018, during the ~~third~~first quarter ~~2017~~2018, ~~nor~~there were ~~there~~no ~~any~~newly identified or material changes to ~~the~~our critical accounting policies and estimates, as discussed in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017. See Note 1, “Organization and Summary of Significant Accounting Policies” and Note 2, “Recently Issued Accounting Pronouncements,” for further information regarding our updated revenue recognition and guest loyalty program accounting policies, including estimates inherent in the accounting of such items, and the impact of adoption of ASC 606 on our unaudited Condensed Consolidated Financial Statements.

FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 (the “Act”) provides certain “safe harbor” provisions for forward-looking statements. Except for the historical information contained herein, the matters addressed in this Quarterly Report on Form 10-Q, as well as in other reports filed with or furnished to the SEC or statements made by us, may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. From time to time, we may provide oral or written forward-looking statements in our other periodic reports on Form 10-Q, Form 8-K, press releases and other materials released to the public. All forward-looking statements made in this Quarterly Report on Form 10-Q and any documents we incorporate by reference are made pursuant to the Act. Words such as, but not limited to, “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “could,” “may,” “will,” “should,” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements, which may include, without limitation, statements regarding the Proposed Company Sale and the Penn National Merger Agreement, the consummation of the Proposed Company Sale and the timing thereof, the ability of the Company and Penn National to obtain required regulatory approvals, the stock price of the Company and Penn National following the consummation of a transaction with Penn National, expected results of operations and future operating performance and future growth; adequacy of resources to fund development and expansion projects; liquidity; financing options, including the state of the capital markets and our ability to access the capital markets; the state of the credit markets and economy; cash needs; cash reserves; operating and capital expenses; expense reductions, the sufficiency of insurance coverage; anticipated marketing costs at various projects; the future outlook of the Company and the gaming industry and pending regulatory and legal matters; the potential occurrence of impairments to goodwill, other intangible assets or long-lived assets; extreme weather conditions or climate change; potential work stoppages or other labor problems; cyber security risks; the ability of the Company to continue to meet its financial and other covenants governing the Senior Secured Credit Facilities, the bond indenture governing its 5.625% Notes, the Master Lease and the Meadows Lease; the Company’s anticipated future capital expenditures; the ability to implement strategies to improve revenues and operating margins at the Company’s

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markets and economy; cash needs; cash reserves; operating and capital expenses; expense reductions, the sufficiency of insurance coverage; anticipated marketing costs at various projects; the future outlook of the Company and the gaming industry and pending regulatory and legal matters; the potential occurrence of impairments to goodwill, other intangible assets or long-lived assets; extreme weather conditions or climate change; potential work stoppages or other labor problems; cyber security risks; the ability of the Company to continue to meet its financial and other covenants governing the Senior Secured Credit Facilities, the bond indenture governing its 5.625% Notes, the Master Lease and the Meadows Lease; the Company’s anticipated future capital expenditures; the ability to implement strategies to improve revenues and operating margins at the Company’s properties; reduce costs and debt; the Company’s ability to successfully implement marketing programs to increase revenue at the Company’s properties; and the Company’s ability to improve operations and performance, are all subject to a variety of risks and uncertainties that could cause actual results to differ materially from those anticipated by us. This can occur as a result of inaccurate assumptions or as a consequence of known or unknown risks and uncertainties. For more information on the potential factors that could affect our operating results and financial condition in addition to the risk factors described above, review our other filings (other than any portion of such filings that are furnished under applicable SEC rules rather than filed) with the SEC, including this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K and the risk factors described therein. Factors that may cause our actual performance to differ materially from that contemplated by such forward-looking statements include, among others:


•	The announcement and pendency of the Proposed Company Sale to Penn National may have an adverse effect on our business, operating results and stock price;


•	Because the Exchange Ratio is fixed and the market prices of Penn National Common Stock and Pinnacle Common Stock may fluctuate, our stockholders cannot be sure of the value of the Penn National Common Stock they will receive on the closing date;


•	The Proposed Company Sale to Penn National may not be completed;


•	Failure to complete the Proposed Company Sale to Penn National could negatively impact the stock price and the future business and financial results of the Company;


•	The Penn National Merger Agreement contains provisions that limit the Company’s ability to pursue alternatives to the Proposed Company Sale, could discourage a potential competing acquirer of the Company from making a favorable alternative transaction proposal and, in specified circumstances, could require the Company to pay Penn National a termination fee of $60.0 million;


•	The completion of the transactions contemplated by the Penn National Merger Agreement may trigger change in control or other provisions in certain agreements to which the Company is a party;


•	Our business is particularly sensitive to reductions in consumers’ discretionary spending as a result of downturns in the economy or other changes we cannot accurately predict;


•	The gaming industry is very competitive and increased competition, including through legislative legalization or expansion of gaming by states in or near where we operate facilities or through Native American gaming facilities and internet gaming, could adversely affect our financial results;


•	Our gaming operations rely heavily on technology services provided by third parties. In the event that there is an interruption of these services to us, it may have an adverse effect on our operations and financial condition;


•	Our business may be harmed from cyber security risk and we may be subject to legal claims if there is loss, disclosure or misappropriation of or access to our guests’ or our business partners’ or our own information or other breaches of our information security;


•	We are required to pay a significant portion of our cash flows pursuant to and subject to the terms and conditions of the Master Lease and the Meadows Lease, which could adversely affect our ability to fund our operations and growth and limit our ability to react to competitive and economic changes;


•	Substantially all of our gaming facilities are leased and could experience risks associated with leased property, including risks relating to lease termination, lease extensions, charges and our relationship with GLPI, which could have a material adverse effect on our business, financial position or results of operations;


•	We face risks associated with growth and acquisitions;

• We derived 2826.53% and 2826.74% of our revenues in ~~2016~~2017 from our casinos located in Louisiana and Missouri, respectively, and are especially subject to certain risks, including economic and competitive risks, associated with the conditions in those areas and in the states from which we draw patrons;

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•	Our present indebtedness and projected future borrowings could adversely affect our financial health; future cash flows may not be sufficient to meet our obligations, and we may have difficulty obtaining additional financing; and we may experience adverse effects of interest rate fluctuations;


•	Our indebtedness imposes restrictive covenants on us;


•	To service our indebtedness and make payments under the Master Lease and the Meadows Lease, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control;


•	Our ability to obtain additional financing on commercially reasonable terms may be limited;


•	We may experience an impairment of our goodwill, other intangible assets, or long-lived assets, which could adversely affect our financial condition and results of operations;

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•	Insufficient or lower-than-expected results generated from our new developments and acquisitions may negatively affect our operating results and financial condition;


•	Rising operating costs at our operations could have a negative impact on our business;


•	Our slots and table games hold percentages may fluctuate;


•	Recessions have affected our business and financial condition, and economic conditions may continue to affect us in ways that we currently cannot accurately predict;


•	We expect to be engaged from time to time in one or more construction and development projects, and many factors could prevent us from completing them as planned, including the escalation of construction costs beyond increments anticipated in our construction budgets;


•	Our industry is highly regulated, which makes us dependent on obtaining and maintaining gaming licenses and subjects us to potentially significant fines and penalties;


•	Potential changes in the regulatory environment could harm our business;


•	Our business may be adversely affected by legislation prohibiting tobacco smoking;


•	Our operations are largely dependent on the skill and experience of our management and key personnel. The loss of management and other key personnel could significantly harm our business, and we may not be able to effectively replace members of management who have left our company;


•	Adverse weather conditions, road construction, gasoline shortages and other factors affecting our facilities and the areas in which we operate could make it more difficult for potential customers to travel to the facilities on which we operate and deter customers from visiting our facilities;


•	Our results of operations and financial condition could be materially adversely affected by the occurrence of natural disasters, such as hurricanes, or other catastrophic events, including war and terrorism;


•	We are exposed to a variety of natural disasters such as named windstorms, floods and earthquakes and this can make it challenging for us to obtain adequate levels of weather catastrophe occurrence insurance coverage for our facilities at reasonable rates, if at all;


•	We may incur property and other losses that are not adequately covered by insurance, which may harm our results of operations;


•	The concentration and evolution of the slot machine manufacturing industry or other technological conditions could impose additional costs on us;


•	We operate in a highly taxed industry and it may be subject to higher taxes in the future. If the jurisdictions in which we operate increase gaming taxes and fees, our operating results could be adversely affected;

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•	Work stoppages, organizing drives and other labor problems could negatively impact our future profits;


•	We face environmental and archaeological regulation of the real estate on which we operate;


•	We are subject to litigation, which, if adversely determined, could cause us to incur substantial losses;


•	We are subject to certain federal, state and other regulations;


•	Climate change, climate change regulations and greenhouse effects may adversely impact our operations and markets;


•	We face business and regulatory risks associated with our investment in Asian Coast Development (Canada), Ltd.;


•	We are subject to extensive governmental regulations that impose restrictions on the ownership and transfer of our securities; and

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•	The market price for our common stock may be volatile, and you may not be able to sell our stock at a favorable price or at all.

In addition, these forward-looking statements could be affected by general domestic and international economic and political conditions, uncertainty as to the future direction of the economy and vulnerability of the economy to domestic or international incidents, as well as market conditions in our industry.

For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, please see the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections contained in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 and review our other filings (other than any portion of such filings that are furnished under applicable SEC rules rather than filed) with the SEC. All forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this Form 10-Q. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk from adverse changes in interest rates with respect to the short-term floating interest rate on borrowings under our Senior Secured Credit Facilities. As of ~~September~~March 3031, ~~2017~~2018, we had $~~161~~194.0 million drawn under our Revolving Credit Facility and had $9.2 million committed under various letters of credit. In addition, as of ~~September~~March 3031, ~~2017~~2018, we had $~~173~~110.40 million of principal outstanding under the Term Loan A Facility.

As of ~~September~~March 3031, ~~2017~~2018, for every 50 basis points decrease in LIBOR, our annual interest expense would decrease by approximately $1.75 million and our annual interest expense would increase by approximately $1.75 million for every 50 basis points increase in LIBOR, assuming constant debt levels.

The table below provides the principal cash flows and related weighted average interest rates by contractual maturity dates for our debt obligations as of ~~September~~March 3031, ~~2017~~2018. As of ~~September~~March 3031, ~~2017~~2018, we did not hold any material investments in market-risk-sensitive instruments of the type described in Item 305 of Regulation S-K.

	2017			2018			2019			2020			2021			Thereafter			Total			Fair Value
	2018			2019			2020			2021			2022			Thereafter			Total			Fair Value
	(in thousands)
Revolving Credit Facility	$	—		$	—		$	—		$	—194,000		$	~~161,000~~—		$	—		$	~~161~~194,000		$	~~157~~190,~~780~~120
Interest Rate	23.9830		%	23.9830		%	23.9830		%	23.9830		%	~~2.98~~—		%	—			23.9830		%
Term Loan A Facility	$	~~2,313~~—		$	~~11,562~~—		$	~~16,188~~—		$	18110,~~500~~000		$	~~124,875~~—		$	—		$	~~173~~110,~~438~~000		$	~~173~~110,~~437~~000
Interest Rate	23.9830		%	23.9830		%	23.9830		%	23.9830		%	~~2.98~~—		%	—			23.9830		%
5.625% Notes	$	—		$	—		$	—		$	—		$	—		$	500,000		$	500,000		$	~~511~~521,850
Interest Rate	5.625		%	5.625		%	5.625		%	5.625		%	5.625		%	5.625		%	5.625		%
Other	$	27		$	9		$	911		$	1011		$	1113		$	3016		$	7167		$	7167
Interest Rate	10.00		%	10.00		%	10.00		%	10.00		%	10.00		%	10.00		%	10.00		%

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Item 4. Controls and Procedures

The Company’s management, with the participation of the Chief Executive Officer (the “CEO”) and the Chief Financial Officer (the “CFO”), evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of ~~September~~March 3031, ~~2017~~2018. Based on this evaluation, the Company’s management, including the CEO and the CFO, concluded that, as of ~~September~~March 3031, ~~2017~~2018, the Company’s disclosure controls and procedures were effective, in that they provide a reasonable level of assurance that information required to be disclosed by the Company in the reports filed or submitted by it under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. The Company’s disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the CEO and the CFO, as appropriate, to allow timely decisions regarding required disclosure.

Notwithstanding the foregoing, there can be no assurance that the Company’s disclosure controls and procedures will detect or uncover all failures of persons within the Company and its consolidated subsidiaries to disclose material information otherwise required to be set forth in the Company’s periodic reports. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable, not absolute, assurance of achieving their control objectives.

NoDuring ~~change~~the quarter ended March 31, 2018, there were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) ~~occurred during the quarter ended September 30, 2017~~ that ~~has~~ materially affected, or isare reasonably likely to materially affect, ~~the~~our ~~Company’s~~ internal control over financial reporting.

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PART II

Item 1. Legal Proceedings

We are a party to a number of other pending legal proceedings. Management does not expect that the outcome of such proceedings, either individually or in the aggregate, will have a material effect on our financial position, cash flows or results of operations.

Item 1A. Risk Factors

There were no material changes from the risk factors set forth under Part I, Item 1A “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017.

Item 2. Unregistered Sales of Securities and Use of Proceeds

The following table contains information with respect to purchases made by or on behalf of Pinnacle or any “affiliated purchaser” (as defined in Rule 10b-18(a) (3) under the Securities Exchange Act of 1934), of our common stock during our third quarter ended September 30, 2017.

Period	Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Unit) (1)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may be Purchased Under the Plans or Programs (2)
July 1 - July 31, 2017	—	$	—	—	$	29,922,918
August 1 - August 31, 2017	423,398	$	19.40	423,398	$	21,707,796
September 1 - September 30, 2017	698,477	$	19.51	698,477	$	8,080,345
Total	1,121,875	$	19.47	1,121,875	$	8,080,345

(1) Average price paid per share for shares purchased as part of our share repurchase program (includes brokerage commissions).

(2) In August 2016, the Company’s Board of Directors authorized a share repurchase program of up to $50.0 million of our common stock. As of November 6, 2017, under this program, we have repurchased 2.8 million shares of our common stock for $42.4 million.

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Item 6. Exhibits

Exhibit Number		Description of Exhibit
3.1		Amended and Restated Certificate of Incorporation of Pinnacle Entertainment, Inc., dated as of April 18, 2016, as amended, is hereby incorporated by reference to Exhibit 3.1 to the Company’s ~~Current~~Annual Report on Form 810-K filed on ~~April~~March 201, ~~2016~~2018. (SEC File No. 001-37666).
3.2		~~Certificate of Amendment to the~~ Amended and Restated ~~Certificate~~Bylaws of ~~Incorporation of~~ Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 3.1 to the Company'’s Current Report on Form 8-K filed on ~~April~~February 2817, ~~2016~~2017. (SEC File No. 001-37666).
3.3		Amended and Restated Bylaws of Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on February 17, 2017. (SEC File No. 001-37666).
11*		Statement re: Computation of Per Share Earnings.
31.1*		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2*		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32**		Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer.
101*		Financial statements from Pinnacle Entertainment, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended ~~September~~March 3031, ~~2017~~2018, formatted in XBRL (eXtensible Business Reporting Language): (i)unaudited Condensed Consolidated Statements of Operations, (ii)unaudited Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~,(iii)unaudited Condensed Consolidated Balance Sheets, (iv)unaudited Condensed Consolidated Statement of Changes in Stockholders’ Deficit, (v)unaudited Condensed Consolidated Statements of Cash Flows; and (vi)Notes to unaudited Condensed Consolidated Financial Statements.

________________



*		Filed herewith.

**		Furnished herewith.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			PINNACLE ENTERTAINMENT, INC.(Registrant)
Date:	~~November~~May 910, ~~2017~~2018	By:	/s/ Carlos A. Ruisanchez
			Carlos A. Ruisanchez
			President and Chief Financial Officer(Authorized Officer, Principal Financial Officer and Principal Accounting Officer)

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EXHIBIT INDEX

Exhibit Number		Description of Exhibit
3.1		Amended and Restated Certificate of Incorporation of Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 20, 2016. (SEC File No. 001-37666).
3.2		Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on April 28, 2016. (SEC File No. 001-37666).
3.3		Amended and Restated Bylaws of Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on February 17, 2017. (SEC File No. 001-37666).
11*		Statement re: Computation of Per Share Earnings.
31.1*		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2*		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32**		Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer.
101*		Financial statements from Pinnacle Entertainment, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i)unaudited Condensed Consolidated Statements of Operations, (ii)unaudited Condensed Consolidated Statements of Comprehensive Income (Loss),(iii)unaudited Condensed Consolidated Balance Sheets, (iv)unaudited Condensed Consolidated Statement of Changes in Stockholders’ Deficit, (v)unaudited Condensed Consolidated Statements of Cash Flows; and (vi)Notes to unaudited Condensed Consolidated Financial Statements.

________________

* Filed herewith. ** Furnished herewith.

Filing Compare · Pinnacle Entertainment, Inc.