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MTR GAMING GROUP, INC. TABLE OF CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2014
For the quarterly period ended March 31, 2015
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NO.: 000-20508

MTR Gaming Group, Inc.
(Exact name of registrant as specified in its charter)


DELAWARE (State or other jurisdiction of incorporation)		84-1103135 (I.R.S. Employer Identification Number)

STATE ROUTE 2 SOUTH, P.O. BOX 356, CHESTER, WEST VIRGINIA 26034
(Address of principal executive offices)

(304) 387-8000
(Registrant's telephone number, including area code)

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, as amended, 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 ýo No oý

Note: The registrant is a voluntary filer and is not subject to the filing requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended. Although not subject to these filing requirements, the registrant has filed all reports that would have been required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, during the preceding 12 months.

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 ý No o

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


Large accelerated filer o		Accelerated filer o		Non-accelerated filer ý (Do not check if a smaller reporting company)		Smaller reporting company 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 ý

The number of shares of the Registrant's Common Stock, $0.01 par value per share, outstanding as of ~~September~~March 3031, ~~2014~~2015, was 1,000 shares.

Table of Contents

MTR GAMING GROUP, INC.
TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION			2
Item 1—Financial Statements			2
Consolidated Balance Sheets at September 30, 2014 (Successor) (unaudited) and December 31, 2013 (Predecessor)			2
Consolidated Balance Sheets at March 31, 2015 (Successor) (unaudited) and December 31, 2014 (Successor)			2
Consolidated Statements of Operations for the period from July 1 to September 18, 2014 (Predecessor), the period from January 1 to September 18, 2014 (Predecessor), the period from September 19 to September 30, 2014 (Successor), and the Three and Nine Months Ended September 30, 2013 (Predecessor) (unaudited)			3
Consolidated Statements of Operations for the Three Months Ended March 31, 2015 (Successor) and 2014 (Predecessor) (unaudited)			3
Consolidated Statements of Comprehensive Income (Loss) for the period from July 1 to September 18, 2014 (Predecessor), the period from January 1 to September 18, 2014 (Predecessor), the period from September 19 to September 30, 2014 (Successor), and the Three and Nine Months Ended September 30, 2013 (Predecessor) (unaudited)			5
Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2015 (Successor) and 2014 (Predecessor) (unaudited)			4
Consolidated Statements of Cash Flows for the Period from January 1 to September 18, 2014 (Predecessor), the Period September 19 to September 30, 2014 (Successor), and the Nine Months Ended September 30, 2013 (Predecessor) (unaudited)			7
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2015 (Successor) and 2014 (Predecessor) (unaudited)			5
Condensed Notes to Consolidated Financial Statements (unaudited)			8
Notes to Consolidated Financial Statements (unaudited)			6
Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations			2623
Item 3—Quantitative and Qualitative Disclosures about Market Risk			4937
Item 4—Controls and Procedures			4938
PART II—OTHER INFORMATION			5039
Item 1—Legal Proceedings			5039
Item 1A—Risk Factors			5140
Item 2—Unregistered Sales of Equity Securities and Use of Proceeds			5140
Item 3—Defaults upon Senior Securities			5140
Item 4—Mine Safety Disclosures			5140
Item 5—Other Information			5140
Item 6—Exhibits			5240
SIGNATURE PAGE			5341
EXHIBIT INDEX			54

Table of Contents

PART I
FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MTR GAMING GROUP, INC. (A WHOLLY-OWNED SUBSIDIARY OF ELDORADO RESORTS, INC.) CONSOLIDATED BALANCE SHEETS (dollars in thousands)

CONSOLIDATED BALANCE SHEETS

	Successor

	March 31, 2015			December 31, 2014
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	39,787		$	60,650
Restricted cash		8,036			5,413
Accounts receivable, net of allowance for doubtful accounts of $154 in 2015 and $175 in 2014		2,006			2,912
Inventories		3,873			3,911
Prepaid expenses and other current assets		6,408			7,115

Total current assets		60,110			80,001
Property and equipment, net		278,475			283,191
Other intangible assets, primarily gaming licenses		469,404			471,339
Goodwill		66,826			66,826
Deposits and other		3,950			3,950
Non-operating real property		16,419			16,419

Total assets	$	895,184		$	921,726



LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable	$	3,629		$	2,122
Accrued gaming taxes and assessments		4,908			10,346
Accrued payroll and related		4,958			4,785
Interest payable		10,746			26,865
Accrued other liabilities		20,138			17,205
Construction project and equipment liabilities		736			2,333
Deferred income taxes		1,474			1,474
Liabilities of discontinued operations		116			116

Total current liabilities		46,705			65,246
Long-term debt		608,090			610,827
Other regulatory gaming assessments		4,453			4,572
Deferred income taxes		147,698			145,054
Other long-term liabilities		2,461			2,439

Total liabilities		809,407			828,138

Stockholder's equity:
Common stock		—			—
Additional paid-in capital		103,011			103,011
Accumulated deficit		(17,321	)		(9,510	)
Accumulated other comprehensive income		87			87

Total stockholder's equity		85,777			93,588

Total liabilities and stockholder's equity	$	895,184		$	921,726

See ~~(dollars~~accompanying innotes ~~thousands)~~ to consolidated financial statements.

	Successor			Predecessor
	September 30 2014			December 31 2013
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	62,593		$	100,124
Restricted cash		1,243			7,255
Accounts receivable, net of allowance for doubtful accounts of $172 in 2014 and $151 in 2013		3,878			4,853
Inventories		4,027			4,272
Deferred financing costs		—			1,642
Prepaid expenses and other current assets		7,437			7,850

Total current assets		79,178			125,996
Property and equipment, net		269,189			371,364
Other intangible assets		436,371			136,080
Goodwill		104,734			—
Deferred financing costs, net of current portion		—			6,766
Deposits and other		3,962			1,801
Non-operating real property		16,419			10,769
Assets of discontinued operations		—			184

Total assets	$	909,853		$	652,960


LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable		2,813			2,998
Accrued gaming taxes and assessments		8,617			9,947
Accrued payroll and related		6,121			5,466
Interest payable		10,938			27,344
Accrued other liabilities		18,909			17,043
Construction project and equipment liabilities		708			788
Deferred income taxes		2,348			837
Liabilities of discontinued operations		116			116

Total current liabilities		50,570			64,539
Long-term debt		624,481			558,834
Other regulatory gaming assessments		4,676			4,806
Long-term compensation		—			871
Deferred income taxes		129,847			17,412
Other long-term liabilities		424			497

Total liabilities		809,998			646,959

Stockholder's equity:
Common stock		—			—
Additional paid-in capital		103,011			65,047
Accumulated deficit		(3,157	)		(59,143	)
Accumulated other comprehensive income (loss)		1			(127	)

Total stockholder's equity of MTR Gaming Group, Inc.		99,855			5,777
Non-controlling interest of discontinued operations		—			224

Total stockholder's equity		99,855			6,001

Total liabilities and stockholder's equity	$	909,853		$	652,960

See accompanying condensed notes to consolidated financial statements.

Table of Contents

MTR GAMING GROUP, INC. (A WHOLLY-OWNED SUBSIDIARY OF ELDORADO RESORTS, INC.) CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands) (unaudited)

CONSOLIDATED STATEMENTS OF OPERATIONS




	Successor			Predecessor
	Successor			Predecessor
	Three Months Ended March 31, 2015			Three Months Ended March 31, 2014


Operating revenues:
Gaming	$	101,309		$	106,950
Pari-mutuel commissions		1,205			1,280
Food and beverage		7,717			7,807
Hotel		1,148			1,188
Other		2,464			2,421

		113,843			119,646
Less—promotional allowances		(4,779	)		(4,818	)

Net operating revenues		109,064			114,828

Operating expenses:
Gaming		62,233			66,335
Pari-mutuel commissions		1,696			1,742
Food and beverage		5,302			4,731
Hotel		337			344
Other		1,181			1,366
Marketing and promotions		3,254			3,307
General and administrative		15,949			16,488
Depreciation and amortization		10,539			7,784

Total operating expenses		100,491			102,097
(Gain) loss on the sale or disposal of property		(1	)		18
Strategic transaction costs		84			521

Operating income		8,490			12,192

Other income (expense):
Interest income		1			2
Interest expense		(13,399	)		(17,390	)

Total other expense		(13,398	)		(17,388	)

Loss before income taxes		(4,908	)		(5,196	)
Provision for income taxes		(2,903	)		(1,017	)

Net loss	$	(7,811	)	$	(6,213	)

See ~~(dollars~~accompanying innotes ~~thousands)~~ to consolidated financial statements.

(unaudited)

	Successor			Predecessor
	Period from September 19 to September 30			Period from July 1 to September 18			Three Months Ended September 30
	2014			2014			2013
Operating Revenues:
Gaming	$	14,399		$	100,760		$	115,268
Pari-mutuel commissions		446			3,391			4,133
Food and beverage		1,270			8,460			9,804
Hotel		199			1,053			1,451
Other		773			3,345			3,791

		17,087			117,009			134,447
Less—promotional allowances		(776	)		(4,860	)		(5,584	)

Net operating revenues		16,311			112,149			128,863

Operating Expenses:
Gaming		8,659			59,644			68,444
Pari-mutuel commissions		520			3,077			3,548
Food and beverage		1,031			6,810			8,170
Hotel		114			590			779
Other		475			2,015			2,618
Marketing and promotions		889			3,397			4,165
General and administrative		2,754			15,664			15,883
Depreciation and amortization		1,289			6,742			7,691

Total operating expenses		15,731			97,939			111,298
Loss on the sale or disposal of property		—			139			161
Strategic transaction costs		618			6,716			2,723

Operating (Loss) income		(38	)		7,355			14,681

Other Income (Expense):
Interest income		1			2			4
Interest expense		(1,813	)		(15,057	)		(17,393	)

Total other expense		(1,812	)		(15,055	)		(17,389	)

Loss before Income Taxes		(1,850	)		(7,700	)		(2,708	)
Provision for income taxes		(1,307	)		(687	)		(921	)

Net Loss	$	(3,157	)	$	(8,387	)	$	(3,629	)

See accompanying condensed notes to consolidated financial statements.

Table of Contents

MTR GAMING GROUP, INC. (A WHOLLY-OWNED SUBSIDIARY OF ELDORADO RESORTS, INC.) CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (dollars in thousands) (unaudited)

CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)




	Successor			Predecessor
	Successor			Predecessor
	Three Months Ended March 31, 2015			Three Months Ended March 31, 2014


Net Loss	$	(7,811	)	$	(6,213	)
Other comprehensive income, net of tax:
Defined benefit pension plan:
Changes in unamortized net pension(1)		—			8

Comprehensive loss, net of tax	$	(7,811	)	$	(6,205	)

(~~dollars~~1)In the inPredecessor ~~thousands)~~ period, no tax expense or benefit was recognized on these amounts as a result of the Company's cumulative loss position.

~~(unaudited)~~ See accompanying notes to consolidated financial statements.

	Successor			Predecessor
	Period from September 19 to September 30			Period from January 1 to September 18			Nine Months Ended September 30
	2014			2014			2013
Operating Revenues:
Gaming	$	14,399		$	320,366		$	349,223
Pari-mutuel commissions		446			8,014			8,932
Food and beverage		1,270			25,319			27,452
Hotel		199			3,489			4,099
Other		773			9,619			9,582

		17,087			366,807			399,288
Less—promotional allowances		(776	)		(14,930	)		(16,321	)

Net operating revenues		16,311			351,877			382,967

Operating Expenses:
Gaming		8,659			190,305			205,533
Pari-mutuel commissions		520			8,053			8,525
Food and beverage		1,031			21,222			23,071
Hotel		114			2,087			2,307
Other		475			5,740			6,315
Marketing and promotions		889			10,467			11,882
General and administrative		2,754			47,081			47,380
Depreciation and amortization		1,289			22,231			22,782

Total operating expenses		15,731			307,186			327,795
Loss on the sale or disposal of property		—			184			68
Strategic transaction costs		618			7,620			2,723

Operating (Loss) Income		(38	)		36,887			52,381

Other Income (Expense):
Interest income		1			6			26
Interest expense		(1,813	)		(49,838	)		(52,176	)

Total other expense		(1,812	)		(49,832	)		(52,150	)

(Loss) Income before Income Taxes		(1,850	)		(12,945	)		231
Provision for income taxes		(1,307	)		(2,837	)		(2,260	)

Net Loss	$	(3,157	)	$	(15,782	)	$	(2,029	)

See accompanying condensed notes to consolidated financial statements.

Table of Contents

MTR GAMING GROUP, INC. (A WHOLLY-OWNED SUBSIDIARY OF ELDORADO RESORTS, INC.) CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (unaudited)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)




	Successor			Predecessor
	Successor			Predecessor
	Three Months Ended March 31, 2015			Three Months Ended March 31, 2014
	Three Months Ended March 31, 2015			Three Months Ended March 31, 2014
Cash flows from operating activities:
Net loss	$	(7,811	)	$	(6,213	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		10,539			7,784
Amortization of deferred financing fees and (premium) discount		(2,737	)		941
Provision (recovery) for bad debts		49			(4	)
Stock-based compensation expense		—			455
Change in fair value of acquisition related contingencies		16			18
Deferred income taxes		2,644			923
(Gain) loss on the sale or disposal of property		(1	)		18
Change in operating assets and liabilities:
Accounts receivable		857			2,569
Other current assets		745			490
Accounts payable		(3,933	)		(3,749	)
Accrued liabilities		(13,007	)		(13,918	)
Other regulatory gaming assessments		(117	)		(125	)
Incentive compensation		—			(816	)

Net cash used in operating activities		(12,756	)		(11,627	)

Cash flows from investing activities:
Increase in restricted cash		(2,623	)		(1,502	)
Increase in deposits and other		—			31
Proceeds from the sale of property and equipment		2			1
Reimbursement of capital expenditures from West Virginia regulatory authorities		—			235
Capital expenditures		(5,486	)		(2,808	)

Net cash used in investing activities		(8,107	)		(4,043	)

Cash flows from financing activities:
Proceeds from exercise of stock options		—			264

Net decrease in cash and cash equivalents		(20,863	)		(15,406	)
Cash and cash equivalents, beginning of period		60,650			100,124

Cash and cash equivalents, end of period	$	39,787		$	84,718



Supplemental disclosure of cash flow information:
Interest paid	$	32,238		$	32,838

See ~~(dollars~~accompanying innotes ~~thousands)~~ to consolidated financial statements.

(unaudited)

	Successor			Predecessor
	Period from September 19 to September 30
				Period from July 1 to September 18			Three Months Ended September 30
	2014			2014			2013
Net Loss	$	(3,157	)	$	(8,387	)	$	(3,629	)
Other Comprehensive Income, net of tax:
Defined benefit pension plan:
Amortization of net gain(1)		1			6			11

Other Comprehensive Income		1			6			11

Comprehensive Loss, net of tax	$	(3,156	)	$	(8,381	)	$	(3,618	)

(1)In the Predecessor periods, no tax expense or benefit was recognized on these amounts as a result of the Company's cumulative loss position.

See accompanying condensed notes to consolidated financial statements.

Table of Contents

MTR GAMING GROUP, INC. (A WHOLLY-OWNED SUBSIDIARY OF ELDORADO RESORTS, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Continued)

(dollars in thousands)

(unaudited)

	Successor			Predecessor
	Period from September 19 to September 30
				Period from January 1 to September 18			Nine Months Ended September 30
	2014			2014			2013
Net Loss	$	(3,157	)	$	(15,782	)	$	(2,029	)
Other Comprehensive Income, net of tax:
Defined benefit pension plan:
Amortization of net gain(1)		1			21			32

Other Comprehensive Income		1			21			32

Comprehensive Loss, net of tax	$	(3,156	)	$	(15,761	)	$	(1,997	)

(1)For the Predecessor periods, no tax expense or benefit was recognized on these amounts as a result of the Company's cumulative loss position.

See accompanying condensed notes to consolidated financial statements.

Table of Contents

MTR GAMING GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)

	Successor			Predecessor
	Period from September 19 to September 30			Period from January 1 to September 18
							Nine Months Ended September 30
	2014			2014			2013
Cash flows from operating activities:
Net loss	$	(3,157	)	$	(15,782	)	$	(2,029	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		1,518			22,231			22,782
Amortization of deferred financing fees and premium / discount		(396	)		2,696			2,820
Bad debt expense		—			67			64
Stock-based compensation expense		—			1,310			789
Change in fair value of acquisition related contingencies		—			37			61
Deferred income taxes		1,302			2,498			2,556
Loss on the sale or disposal of property		—			184			68
Change in operating assets and liabilities:
Accounts receivable		1,354			(446	)		(1,305	)
Other current assets		1,468			(704	)		(2,698	)
Accounts payable		1,228			(2,761	)		(1,931	)
Accrued liabilities		4,053			(17,737			(13,325	)
Other regulatory gaming assessments		94			(206	)		(570	)
Long-term compensation		—			(1,435	)		304

Net cash provided by (used in) continuing operating activities		7,464			(10,048	)		7,586
Net cash used in discontinued operating activities		—			—			(7	)

Net cash provided by (used in) operating activities		7,464			(10,048	)		7,579

Cash flows from investing activities:
Decrease in restricted cash		1,913			4,099			24
Increase in deposits and other		—			(439	)		(10	)
Payment of Ohio video lottery terminal license fee		—			—			(25,000	)
Proceeds from the sale of property and equipment		—			55			168
Reimbursement of capital expenditures from West Virginia regulatory authorities		—			628			1,828
Capital expenditures		(337	)		(11,262	)		(13,960	)

Net cash provided by (used in) investing activities		1,576			(6,919	)		(36,950	)

Cash flows from financing activities:
Proceeds from exercise of stock options		—			773			564
Purchase and retirement of treasury stock		—			(377	)		(231	)
Purchase of shares for Merger consideration		—			(30,000	)		—

Net cash (used in) provided by financing activities		—			(29,604	)		333

Net increase (decrease) in cash and cash equivalents		9,040			(46,571	)		(29,038	)
Cash and cash equivalents, beginning of period		53,553			100,124			115,113

Cash and cash equivalents, end of period	$	62,593		$	53,553		$	86,075


Supplemental disclosure of cash flow information:
Interest paid	$	25		$	65,727		$	65,727


Income taxes paid	$	—		$	88		$	175

See accompanying condensed notes to consolidated financial statements.

Table of Contents

MTR GAMING GROUP, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION

Organization

MTR Gaming Group, Inc. (the "Company" or "we" or "MTR"), a Delaware corporation and a wholly-owned subsidiary of Eldorado Resorts, Inc. ("ERI"), is a hospitality and gaming company that owns and operates racetrack, gaming and hotel properties in West Virginia, Pennsylvania and Ohio. The common shares of ERI are listed on the Nasdaq Stock Market.

The Company, through its wholly-owned subsidiaries, owns and operates Mountaineer Casino, Racetrack & Resort in Chester, West Virginia ("Mountaineer"), Presque Isle Downs & Casino in Erie, Pennsylvania ("Presque Isle Downs"), and Scioto Downs in Columbus, Ohio. Scioto Downs, through its subsidiary RacelineBet, Inc., also operates Racelinebet.com, a national account wagering service that offers online and telephone wagering on horse races as a marketing affiliate of TwinSpires.com, an affiliate of Churchill Downs, Inc.

In September 2013, we entered into a merger agreement to facilitate a business combination with Eldorado HoldCo LLC, a Nevada limited liability company ("Eldorado"), and formed several entities to facilitate the merger: Eclair Holdings Company, a Nevada corporation and wholly owned subsidiary of the Company ("NewCo"), Ridgeline Acquisition Corp., a Delaware corporation and wholly owned subsidiary of NewCo ("Merger Sub A"), and Eclair Acquisition Company, LLC, a Nevada limited liability company and wholly owned subsidiary of NewCo ("Merger Sub B"). These entities had no assets or operations for ~~fiscal~~the ~~year~~three ~~2013~~months ended March 31, 2014.

On September 19, 2014 (the "Acquisition Date"), MTR merged with and into Merger Sub A, with MTR surviving the merger (the "MTR Merger"), and Eldorado merged with and into Merger Sub B, with Eldorado surviving the merger (the "Eldorado Merger" and, together with the MTR Merger, the "Mergers"). As a result of the Mergers, NewCo became the holding company for the Company and Eldorado and was renamed "Eldorado Resorts, Inc."

Basis of Presentation

The Mergers were accounted for as a reverse acquisition of the Company by Eldorado under accounting principles generally accepted in the United States. Under the acquisition method of accounting, Eldorado is treated as the accounting acquirer and the Company is treated as the legal acquirer, resulting in the Company applying fair value accounting to its assets and liabilities as of the Acquisition Date. Accordingly, the consolidated financial statements and the ~~condensed~~ notes to the consolidated financial statements are presented in two distinct periods, "Predecessor" and "Successor," which relate to the accounting periods preceding and succeeding the completion of the Mergers. The Predecessor and Successor periods have ~~been~~ been separated by a vertical line to highlight the fact that the financial information for such periods has been prepared under two different historical-cost basis of accounting and are not comparable. In addition, the accompanying consolidated financial statements for the Successor period were prepared to conform to the financial statement presentation of Eldorado. We have reclassified certain amounts for the prior year to conform to the Successor presentation. These reclassifications, as detailed below, had no impact on income from operations or net income as previously reported.

~~The accompanying unaudited consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP")~~ 6

Table of Contents

MTR GAMING GROUP, INC.

~~CONDENSED~~(A ~~NOTES~~WHOLLY-OWNED TOSUBSIDIARY ~~CONSOLIDATED~~OF ~~FINANCIAL~~ELDORADO ~~STATEMENTS (Continued~~RESORTS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION (Continued)

~~for~~ The accompanying unaudited consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included herein. The results of operations for these interim periods are not necessarily indicative of the operating results for other quarters, for the full year or for any future period. All significant intercompany accounts and transactions have been eliminated in consolidation. We view each operating property as an operating segment and all operating segments have been aggregated into one reportable segment.

These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2013~~2014.

Earnings per share information has not been presented because the Company's stock is no longer publicly traded.

Reclassifications

~~Reclassifications~~The following table includes the reclassifications to the ~~Consolidated~~consolidated ~~Statements~~statements of ~~Operations~~operations for the Predecessor ~~periods~~period. ~~are~~The reclassifications ashad ~~follows~~no ~~(in~~impact ~~thousands):~~on income from operations or net income as previously reported.

	Three Months Ended
	Three Months Ended March 31, 2014
					Nine Months Ended September 30
	(in thousands)
	March 31		June 30
Hotel revenues were reclassified from food, beverage and lodging revenues to their own financial statement line item	$	1,188
2014:
Hotel expenses were reclassified from food, beverage and lodging expense to their own financial statement line item		377
Hotel revenues were reclassified from Food, beverage and lodging revenues to their own financial statement line item	$	1,188	$	1,248	$	2,436
Utility expenses were reclassified from gaming, pari-mutuel, food and beverage, hotel, other, marketing and promotions to general and administrative expenses		682
Hotel expenses were reclassified from Food, beverage and lodging expense to their own financial statement line item		377		327		704
Surveillance expenses were reclassified from general and administrative expenses to gaming expenses		610
Utility expenses were reclassified from Gaming, Pari-mutuel, Food and beverage, Hotel, Other, Marketing and promotions to General and administrative expenses		682		545		1,227
Reservation expenses were reclassified from other expenses to hotel expenses		62
Surveillance expenses were reclassified from General and administrative expenses to Gaming expenses		610		587		1,197
Hotel housekeeping expenses were reclassified from general and administrative expenses to hotel expenses		504
Reservation expenses were reclassified from Other expenses to Hotel expenses		62		63		125
Cost of providing food and beverage complimentary services were reclassified from food and beverage expense to gaming expense		2,138
Hotel housekeeping expenses were reclassified from General and administrative expenses to Hotel expenses		504		519		1,023
Cost of providing hotel complimentary services were reclassified from hotel expense to gaming expense		399
Cost of providing other complimentary services were reclassified from other expense to gaming expense		93

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MTR GAMING GROUP, INC.

~~CONDENSED~~(A ~~NOTES~~WHOLLY-OWNED TOSUBSIDIARY ~~CONSOLIDATED~~OF ~~FINANCIAL~~ELDORADO ~~STATEMENTS (Continued~~RESORTS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION (Continued)

	Three Months Ended
							Nine Months Ended September 30
	March 31		June 30		September 30
2013:
Hotel revenues were reclassified from Food, beverage and lodging revenues to their own financial statement line item		1,225		1,423	$	1,451	$	4,099
Hotel expenses were reclassified from Food, beverage and lodging expense to their own financial statement line item		382		347		357		1,086
Utility expenses were reclassified from Gaming, Pari-mutuel, Food and beverage, Hotel, Other, Marketing and promotions to General and administrative expenses		644		601		661		1,906
Surveillance expenses were reclassified from General and administrative expenses to Gaming expenses		630		598		580		1,808
Reservation expenses were reclassified from Other expenses to Hotel expenses		66		64		61		191
Hotel housekeeping expenses were reclassified from General and administrative expenses to Hotel expenses		501		527		549		1,577

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (~~the~~ "FASB") issued Accounting Standards Update ("ASU") No. 2014-099, ~~Revenue~~ "Revenue from Contracts with Customers", which ~~(Topic~~provides ~~606)~~guidance ~~("ASU~~for ~~2014-09")~~revenue recognition. The new standard ~~requires~~outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity should recognize revenue to bedepict ~~recognized~~the ~~when~~transfer ~~promised~~of promised goods or services ~~are transferred~~ to customers in an amount that reflects the consideration ~~that~~to iswhich ~~expected~~the entity expects to be ~~received~~entitled in exchange for those goods or services. ~~Qualitative~~The ~~and~~standard ~~quantitative~~is ~~disclosures~~designed ~~are~~to ~~also required regarding~~create ~~customer~~greater ~~contracts,~~comparability ~~significant~~for ~~judgments~~financial ~~and~~statement ~~changes~~users inacross ~~judgments,~~industries and ~~assets~~jurisdictions ~~recognized~~and ~~from~~also ~~the~~requires ~~costs~~enhanced todisclosures. ~~obtain~~The orguidance ~~fulfill~~is aeffective ~~contract.~~for ~~ASU~~fiscal ~~2014-09~~years, ~~supersedes~~ and ~~replaces~~interim ~~nearly~~periods ~~all existing~~within ~~revenue~~those ~~recognition~~years, ~~guidance~~beginning ~~under~~after ~~U.S.~~December ~~GAAP~~15, 2017. ~~This~~Early ~~accounting~~adoption ~~guidance is~~ effective for ~~public~~fiscal ~~entities~~years, ~~for~~and ~~annual~~interim ~~reporting~~ periods within those years, beginning after December 15, 2016, ~~including interim periods therein. Early adoption~~ is ~~not~~ permitted. We are currently evaluating the ~~method~~impact of the adoption ~~and~~of ~~effect~~ASU ~~that~~2014-09 ~~this standard will have~~ on our consolidated financial statements ~~and related disclosures~~.

NOTE 2—MERGER ~~WITH~~AND ~~ELDORADO~~PURCHASE ACCOUNTING

On September 19, 2014, the Company and Eldorado combined their businesses through the Mergers, as defined above, consummated pursuant to the Agreement and Plan of Merger, dated as of September 9, 2013, as amended on November 18, 2013, February 13, 2014 and May 13, 2014, by and among MTR, Eldorado, NewCo and certain affiliates of NewCo and Eldorado (the "Merger Agreement").

Pursuant to the Merger Agreement, upon completion of the MTR Merger, subject to proration, each outstanding share of the Company's common stock, par value $0.00001 per share, was converted into the right to elect to receive either $6.05 per share in cash or one share of ERI's common stock, par value $0.00001 per share. Pursuant to the proration procedures provided in the Merger Agreement, former MTR shareholders received (in the aggregate) a cash payment of $35.0 million (of which $30.0 million was funded by MTR and $5.0 million by Eldorado).

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MTR GAMING GROUP, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 2—MERGER WITH ELDORADO (Continued)

into the right to elect to receive either $6.05 per share in cash or one share of ERI's common stock, par value $0.00001 per share. Pursuant to the proration procedures provided in the Merger Agreement, former MTR shareholders received (in the aggregate) a cash payment of $35.0 million (of which $30.0 million was funded by MTR and $5.0 million by Eldorado).

Consideration Transferred

The purchase consideration in a reverse acquisition is determined with reference to the value of equity that the accounting acquirer, Eldorado, would have had to issue to the owners of the accounting acquiree, MTR, to give them the same percentage interest in the combined entity. However, in reverse acquisitions that occur between a public company as the legal acquirer and a private company as the accounting acquirer, the fair value of the legal acquirer's publicly traded stock generally is a more reliable determination of the fair value than the fair value of the accounting acquirer's untraded equity securities, and, as such, is generally used in calculating the purchase consideration. Accordingly, the following table provides the calculation of the purchase price, which was calculated using the fair value ~~of the Company's common stock, based on the closing stock price of $4.43 on the Acquisition Date, as well as a reconciliation of the total shares outstanding as of the Acquisition Date.~~

ERI Outstanding Share Calculation
Shares Issued to Eldorado(i)		23,311,492
Number of MTR shares outstanding at the Acquisition Date(ii)		28,386,084
MTR RSUs that vested upon closing of the Mergers(iii)		499,179

Total ERI shares outstanding—before share repurchase		52,196,755
MTR shares acquired at $6.05 per share based on $35.0 million cash election		(5,785,123	)
Total ERI shares outstanding at Acquisition Date		46,411,632


Eldorado % ownership		50.23	%
MTR % ownership		49.77	%
Consideration Transferred (dollars in thousands, except stock price)
Number of MTR shares outstanding at the Acquisition Date		28,386,084
MTR RSUs that vested upon closing of the Mergers		499,179
MTR shares acquired at $6.05 per share based on $35.0 million cash election		(5,785,123	)

Total net MTR shares		23,100,140
FMV of MTR common stock at Acquisition Date	$	4.43

Fair Value of MTR shares	$	102,334
Fair Value of MTR stock options		677


Total consideration transferred	$	103,011

(i)The number of shares issued to members of Eldorado in the Merger as merger consideration was determined pursuant to the terms of the Merger Agreement.

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MTR GAMING GROUP, INC.

~~CONDENSED~~(A ~~NOTES~~WHOLLY-OWNED TOSUBSIDIARY ~~CONSOLIDATED~~OF ~~FINANCIAL~~ELDORADO ~~STATEMENTS (Continued~~RESORTS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 2—MERGER ~~WITH~~AND ~~ELDORADO~~PURCHASE ACCOUNTING (Continued)

~~(ii)Number~~ of ~~shares of~~ MTR's common stock, ~~issued~~based ~~and~~on ~~outstanding immediately prior to closing. (iii)Pursuant to~~ the ~~MTR 2010 Long-Term Incentive Plan, immediately prior to~~ closing, ~~all outstanding~~ stock ~~options~~price ~~and~~of ~~MTR RSUs vested and became immediately exercisable~~$4.43 ~~All~~on ~~vested~~the ~~MTR~~Acquisition ~~RSUs~~Date, ~~were~~as ~~exchanged~~well ~~for~~as ~~one~~a ~~share~~reconciliation of ~~ERI~~the ~~common~~total ~~stock.~~shares ~~All~~ outstanding ~~stock~~as ~~options became exercisable for shares~~ of ~~ERI common stock with~~ the ~~same~~Acquisition ~~terms as the previous awards~~Date.

Preliminary Purchase Price Allocation


*ERI Outstanding Share Calculation*
Shares Issued to Eldorado(i)		23,286,202
Number of MTR shares outstanding at the Acquisition Date(ii)		28,386,084
MTR RSUs that vested upon closing of the Mergers(iii)		499,179

Total ERI shares outstanding—before share repurchase		52,171,465
MTR shares acquired at $6.05 per share based on $35.0 million cash election		(5,785,123	)
Total ERI shares outstanding at Acquisition Date(iv)		46,386,342



Eldorado % ownership		50.20	%
MTR % ownership		49.80	%
*Consideration Transferred (dollars in thousands, except stock price)*
Number of MTR shares outstanding at the Acquisition Date		28,386,084
MTR RSUs that vested upon closing of the Mergers		499,179
MTR shares acquired at $6.05 per share based on $35.0 million cash election		(5,785,123	)

Total net MTR shares		23,100,140
FMV of MTR common stock at Acquisition Date	$	4.43

Fair Value of MTR shares	$	102,334
Fair Value of MTR stock options(iii)		677



Total consideration transferred	$	103,011

(i)The number ~~following~~of ~~table~~shares ~~summarizes~~issued ~~the~~to ~~preliminary~~members ~~allocation~~ of Eldorado in the ~~purchase~~Mergers ~~price~~as merger consideration was determined pursuant to ~~the~~terms ~~tangible~~of ~~and~~the ~~identifiable~~Merger ~~intangible~~Agreement. ~~assets~~The ~~acquired~~shares ~~and~~have ~~liabilities~~been ~~assumed~~adjusted based onupon ~~their~~the ~~estimated~~final ~~fair~~review, ~~values~~as ondefined in the ~~Acquisition~~Merger ~~Date~~Agreement. ~~The~~As ~~fair~~a ~~value~~result, ~~estimates~~25,290 ~~are~~escrow ~~based~~shares onpreviously ~~management's~~issued ~~analysis~~were returned to Authorized and Unissued prior to December 31, ~~including~~2014. (ii)Number of ~~preliminary~~shares ~~work~~of ~~performed~~MTR bycommon stock issued and outstanding immediately prior to closing. ~~third~~(iii)Pursuant to the MTR 2010 Long-~~party~~Term ~~valuation~~Incentive ~~specialists~~Plan, immediately prior to closing, all outstanding stock options and isMTR ~~subject~~RSUs tovested ~~change~~and ~~within~~became ~~the~~immediately exercisable. ~~measurement~~All ~~period~~vested asMTR ~~the~~RSUs ~~valuations~~were ~~are~~exchanged ~~finalized~~for one share of ERI common stock. ~~The~~All ~~final~~outstanding ~~fair~~stock ~~value~~options ~~determinations~~became ~~are~~exercisable ~~expected~~for toshares beof ~~completed~~ERI nocommon ~~later than~~stock with the ~~third~~same ~~quarter~~terms ofas ~~2015.~~the previous awards. (iv)The number ~~final~~of ~~fair~~shares ~~value~~issued ~~determinations~~and ~~may~~outstanding, beafter ~~significantly~~settlement ~~different~~of ~~than~~the ~~those~~escrow ~~reflected~~shares, inas determined pursuant to the ~~consolidated~~terms ~~financial~~of ~~statements~~the Merger Agreement.

Goodwill, the excess of the purchase price over the fair market value of the net assets acquired, in the amount of $104.7 million, was recorded as of the Acquisition Date. The Company considers the goodwill to represent benefits that are expected to be realized as a result of the Mergers, including, but not limited to, the expected synergies and the assembled workforce. None of the goodwill is expected to be deductible for tax purposes. 9

The following table summarizes the preliminary purchase price allocation of the acquired assets and assumed liabilities as recorded at fair value on the Acquisition Date (dollars in thousands):

Current and other assets	$	74,873
Property and equipment		270,172
Goodwill		104,734
Intangible assets(1)		436,600
Other noncurrent assets		20,381

Total assets		906,760
Current liabilities		45,316
Long term debt(2)		624,877
Deferred income taxes(3)		128,545
Other noncurrent liabilities		5,011

Total liabilities		803,749

Net assets acquired	$	103,011

(1)Intangible assets consist of gaming licenses, trade names, and customer loyalty programs. (2)Long term debt was comprised of MTR Gaming's $570.7 million 11.5% Senior Secure Second Lien Notes due August 2019.

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MTR GAMING GROUP, INC.

~~CONDENSED~~(A ~~NOTES~~WHOLLY-OWNED TOSUBSIDIARY ~~CONSOLIDATED~~OF ~~FINANCIAL~~ELDORADO ~~STATEMENTS (Continued~~RESORTS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 2—MERGER ~~WITH~~AND ~~ELDORADO~~PURCHASE ACCOUNTING (Continued)

~~(3)Deferred~~ ~~tax liabilities were derived based on fair value adjustments for property and equipment, identified intangibles, deferred financing costs, certain~~ ~~long~~ Final ~~term~~Purchase ~~liabilities~~Price ~~and long term debt.~~Allocation

~~Trade receivables~~The ~~and~~following ~~payable,~~table ~~inventory~~summarizes asthe ~~well~~final asallocation ~~other~~of ~~current~~the ~~and~~purchase ~~non-current~~price ~~assets~~to ~~and liabilities were valued at~~ the ~~existing~~tangible ~~carrying~~and ~~values~~identifiable asintangible ~~they~~assets ~~represented the fair value of~~acquired ~~those~~and ~~items~~liabilities assumed at the Acquisition Date,. The fair values are based on management's ~~judgments~~analysis, ~~and~~including ~~estimates~~final work performed by third-party valuation specialists.

~~The~~Goodwill, ~~fair~~the ~~value~~excess of ~~property~~the ~~and~~purchase ~~equipment~~price ~~utilized~~over athe ~~combination~~fair market value of the ~~cost~~net ~~and~~assets ~~market approaches~~acquired, ~~depending~~in on the ~~characteristics~~amount of ~~the asset classification~~$66.8 million, ~~The~~was ~~fair~~recorded ~~value~~as of ~~land was determined using~~ the ~~market~~Acquisition ~~approach,~~Date. ~~which~~The Company considers ~~sales~~the ofgoodwill ~~comparable~~to ~~assets~~represent ~~and~~benefits ~~applies~~that ~~compensating~~are ~~factors~~expected ~~for any differences specific~~ to ~~the~~be ~~particular~~realized ~~assets.~~as ~~With~~a ~~respect~~result ~~to personal property components~~ of the ~~assets (gaming equipment~~Mergers, ~~furniture~~including, ~~fixtures~~but ~~and~~not ~~equipment,~~limited ~~computers~~to, ~~and vehicles)~~ the ~~cost~~expected ~~approach~~synergies ~~was~~and ~~used,~~the ~~which~~assembled isworkforce. None ~~based on replacement or reproduction costs~~ of the ~~asset.~~ ~~Building~~goodwill ~~and~~is ~~site~~expected ~~improvements~~to ~~were~~be ~~valued~~deductible ~~using~~for ~~the~~tax ~~cost approach using a direct cost model built on estimates of replacement cost~~purposes.

The ~~fair~~following ~~value~~table summarizes the final purchase price allocation of ~~non-operating~~the ~~real~~acquired ~~property~~assets ~~was~~and ~~determined~~assumed ~~utilizing~~liabilities aas ~~sales~~recorded ~~comparison~~at ~~approach.~~fair value on the Acquisition Date (dollars in thousands):

The gaming and racing licenses of each property were valued in aggregate for each respective property, as these licenses are considered to be the most significant asset of the Company and the gaming licenses could not be obtained without holding the racing licenses. Therefore, a market participant would value the licenses in aggregate. The fair value of the licenses was determined using the excess earnings methodology, which is an income approach methodology that allocates the projected cash flows of the business to the gaming license intangible assets less charges for the use of other identifiable assets of MTR including working capital, fixed assets and other intangible assets. This methodology was considered appropriate as the gaming licenses are the primary asset of MTR and the licenses are linked to each respective facility. Under the gaming legislation applicable to our properties, licenses are property specific and can only be acquired if a buyer acquires the existing facility. Because existing licenses may not be acquired and transferred for use at a different facility, the estimated future cash flows of each of our properties was the primary assumption in the valuation of such property.


Current and other assets	$	75,031
Property and equipment		289,211
Goodwill		66,826
Intangible assets(1)		473,000
Other noncurrent assets		20,381

Total assets		924,449
Current liabilities		46,446
Long term debt(2)		624,877
Deferred income taxes(3)		143,104
Other noncurrent liabilities		7,011

Total liabilities		821,438

Net assets acquired	$	103,011

~~Management~~ ~~has~~ ~~preliminarily~~ (1)Intangible assets ~~assigned~~consist anof ~~indefinite useful life to the~~ gaming licenses, intrade ~~accordance~~names, ~~with~~and ~~its~~customer ~~review~~loyalty ~~of the applicable guidance of Accounting Standards Codification~~programs. (~~"ASC"~~2)Long term ~~350.~~debt ~~The~~was ~~standard~~comprised ~~required management to consider, among other things, the expected use~~ of ~~the asset, the expected useful life of other related asset or asset group, any legal, regulatory, or contractual provisions that may limit the useful life, the Company~~MTR's ~~own historical experience in renewing similar arrangements, the effects of obsolescence, demand and other economic factors, and the maintenance expenditures required to obtain the expected cash flows~~$570.7 million ~~In that analysis, management determined that no legal, regulatory, contractual, competitive, economic or other factors limit the useful lives of these intangible assets~~11.5% ~~The~~Senior ~~Company~~Secured ~~has~~Second ~~licenses~~Lien inNotes ~~Pennsylvania,~~due ~~West~~August ~~Virginia and Ohio~~2019. (3)Deferred tax ~~The~~liabilities ~~renewal~~were ofderived ~~each~~based ~~state's gaming license depends~~ on afair ~~number~~value ofadjustments ~~factors,~~for ~~including~~property ~~payment of certain fees~~ and ~~taxes~~equipment, ~~providing~~identified ~~certain information to the state's gaming regulator~~intangibles, ~~and~~deferred ~~meeting~~financing ~~certain inspection requirements. However~~costs, ~~the Company's historical experience has not indicated,~~certain ~~nor~~long ~~does~~term ~~management~~liabilities ~~expect,~~and ~~any~~long ~~limitations~~term ~~regarding its ability to continue to renew each license~~debt. ~~No other competitive,~~

13 Pro Forma Information

The following table includes the unaudited pro forma results for the three months ended March 31, 2014, which gives effect to the Mergers as if they had occurred on January 1, 2013 and

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MTR GAMING GROUP, INC.

~~CONDENSED~~(A ~~NOTES~~WHOLLY-OWNED TOSUBSIDIARY ~~CONSOLIDATED~~OF ~~FINANCIAL~~ELDORADO ~~STATEMENTS (Continued~~RESORTS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 2—MERGER ~~WITH~~AND ~~ELDORADO~~PURCHASE ACCOUNTING (Continued)

~~contractual,~~reflect orpro ~~economic~~forma ~~factor~~adjustments ~~limits~~that ~~the~~are ~~useful~~expected ~~lives~~to ofhave ~~these~~a ~~assets.~~continuing ~~Accordingly,~~impact on the ~~Company~~results ~~has~~of ~~preliminarily~~operations ~~concluded~~and ~~that~~are ~~the~~directly ~~useful~~attributable ~~lives~~to ofthe ~~these licenses are indefinite~~acquisition.

Trade names were valued using the relief-from-royalty method. The customer loyalty program was valued using a combination of a replacement cost and lost profits analysis. Trade names are being amortized on a straight-line basis over a five year useful life and the customer loyalty program is being amortized on a straight-line basis over a one year useful life. The weighted average useful life of all amortizing intangible assets related to the Mergers is approximately three years.

	Three Months Ended March 31,

	2014
	(in thousands)
Net revenues	$	114,828
Net loss	$	(2,326	)

Existing long term debt assumed on the Acquisition Date was fair valued based on quoted market prices.

Deferred income tax assets and liabilities as of the Acquisition Date represent the expected future tax consequences of temporary differences between the fair values of the assets acquired and liabilities assumed and their tax bases.

Unaudited Pro Forma Information

The following table includes the unaudited pro forma results for the three and nine months ended September 30, 2014 and 2013, which gives effect to the Mergers as if they had occurred on January 1, 2013 and reflect pro forma adjustments that are expected to have a continuing impact on the results of operations and are directly attributable to the acquisition.

	Three Months Ended September 30,					Nine Months Ended September 30,
	2014			2013		2014			2013
	(in thousands)
Net revenues	$	128,460		$	128,863	$	368,188		$	382,967
Net (loss) income	$	(3,254	)	$	741	$	(1,093	)	$	1,170

NOTE 3—FAIR VALUE MEASUREMENTS

ASC 820, Fair Value Measurements and Disclosures, provides guidance for measuring the fair value of assets and liabilities and requires expanded disclosures about fair value measurements. ASC 820 indicates that fair value should be determined based on the assumptions marketplace participants would use in pricing the asset or liability and provides additional guidelines to consider in determining the market-based measurement.

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MTR GAMING GROUP, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 3—FAIR VALUE MEASUREMENTS (Continued)

ASC 820 requires fair value measurements be classified and disclosed in one of the following categories:


Level 1:		Unadjusted quoted market prices for identical assets and liabilities.
Level 2:		Inputs other than Level 1 that are observable, either directly or indirectly, for the asset or liability through corroboration with market data for substantially the full term of the asset or liability.
Level 3:		Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities (management's own assumptions about what market participants would use in pricing the asset or liability at the measurement date).

Cash equivalents: Cash equivalents include investments in money market funds. Investments in this category can be redeemed immediately at the current net asset value per share. A money market fund is a mutual fund whose investments are primarily in short-term debt securities designed to maximize current income with liquidity and capital preservation, usually maintaining per share net asset value at a constant amount, such as one dollar. The carrying amounts approximate fair value because of the short maturity of these instruments.

Acquisition-related contingent considerations: Contingent consideration related to the July 2003 acquisition of Scioto Downs represents the estimate of amounts to be paid to former shareholders of Scioto Downs under certain earn-out provisions. We consider the acquisition related contingency's fair value measurement, which includes forecast assumptions, to be Level 3 within the fair value hierarchy.

~~The following table presents assets and liabilities measured at fair value on a recurring basis at September 30, 2014 and December 31, 2013:~~ 11

	Successor
	September 30, 2014
Description	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash equivalents	$	10,679	$	—	$	—	$	10,679

Total assets	$	10,679	$	—	$	—	$	10,679


Liabilities
Acquisition-related contingent considerations	$	—	$	—	$	508	$	508

Total liabilities	$	—	$	—	$	508	$	508

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MTR GAMING GROUP, INC.

~~CONDENSED~~(A ~~NOTES~~WHOLLY-OWNED TOSUBSIDIARY ~~CONSOLIDATED~~OF ~~FINANCIAL~~ELDORADO ~~STATEMENTS (Continued~~RESORTS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 3—FAIR VALUE MEASUREMENTS (Continued)

	Predecessor
	December 31, 2013
Description	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash equivalents	$	33,524	$	—	$	—	$	33,524

Total assets	$	33,524	$	—	$	—	$	33,524


Liabilities
Acquisition-related contingent considerations	$	—	$	—	$	586	$	586

Total liabilities	$	—	$	—	$	586	$	586

The following table presents assets and liabilities measured at fair value on a recurring basis at March 31, 2015 and December 31, 2014:

The following table represents the change in acquisition-related contingent consideration liabilities during the nine months ended September 30, 2014 (in thousands):

	March 31, 2015

Description	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash equivalents	$	81	$	—	$	—	$	81

Total assets	$	81	$	—	$	—	$	81



Liabilities
Acquisition-related contingent considerations	$	—	$	—	$	546	$	546

Total liabilities	$	—	$	—	$	546	$	546

	December 31, 2014
Balance as of December 31, 2013 (Predecessor)	$	586
Amortization of present value discount(1)		56
Description	(Level 1)			(Level 2)		(Level 3)		Total
Fair value adjustment for change in consideration expected to be paid(2)		(56	)
	(in thousands)
Settlements		(78	)
Assets

Cash equivalents	$	5,680		$	—	$	—	$	5,680
Balance as of September 30, 2014 (Successor)	$	508


Total assets	$	5,680		$	—	$	—	$	5,680



Liabilities
Acquisition-related contingent considerations	$	—		$	—	$	524	$	524

Total liabilities	$	—		$	—	$	524	$	524

The following ~~(1)Changes in~~table ~~present~~represents ~~value are included as a component of interest expense in~~ the ~~consolidated~~change ~~statement of operations. Amortization of the present value discount resulted~~ in ~~interest~~acquisition-related ~~expense~~contingent ofconsideration ~~$37,000~~liabilities ~~and $19,000~~ during the ~~Predecessor~~three ~~period~~months ~~and~~ended ~~Successor period~~March 31, ~~respectively. (2)Prior to~~2015 ~~the Mergers, fair value adjustments for changes~~ (in ~~earn-out~~thousands): estimates of $37,000 were recorded to indefinite-lived intangibles in the consolidated balance sheet in the Predecessor period. Due to purchase accounting as a result of the Mergers, fair value adjustments for changes in earn-out estimates of $19,000 in the Successor period were recorded to general and administrative expense in the consolidated statement of operations.

The carrying amounts as of September 30, 2014, for cash, trade accounts receivable, and trade accounts payable approximate their respective fair values based on the short-term nature of these instruments. The fair value of the Notes (see Note 7) was $626.3 million at September 30, 2014 compared to a carrying value of $624.5 million at September 30, 2014. The fair value of the Notes was $634.8 million at December 31, 2013 compared to a carrying value of $558.8 million at December 31, 2013. The fair values of our Notes were determined based on Level 2 inputs including quoted market prices and bond terms and conditions.


Balance as of December 31, 2014	$	524
Amortization of present value discount(1)		16
Fair value adjustment for change in consideration expected to be paid(2)		6

Balance as of March 31, 2015	$	546

16 (1)Changes in present value are included as a component of interest expense in the consolidated statement of operations. (2)Fair value adjustments for changes in earn-out estimates are included in general and administrative expense in the consolidated statements of operations.

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MTR GAMING GROUP, INC.

~~CONDENSED~~(A ~~NOTES~~WHOLLY-OWNED TOSUBSIDIARY ~~CONSOLIDATED~~OF ~~FINANCIAL~~ELDORADO ~~STATEMENTS (Continued~~RESORTS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 3—FAIR VALUE MEASUREMENTS (Continued)

The carrying amounts for cash, trade accounts receivable, and trade accounts payable approximate their respective fair values based on the short-term nature of these instruments. The fair value of the Notes (see Note 8) was $608.3 million at March 31, 2015 compared to a carrying value of $608.1 million at March 31, 2015. The fair value of the Notes was $606.9 million at December 31, 2014 compared to a carrying value of $610.8 million at December 31, 2014. The fair values of our Notes were determined based on Level 2 inputs including quoted market prices and bond terms and conditions.

NOTE 4—NON-OPERATING REAL PROPERTY

We have designated certain assets, consisting principally of land and undeveloped properties, as non-operating real property and declared our intent to sell those assets. No less than annually, we obtain independent appraisals of the fair value of these assets. In connection with the Mergers, as discussed in Note 2, the non-operating real properties were adjusted to fair value on the Acquisition Date.

Although we continue to actively market these properties for sale, we do not anticipate that we will be able to sell the majority of the assets within the next twelve months. As such, these properties are not classified as held- for-sale as of ~~September~~March 3031, ~~2014~~2015. These properties are included in non-operating real properties in our consolidated balance sheets as of ~~September~~March 3031, ~~2014~~2015 and December 31, ~~2013~~2014.

NOTE 5—GOODWILL AND OTHER INTANGIBLES ASSETS

The ~~components~~gross carrying value, accumulated impairment and net carrying value of each major component of our goodwill and other intangible assets ~~are~~is as follows:

	Successor
	March 31, 2015
	September 30, 2014
	Gross Carrying value		Accumulated Amortization			Net Carrying Value		Weighted Average Remaining Amortization Period
	Gross Carrying value		Accumulated Amortization			Net Carrying Value		Weighted Average Amortization Period
	(in thousands)							(in years)
Goodwill	$	~~104~~66,~~734~~826	$	—		$	~~104~~66,~~734~~826		N/A
Gaming licenses (indefinite-lived)		~~424~~461,~~900~~500		—			~~424~~461,~~900~~500		N/A
Trade names		6,~~600~~700		(471,025	)		65,~~553~~675		53.0
Customer loyalty programs		54,~~100~~800		(~~182~~2,571	)		42,~~918~~229		10.5

Total goodwill and other intangible assets	$	~~541~~539,~~334~~826	$	(~~229~~3,596	)	$	~~541~~536,~~105~~230

	Predecessor
	December 31, 2013
	Gross Carrying Value		Accumulated Impairment		Net Carrying Value		Weighted Average Amortization Period
	(in thousands)
Goodwill	$	494	$	494	$	—		N/A
Gaming licenses (indefinite-lived)		136,080		—		136,080		N/A

Total goodwill and other intangible assets	$	136,574	$	494	$	136,080

The increase in intangible assets, and related amortization expense, as compared to December 31, 2013 is due to purchase accounting adjustments as a result of the Mergers. The Company incurred amortization expense of $0.2 million during the Successor period, and is included as a component of marketing and promotions expense in the consolidated statement of operations. We did not have any amortization expense during the Predecessor period.

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MTR GAMING GROUP, INC.

~~CONDENSED~~(A ~~NOTES~~WHOLLY-OWNED TOSUBSIDIARY ~~CONSOLIDATED~~OF ~~FINANCIAL~~ELDORADO ~~STATEMENTS (Continued~~RESORTS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 5—GOODWILL AND OTHER INTANGIBLES ASSETS (Continued)

	December 31, 2014

	Gross Carrying value		Accumulated Amortization			Net Carrying Value		Weighted Average Remaining Amortization Period
	(in thousands)							(in years)
Goodwill	$	66,826	$	—		$	66,826		N/A
Gaming licenses (indefinite-lived)		461,500		—			461,500		N/A
Trade names		6,700		(547	)		6,153		3.2
Customer loyalty programs		4,800		(1,114	)		3,686		0.7

Total goodwill and other intangible assets	$	539,826	$	(1,661	)	$	538,165

As a result of the Mergers, the Company recorded goodwill which has an aggregate carrying value of $66.8 million as of March 31, 2015.

Goodwill is tested by comparing the carrying value of the reporting unit to its fair value. The Company estimates the fair value of the reporting unit utilizing income and market approaches. The income approach is based on a reporting unit's projection of operating results and cash flows that is discounted using a weighted-average cost of capital. The market approach is based on the Company's market capitalization at the testing date.

Mountaineer, Presque Isle Downs and Scioto Downs are each required to maintain gaming and racing licenses (collectively "Gaming Licenses") to operate. The value of the Gaming Licenses increased from $136.1 million, which reflected the purchase price allocation from the Scioto Downs business combination in 2003 and the original cost of the regulatory license fees before any facility was operational, to $461.5 million, which reflects the fair value of the licenses calculated as of the Acquisition Date. The gaming and racing licenses of each property were valued in aggregate for each respective property, as these licenses are considered to be the most significant asset of the properties and the gaming licenses could not be obtained without holding the racing licenses. Therefore, a market participant would consider the licenses in aggregate. Gaming License rights are not subject to amortization as the Company has determined that they have an indefinite useful life.

Assessing the other indefinite-lived intangible assets for impairment is a process that requires significant judgment and involves detailed quantitative and qualitative business-specific analysis and many individual assumptions which fluctuate between assessments. Our properties' estimated future cash flows are a primary assumption in the respective impairment analyses. Unforeseen events, changes in circumstances and market conditions and material differences in estimates of future cash flows could negatively affect the fair value of our assets and result in an impairment charge, which could be material. Cash flow estimates include assumptions regarding factors such as recent and budgeted operating performance, net win per unit (revenue), patron visits, growth percentages which are developed considering general macroeconomic conditions as well as competitive impacts from current and anticipated competition through a review of customer market data, operating margins, and current regulatory, social and economic climates. These estimates could also be negatively impacted by changes in federal, state, or local regulations, economic downturns or developments and other market

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MTR GAMING GROUP, INC.

(A WHOLLY-OWNED SUBSIDIARY OF ELDORADO RESORTS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 5—GOODWILL AND OTHER INTANGIBLES ASSETS (Continued)

conditions affecting travel and access to the properties. The most significant of the assumptions used in our valuations include: (1) revenue growth/decline percentages; (2) discount rates; (3) effective income tax rates; (4) future terminal values and (5) capital expenditure assumptions. These assumptions were developed for each property based on historical trends, the current competitive markets in which they operate, and projections of future performance and competition. No impairment charges were recorded for our other indefinite-lived intangible assets in any of the periods presented.

In addition, the Company recorded other intangible assets for the fair value of the trade names and customer loyalty programs in connection with the Mergers. Trade names are amortized on a straight-line basis over a 3.5 year useful life and the customer loyalty program is amortized on a straight-line basis over a one year useful life. The Company incurred amortization expense of $1.9 million during the three months ended March 31, 2015 (Successor) which is included in depreciation and amortization in the consolidated statements of operations. We did not have any amortization expense during the Predecessor period. Based upon the amortizable intangible assets as of March 31, 2015, the estimated aggregate future amortization expense is $3.7 million for the remainder of 2015, $1.9 million for the year ended December 31, 2016, $1.9 million for the year ended December 31, 2017 and $0.4 million for the year ended December 31, 2018.

We believe we have used reasonable estimates and assumptions to calculate the fair value of our goodwill and other indefinite-lived intangible assets; however, these estimates and assumptions could be materially different from actual results. If actual market conditions are less favorable than those projected, or if events occur or circumstances change that would reduce the fair value of our licensing intangibles below the carrying value reflected on the consolidated balance sheet, we may be required to conduct an interim test or possibly recognize impairment charges, which may be material, in future periods.

NOTE 6—EQUITY AWARDS AND OTHER INCENTIVE COMPENSATION

We account for stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation, and the amounts are included in ~~General~~general and administrative expenses in our consolidated statements of operations.

The total incentive-based compensation expense ~~for~~was ~~the three months ended September 30, 2014 is~~ as follows (in thousands):

	Successor		Predecessor
	Period from September 19 to September 30		Period from July 1 to September 18
	Three Months Ended March 31, 2015		Three Months Ended March 31, 2014
					Three Months Ended September 30
Stock-based compensation expense	$	—	$	402
	2014		2014		2013
Performance award compensation expense		—		53
Stock-based compensation expense		—		748		168
Performance award compensation expense		—		886		178

~~The~~Prior ~~total~~to ~~incentive~~the Mergers, nonqualified stock options ("Stock Options"), restricted stock units ("RSUs") and cash-based ~~compensation~~performance ~~expense~~awards ~~for~~("Performance Awards") were approved by the Compensation ~~nine~~Committee ~~months~~of ~~ended~~the ~~September 30,~~Board ~~2014~~of isDirectors asand ~~follows~~were ~~(in~~granted ~~thousands):~~to executive officers, certain key

	Successor		Predecessor
	Period from September 19 to September 30		Period from January 1 to September 18
					Nine Months Ended September 30
	2014		2014		2013
Stock-based compensation expense		—		1,310		789
Performance award compensation expense		—		760		329

Nonqualified stock options ("Stock Options"), restricted stock units ("RSUs") and cash-based performance awards ("Performance Awards") as approved by the Compensation Committee of the Board of Directors ("BOD") and are granted to executive officers, certain key employees and non-employee members of the BOD as permitted under the 2010 Long-Term Incentive Plan ("2010 Plan").

Stock Options primarily vest ratably over three years and RSUs granted to employees and executive officers primarily vest and become non-forfeitable upon the third anniversary of the date of grant. RSUs granted to non-employee directors vest immediately and are delivered upon the date that is the earlier of termination of service on the Board of Directors or the consummation of a change of control of the Company. The Performance Awards relate to the achievement of defined levels of performance and are generally measured by the level of the Company's Corporate Free Cash Flow (as defined) over a one or two-year Performance Period depending upon the award agreement. If the Performance Award levels are achieved, the awards earned will vest and become payable at the end of the Vesting Period, defined as either a one or two calendar year period following the Performance Period.

In connection with the Mergers, any unvested awards granted pursuant to the 2010 Plan vested upon the Acquisition Date, and both vested and unvested equity awards granted under the 2010 Plan

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MTR GAMING GROUP, INC.

~~CONDENSED~~(A ~~NOTES~~WHOLLY-OWNED TOSUBSIDIARY ~~CONSOLIDATED~~OF ~~FINANCIAL~~ELDORADO ~~STATEMENTS (Continued~~RESORTS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 6—EQUITY AWARDS AND OTHER INCENTIVE COMPENSATION (Continued)

~~were~~employees ~~converted~~and ~~into~~nonemployee ~~the~~members ~~right~~of tothe ~~receive~~Board ~~shares~~ of ~~ERI~~Directors ~~common~~("BOD") ~~stock,~~as orpermitted ~~were~~under ~~exchanged~~the ~~for,~~2010 orLong-Term ~~settled~~Incentive ~~in,~~Plan ~~shares~~("2010 ~~of ERI common stock~~Plan").

In connection with the Mergers, any unvested awards granted pursuant to the 2010 Plan vested upon the Acquisition Date, and both vested and unvested equity awards granted under the 2010 Plan were converted into the right to receive shares of ERI common stock, or were exchanged for, or settled in, shares of ERI stock. As a result, immediately prior to the Mergers, all unrecognized compensation was immediately recognized as an expense.

Specifically, each Stock Option or other right to acquire common stock granted under the 2010 Plan outstanding immediately prior to the completion of the Mergers, whether vested or unvested, automatically became, after the completion of the Mergers, an option or right to purchase the same number of shares of ERI common stock as the number of shares of common stock that were subject to such Stock Option immediately prior to the completion of the Mergers. The exercise price per share of ERI common stock subject to any such Stock Option at and after the completion of the Mergers is equal to the exercise price per share of common stock subject to such Stock Option immediately prior to the completion of the Mergers. All other terms, except vesting requirements, applicable to such Stock Option will remain the same.

Each RSU in respect of a share of MTR common stock that was outstanding under the 2010 Plan immediately prior to the completion of the Mergers was, as of the completion of the Mergers, settled in the same number of shares of common stock of ERI (without any right to make a cash/stock election), subject to shares withheld to satisfy tax withholding, as the number of shares of MTR common stock that were subject to such RSU immediately prior to the completion of the Mergers. Upon consummation of the Mergers, all outstanding RSUs became fully vested and, as a result, are no longer subject to vesting requirements, lapse, or other restrictions.

All Performance Awards granted under the terms of the 2010 Plan vested and were paid by the Company upon the closing of the Mergers. The payment was recognized as a pre-acquisition expense of the Company and was recorded within general and administrative expense within the consolidated statement of operations. There are no remaining Performance Award obligations.

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MTR GAMING GROUP, INC.

(A WHOLLY-OWNED SUBSIDIARY OF ELDORADO RESORTS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 6—EQUITY AWARDS AND OTHER INCENTIVE COMPENSATION (Continued)

A summary of the Predecessor period Stock Option activity for the three months ended March 31, 2014 is as follows:

			Range of Exercise Prices	Weighted-Average Exercise Price		Weighted- Average Remaining Contractual Life		Aggregate Intrinsic Value

						(in years)		(in millions)
Outstanding—December 31, 2013	852,000		$2.32 - 16.27	$	5.14		6.81
Granted	—		—		—
Exercised	(119,446	)	$2.32 - 3.94		2.62
Expired	—		—		—
Forfeited	(92,799	)	$2.44 - 3.94		3.23

Outstanding—March 31, 2014	639,755		$2.32 - 16.27	$	5.89		6.11	$	1.0



Exercisable at March 31, 2014	505,043		$2.32 - 16.27	$	6.60		5.55	$	0.8

Cash received from the exercise of stock options was $0.3 million for the three months ended March 31, 2014. The Company did not recognized a tax benefit from the stock option exercises as the Company is in a net operating loss carryforward.

A summary of the Predecessor period RSU activity for the three months ended March 31, 2014 is as follows:

			Weighted-Average Grant Date Fair Value		Weighted- Average Remaining Contractual Life		Aggregate Fair Value

					(in years)		(in millions)
Unvested outstanding as of December 31, 2013	223,100		$	2.85		1.65	$	1.2
Granted	85,100			5.26
Vested	(84,500	)		3.06
Forfeited	(36,600	)		2.53

Unvested outstanding as of March 31, 2014	187,100		$	4.05		2.53	$	1.0

NOTE 7—INCOME TAXES

The Company ~~estimates~~will anbe ~~annual~~included ~~effective~~in ~~income~~the ~~tax~~consolidated ~~rate~~federal, ~~based~~state onand ~~projected~~local ~~results~~income ~~for~~tax ~~the~~returns ~~year~~filed ~~and~~by ~~applies~~ERI. ~~this~~The ~~rate~~allocation toof ~~income~~the ~~before~~Company's ~~taxes~~share toof ~~calculate~~ERI's consolidated income tax expense is determined under the separate return method. ~~Any refinements~~Under ~~made~~this ~~due~~method, tothe ~~subsequent~~Company ~~information~~determines ~~that~~its ~~affects~~income tax provision as if the ~~estimated~~Company ~~annual~~filed ~~effective~~a separate income tax ~~rate~~return. ~~are~~The ~~reflected~~Company asdoes ~~adjustments~~not inhave tax sharing agreements with the ~~current~~other ~~period~~members within the consolidated ERI group.

The income tax provision results in an effective tax rate that has an unusual relationship to the Company's pretax income (loss). This is due to the federal and state valuation allowances on the Company's deferred tax assets as discussed below. 17

For income tax purposes we amortize or depreciate certain assets that have been assigned an indefinite life for book purposes. The incremental amortization or depreciation deductions for income tax purposes result in an increase in certain deferred tax liabilities that cannot be used as a source of future taxable income for purposes of measuring our need for a valuation allowance against the net

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MTR GAMING GROUP, INC.

~~CONDENSED~~(A ~~NOTES~~WHOLLY-OWNED TOSUBSIDIARY ~~CONSOLIDATED~~OF ~~FINANCIAL~~ELDORADO ~~STATEMENTS (Continued~~RESORTS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 7—INCOME TAXES (Continued)

~~deferred~~ The Company estimates an annual effective income tax ~~assets.~~rate ~~Therefore,~~based weon ~~expect~~projected results for the year and applies this rate to ~~record~~income ~~non~~before ~~cash~~taxes ~~deferred~~to calculate income tax expense. asAny refinements wemade ~~amortize~~due ~~these~~to ~~assets~~subsequent ~~for~~information that affects the estimated annual effective income tax ~~purposes~~rate are reflected as adjustments in the current period.

~~During~~The ~~the~~income ~~three~~tax ~~months~~provision ~~ended~~results ~~September 30,~~in ~~2014,~~an ~~our~~effective tax ~~expense~~rate ~~was~~that ~~$0.7 million~~has ~~for~~an ~~the~~unusual ~~Predecessor~~relationship ~~period July 1~~ to ~~September 18, 2014 and $1.3 million for~~ the ~~Successor~~Company's ~~period~~pretax ~~September 19 to September 30, 2014~~loss. ~~The~~This ~~third~~is ~~quarter~~due ofto ~~2014 provision reflects~~ the ~~recording~~federal ofand ~~additional~~state ~~naked~~valuation ~~credit~~allowances ~~amortization~~on in the ~~amount~~Company's ofdeferred ~~$1.4 million and a local income~~ tax ~~provision~~assets ofas ~~$0.6 million.~~discussed ~~During the three months ended September 30, 2013, our tax expense was $0~~below.~~9 million.~~ ~~The third quarter of 2013 provision reflects the recording of additional naked credit amortization in the amount of $0.8 million and a local income tax provision of $0.1 million.~~

~~During~~The ~~the~~difference ~~nine~~between ~~months ended September 30, 2014, our tax expense was $2.8 million for~~ the ~~Predecessor~~effective ~~period~~rate ~~January 1 to September 18, 2014~~ and ~~$1.3 million~~ ~~for~~ the ~~Successor~~statutory ~~period~~rate ~~September 19~~is toattributed ~~September 30,~~primarily ~~2014.~~to ~~The~~the ~~nine~~federal ~~months~~and ~~ended~~state ~~September 30,~~valuation ~~2014~~allowances ~~provision~~on ~~reflects~~our ~~the~~deferred ~~recording~~tax ofassets ~~additional~~as ~~naked credit~~discussed ~~amortization in the amount of $3~~below.~~2 million~~ ~~and~~As a result ~~local income tax provision~~ of ~~$0.9 million. For the nine months ended September 30, 2013,~~ our ~~tax~~net ~~expense~~operating ~~was $2.3 million.~~losses ~~The~~and ~~nine months ended September 30, 2013 provision reflects~~ the ~~recording~~net ofdeferred ~~additional~~tax ~~naked~~asset ~~credit~~position ~~amortization~~(after inexclusion ~~the amount~~ of ~~$2.6 million~~certain ~~and~~deferred ~~a local income~~ tax ~~provision~~liabilities ofthat ~~$0.3 million.~~generally ~~Additionally,~~cannot ~~during~~be ~~the~~offset ~~nine~~against ~~months~~deferred ~~ended September 30, 2013, the Company released unrecognized~~ tax ~~benefits of $0.6 million~~assets, ~~which~~known ~~included~~as ~~$0.2 million~~"Naked ~~of accrued interest~~Credits"), aswe aexpect ~~result~~to ofcontinue ~~the~~to ~~lapse~~provide ~~in the statute of limitations~~ for ~~the~~a ~~original~~full ~~tax~~valuation ~~return~~allowance ~~years~~against ~~and~~substantially ~~subsequent~~all ~~loss carryback periods. As~~ of ~~September 30, 2014,~~our ~~there~~net ~~are~~federal ~~no unrecognized tax benefits~~ and westate dodeferred ~~not expect a significant increase or decrease to the total amounts of unrecognized~~ tax ~~benefits within the next twelve months~~assets.

~~The~~For ~~Company~~income ~~and~~tax ~~its~~purposes ~~subsidiaries~~we ~~file a~~amortize USor ~~federal~~depreciate certain assets that have been assigned an indefinite life for book purposes. The incremental amortization or depreciation deductions for income tax ~~return,~~purposes ~~and~~result ~~various~~in ~~state~~an ~~and~~increase ~~local~~in ~~income~~certain deferred tax ~~returns.~~liabilities ~~With~~that ~~few~~cannot ~~exceptions,~~be ~~the~~used ~~Company~~as isa nosource ~~longer~~of ~~subject~~future totaxable ~~US federal~~income orfor ~~state~~purposes ~~and~~of ~~local~~measuring our need for a valuation allowance against the net deferred tax ~~examinations~~assets. byTherefore, we expect to record non cash deferred tax ~~authorities~~expense ~~for~~as ~~years~~we ~~before~~amortize ~~2011~~these assets for tax purposes.

During the three months ended March 31, 2015 and 2014, our tax expense was $2.9 million and $1.0 million, respectively. As of March 31, 2015, there are no unrecognized tax benefits and we do not expect a significant increase or decrease to the total amounts of unrecognized tax benefits within the next twelve months.

NOTE 8—LONG-TERM DEBT

Long-term debt obligations are summarized as follows:

	Successor		~~Predecessor~~Successor
	September 30, 2014		December 31, 2013
	March 31, 2015		December 31, 2014
	(in thousands)
11.5% Senior Secured Second Lien Notes	$	~~570~~560,664	$	~~570~~560,664
Unamortized premium / (discount)		53,817		(11,830	)
Unamortized premium		47,426		50,163

	$	~~624~~608,~~481~~090	$	~~558~~610,~~834~~827

20 Senior Secured Second Lien Notes

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MTR GAMING GROUP, INC.

~~CONDENSED~~(A ~~NOTES~~WHOLLY-OWNED TOSUBSIDIARY ~~CONSOLIDATED~~OF ~~FINANCIAL~~ELDORADO ~~STATEMENTS (Continued~~RESORTS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 8—LONG-TERM DEBT (Continued)

arrears on ~~Senior~~February 1 ~~Secured~~and ~~Second~~August 1 ~~Lien~~of each year. The Notes were issued pursuant to an indenture, dated as of August 1, 2011 (the "Indenture"), among the Company, Mountaineer Park, Inc., Presque Isle Downs, Inc., Scioto Downs, Inc. (each, a wholly-owned subsidiary of the Company and as a guarantor, the "Guarantors") and Wilmington Trust, National Association, as Trustee and as Collateral Agent.

On August 1, 2011, we completed the offering of $565.0 million 11.5% Senior Secured Second Lien Notes (the "Notes") due August 1, 2019 at an issue price equal to 97% of the aggregate principal amount of the Notes. The Notes mature on August 1, 2019, with interest payable semi-annually in arrears on February 1 and August 1 of each year. The Notes were issued pursuant to an indenture, dated as of August 1, 2011 (the "Indenture"), among the Company, Mountaineer Park, Inc., Presque Isle Downs, Inc., Scioto Downs, Inc. (each, a wholly-owned subsidiary of the Company and as a guarantor, the "Guarantors") and Wilmington Trust, National Association, as Trustee and as Collateral Agent.

The Notes and the guarantees thereof are senior secured obligations and are jointly and severally, fully, and unconditionally guaranteed by the Company's current and future domestic restricted subsidiaries, other than the Company's immaterial subsidiaries. The Notes are secured by a second priority lien on substantially all of the assets of the Company and the Guarantors, other than excluded property, as defined in the Indenture. The Notes and the guarantees are effectively junior to any of the Company's and the Guarantors' existing and future debt that is secured by senior or prior liens on the collateral, including indebtedness under the Company's senior secured revolving credit facility, as discussed below, to the extent of the value of the collateral securing such obligations.

The Indenture contains a number of customary covenants, including limitations on restricted payments and investments, additional liens, transactions with affiliates, additional debt, dispositions of property, mergers and similar transactions, and events of default. In addition, if the consolidated total debt ratio of the Company is equal to or greater than 4.0 to 1.0 and such offer is permitted pursuant to the terms of the Company's credit facilities, the Company is required to repay debt under its credit facility or make an offer to purchase Notes with the excess cash flow amounts (as such term is defined in the). As of ~~September~~March 3031, ~~2014~~2015, the Company was in compliance with the covenants under the Indenture.

The Company may redeem some or all of the Notes prior to August 1, 2015 at a redemption price of 100% of the principal amount thereof plus a "make whole premium" together with accrued and unpaid interest thereon. On or after August 1, 2015, the Company may redeem the Notes at the following redemption prices (expressed as a percentage of principal amount) plus any accrued and unpaid interest thereon:

Year beginning August 1,

2015	106.000	%
2016	103.000	%
2017 and thereafter	100.000	%

In October ~~Credit~~2014, ~~Facility~~ the Company repurchased $10.0 million in aggregate principle amount of the Notes, at a price of $110.25 per $100 in principal amount of the purchased notes.

On August 1, 2011, we entered into a senior secured revolving credit facility (the "Credit Facility") with a borrowing availability of $20.0 million and a maturity date of August 1, 2016. There were no borrowings outstanding as of September 30, 2014 or December 31, 2013.

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MTR GAMING GROUP, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 8—LONG-TERM DEBT (Continued)

The Credit Facility is secured by substantially the same assets securing the Notes (and including securities of the Company's subsidiaries to the extent permitted by law). Borrowings under the Credit Facility are guaranteed by all of our existing and future domestic restricted subsidiaries. The security interest in the collateral that secures the Credit Facility is senior to the security interest in the collateral that secures the Notes.

The Credit Facility contains a number of customary covenants, including limitations on restricted payments and investments, additional liens, transactions with affiliates, additional debt, dispositions of property, mergers and similar transactions, and events of default. The Credit Facility also contains certain financial covenants, including maximum capital expenditures, maximum consolidated leverage ratios, minimum consolidated interest coverage ratios and minimum consolidated EBITDA amounts. As of September 30, 2014, the Company was in compliance with the required covenants.

NOTE 9—ACCUMULATED OTHER COMPREHENSIVE LOSS

The Company's accumulated other comprehensive loss as of March 31, 2015 of $0.1 million is related to the Scioto Downs defined benefit pension plan. AThere ~~summary~~was ofno ~~the~~ change in accumulated other comprehensive loss during the ~~Predecessor~~ ~~and~~three ~~Successor~~months ~~periods~~ended isMarch 31, as2015. ~~follows (in thousands):~~

Balance as of December 31, 2013 (Predecessor)	$	(127	)
Other comprehensive loss before reclassifications		—
Amounts reclassified from accumulated other comprehensive loss(1)		21

Net current-period other comprehensive income		21

Balance as of September 18, 2014 (Predecessor)	$	(106	)

Balance as of September 19, 2014 (Successor)	$	—
Other comprehensive loss before reclassifications		—
Amounts reclassified from accumulated other comprehensive loss(1)		1

Net current-period other comprehensive income		1

Balance as of September 30, 2014 (Successor)	$	1

(1)Amounts are presented after income tax, including consideration of related valuation allowance. No net tax benefit was recognized in 2014.

Amounts reclassified from accumulated other comprehensive loss are limited to the amortization of actuarial losses, which are a component of net periodic benefit cost. These reclassifications are included as a component of general and administrative expense in the accompanying consolidated statement of operations.

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MTR GAMING GROUP, INC.

~~CONDENSED~~(A ~~NOTES~~WHOLLY-OWNED TOSUBSIDIARY ~~CONSOLIDATED~~OF ~~FINANCIAL~~ELDORADO ~~STATEMENTS (Continued~~RESORTS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 9—ACCUMULATED OTHER COMPREHENSIVE LOSS (Continued)

NOTE 10—COMMITMENTS AND CONTINGENCIES

Litigation

We are a party to various lawsuits, which have arisen in the normal course of our business. Estimated losses are accrued for these lawsuits and claims when the loss is probable and can be estimated. The current liability for the estimated losses associated with those lawsuits is not material to our consolidated financial condition and those estimated losses are not expected to have a material impact on our results of operations.

InOn ~~connection~~April 17, ~~with~~2010, ~~the~~Presque ~~Mergers~~Isle Downs, Inc. ~~three~~initiated ~~putative~~legal ~~class~~ action ~~lawsuits~~in ~~were~~the ~~filed~~Court byof ~~purported~~Common ~~stockholders~~Pleas of ~~the~~Erie County, Pennsylvania, against defendants Dwayne Cooper Enterprises, Inc. ("DCE"), Turner Construction Company ~~challenging~~("Turner"), ~~the~~and ~~Mergers~~Rectenwald Buehler Architects, Inc. ~~All~~f/k/a ~~three~~Weborg ~~cases~~Rectenwald ~~were~~Buehler ~~filed~~Architects, Inc. in("RB") ~~the~~to recover ~~Delaware~~damages ~~Court~~arising out of ~~Chancery.~~failures Byof ~~order~~the ofsurveillance system installed during the ~~Court~~original construction of ~~Chancery,~~ the ~~cases~~casino ~~were~~facilities ~~consolidated~~at ~~for~~Presque ~~all~~Isle ~~purposes~~Downs. DCE supplied and ainstalled ~~consolidated~~the ~~amended~~surveillance ~~complaint~~system, ~~was~~RB ~~filed.~~acted ~~This~~as ~~consolidated~~the ~~case~~project architect, ~~which~~and ~~purported~~Turner toserved as bethe ~~brought~~construction asmanager aon ~~class~~the ~~action~~project. Shortly after Presque Isle Downs opened on ~~behalf~~February 28, of2007, ~~all~~it discovered that certain components of the ~~Company's~~surveillance ~~stockholders~~system were defective, malfunctioning ~~excluding~~or missing. After efforts to remediate the ~~members~~deficiencies in the system were unsuccessful, it became necessary to replace certain components of the ~~board~~surveillance system at a cost of $1.9 million, ~~directors~~and to write-off approximately $1.5 million related to the net book value of the equipment that was replaced. On April 5, ~~alleged~~2011, ~~among~~Presque ~~other~~Isle ~~things,~~Downs ~~that~~obtained a default judgment against DCE in the ~~consideration~~amount of $2.7 million. Efforts to enforce the judgment against DCE are ongoing but the assets of DCE appear to be ~~received~~modest byand ~~MTR~~materially insufficient to pay the ~~stockholders~~judgment. Any proceeds that may be received will ~~receive~~be inrecorded ~~connection~~as ~~with~~the amounts are realized. Defendant RB joined five additional vendors/subcontractors as additional defendants in the ~~Mergers~~case. isEach ~~inadequate~~of the defendants and all but one of the additional defendants filed motions or objections requesting that the ~~Company's~~Court ~~directors~~dismiss ~~and~~the ~~current~~claims ~~President~~against ~~breached~~it. ~~their~~After ~~fiduciary~~these ~~duties~~motions toand ~~stockholders~~objections inwere ~~negotiating~~denied and the ~~approving~~parties engaged in limited discovery, the ~~Merger~~parties ~~Agreement~~agreed to submit the case to mediation. OnThe ~~August~~mediation occurred on February 2510, ~~September 17~~2015, and ~~October~~resulted in an agreement under which the sum of $0.7 9million would be paid to Presque Isle Downs, Inc. ~~2014~~in ~~Plaintiffs~~exchange ~~separately~~for ~~moved~~a togeneral release of the defendants (except DCE) and the additional defendants. A draft settlement agreement has been prepared and is currently under review by all parties. It is anticipated the settlement will be concluded and the case voluntarily ~~dismiss~~dismissed ~~their~~by ~~claims~~June 30, 2015.

On October 21, 2011, athe ~~complaint~~Ohio ~~was~~Roundtable filed ~~challenging~~a ~~certain~~complaint ~~aspects~~in of the ~~casino~~Court ~~referendum and the Ohio Governor's and legislature's approval~~ of ~~legislation~~Common ~~authorizing~~Pleas ~~VLTs at~~in ~~Ohio's~~Franklin ~~seven horse racetracks. Scioto Downs~~County, inOhio ~~order~~against toa ~~protect~~number ~~its~~of ~~right to VLT gaming~~defendants, ~~filed~~including athe ~~motion to intervene on February 2~~Governor, ~~2012. Dispositive motions were filed by~~ the Ohio ~~Attorney~~ ~~General,~~Lottery ~~Scioto~~Commission ~~Downs, Inc.~~ and ~~others on February 20, 2012, and, on May 30, 2012,~~ the ~~litigation~~Ohio ~~was~~Casino ~~dismissed.~~Control ~~On March 13, 2013, the appeals court affirmed the lower court decision~~Commission. OnThe ~~April 26,~~complaint ~~2013,~~alleges ~~the plaintiffs filed~~ a ~~Notice~~variety of ~~Appeal~~substantive toand ~~the~~procedural ~~Ohio~~defects ~~Supreme~~relative ~~Court. On July 24, 2013, the Ohio Supreme Court agreed~~ to ~~hear~~ the ~~matter~~approval ~~upon~~and ~~the~~implementation ~~outcome~~ of ~~another~~video ~~case~~lottery ~~with~~terminals as ~~comparable~~well ~~legal~~as ~~issues~~several ~~that~~counts ~~was~~dealing ~~before~~with the ~~court.~~taxation ~~On June 10, 2014, the Ohio Supreme Court affirmed the dismissal~~ of ~~the~~standalone ~~appeal of the matter involving the comparable legal issues~~casinos. InAs ~~light~~interveners, ~~of the decision on the comparable matter~~we, ~~Scioto~~along ~~Downs~~with ~~and~~four ~~the other parties filed a joint motion to dismiss the appeal~~ of ~~this matter on July 2, 2014, which is still pending before the court.~~

~~Environmental Remediation~~ 20

In October 2004, we acquired 229 acres of real property, known as the International Paper site, as an alternative site to build Presque Isle Downs. In connection with our acquisition of the International Paper site, we entered into a consent order and decree (the "Consent Order") with the PaDEP and International Paper insulating us from liability for certain pre-existing contamination, subject to compliance with the Consent Order, which included a proposed environmental remediation plan for the site, which was tied specifically to the use of the property as a racetrack. The proposed environmental remediation plan in the Consent Order was based upon a "baseline environmental report" and management estimated that such remediation would be subsumed within the cost of developing the property as a racetrack. The racetrack was never developed at this site. In October 2005, we sold approximately 205 acres to GEIDC who assumed primary responsibility for the remediation obligations under the Consent Order relating to the property they acquired. However, we were advised by the PaDEP that we were not released from our liability and responsibility under the Consent Order. We

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MTR GAMING GROUP, INC.

~~CONDENSED~~(A ~~NOTES~~WHOLLY-OWNED TOSUBSIDIARY ~~CONSOLIDATED~~OF ~~FINANCIAL~~ELDORADO ~~STATEMENTS (Continued~~RESORTS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 10—COMMITMENTS AND CONTINGENCIES (Continued)

~~also~~the ~~purchased~~other anracinos ~~Environmental~~in ~~Risk~~Ohio, ~~Insurance~~filed ~~Policy~~motions infor judgment on the ~~amount~~pleadings to supplement the position of ~~$10~~the Racing Commission.~~0 million~~ ~~with~~In ~~respect~~May to2012, the ~~property~~Court of Common Pleas dismissed the case; however, ~~which~~the plaintiffs ~~expires~~filed an appeal and oral arguments were held on January 17, 2013 in ~~October~~the ~~2015~~10th District Court of Appeals. WeIn ~~believe~~March 2013, the ~~insurance~~Court ~~coverage~~of isAppeals inupheld ~~excess~~the ruling. The decision of ~~any~~the ~~exposure~~Appeals Court was appealed to the Ohio Supreme Court by the plaintiffs on April 30, 2013 and the Ohio Supreme Court has elected to accept the appeal. The Ohio Supreme Court temporarily stayed the appeal until it first ruled on a matter with similar procedural issues. A decision was issued on that wecase ~~may~~on June 10, 2014. Accordingly, along with the State Appellees, a motion to dismiss as improvidently granted was filed which was partially granted. The remaining propositions of law have inbeen ~~this~~briefed ~~matter~~by both parties and oral argument is scheduled for June 23, 2015.

Environmental Remediation

Regulatory Gaming Assessments

The Pennsylvania Gaming Control Board (the "PGCB"), the Pennsylvania Department of Revenue and the Pennsylvania State Police (collectively "the Borrowers"), were required to fund the costs they incurred in connection with the initial development of the infrastructure to support gaming operations in Pennsylvania as well as the initial ongoing costs of the Borrowers. The initial funding of these costs was provided from a loan from the Pennsylvania General Fund in the amount of approximately $36.1 million, and further funding was provided from additional loans from the Pennsylvania Property Tax Reserve Fund in the aggregate amount of approximately $63.8 million.

The Pennsylvania Department of Revenue will assess all licensees, including Presque Isle Downs, their proportionate share of amounts represented by the borrowings, which are in the aggregate amount of $99.9 million, once the designated number of Pennsylvania's slot machine licensees is operational. On July 11, 2011, the PGCB issued an administrative order which established that payments associated with the $63.8 million that was borrowed from the Property Tax Reserve Fund would commence on January 1, 2012. The repayment allocation between all current licensees is based upon equal weighting of (i) cumulative gross slot revenue since inception in relation to the combined cumulative gross slot revenue for all licensees and (ii) single year gross slot revenue (during the state's fiscal year ending June 30) in relation to the combined single year gross slot revenue for all licensees; and amounts paid each year will be adjusted annually based upon changes in the licensee's proportionate share of gross slot revenue. We have estimated that our total proportionate share of the aggregate $63.8 million to be assessed to the gaming facilities will be approximately $4.2 million and will be paid quarterly over a ten-year period, which began effective January 1, 2012. For the $36.1 million that was borrowed from the General Fund, payment is scheduled to begin after all fourteen licensees are operational. Although we cannot determine when payment will begin, we have considered a similar repayment model for the General Fund borrowings and estimated that our total proportionate share of the aggregate $36.1 million to all fourteen gaming facilities will approximate $2.2 million, which has been accrued in our consolidated balance sheet at September 30, 2014.

The recorded estimate is subject to revision based upon future changes in the revenue assumptions utilized to develop the estimate. Our estimated total obligation at September 30, 2014 (Successor) and December 31, 2013 (Predecessor) was $5.1 million and $5.2 million, respectively, and is accrued in the respective accompanying consolidated balance sheets. As of and during the nine months ended September 30, 2014, our total estimated liability increased as a result of changes in the forecasted assumptions utilized in the model by $0.2 million and was recognized in gaming operating expenses. The Company paid approximately $0.3 million during the nine months ended September 30, 2014. 21

NOTE 11—SEGMENT INFORMATION

The Company, through our wholly owned subsidiaries, owns and operates Mountaineer Casino, Racetrack & Resort in Chester, West Virginia, Presque Isle Downs & Casino in Erie, Pennsylvania, and Scioto Downs in Columbus, Ohio. Scioto Downs, through its subsidiary RacelineBet, Inc., also operates

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MTR GAMING GROUP, INC.

~~CONDENSED~~(A ~~NOTES~~WHOLLY-OWNED TOSUBSIDIARY ~~CONSOLIDATED~~OF ~~FINANCIAL~~ELDORADO ~~STATEMENTS (Continued~~RESORTS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 1110—~~SEGMENT~~COMMITMENTS ~~INFORMATION~~AND CONTINGENCIES (Continued)

~~Racelinebet~~would commence on January 1, 2012.~~com.~~ The repayment allocation between all current licensees is based upon equal weighting of (i) cumulative gross slot revenue since inception in relation ~~Management~~to ~~reviews~~the combined cumulative gross slot revenue for all licensees and (ii) single year gross slot revenue (during the state's fiscal year ending June 30) in relation to the combined single year gross slot revenue for all licensees; and amounts paid each year will be adjusted annually based upon changes in the licensee's proportionate share of gross slot revenue. We have estimated that our ~~operations~~total onproportionate share of the aggregate $63.8 million to be assessed to the gaming facilities will be approximately $4.2 million and will be paid quarterly over a ~~property~~ten-~~by-property~~year ~~basis~~period, which began effective January 1, 2012. ~~Therefore~~For wethe ~~believe~~$36.1 million that ~~each~~was ~~property~~borrowed from the General Fund, payment is anscheduled ~~operating~~to ~~segment~~begin after all fourteen licensees are operational. ~~Based~~Although we oncannot ~~the~~determine when payment will begin, we have considered a similar ~~geographic~~repayment model for the General Fund borrowings and ~~economic characteristics~~estimated ofthat our ~~properties,~~total weproportionate ~~believe~~share itof isthe ~~appropriate~~aggregate $36.1 million to ~~aggregate~~all ~~Mountaineer~~fourteen gaming facilities will approximate $2.2 million, ~~Presque~~which ~~Isle~~has ~~Downs~~been ~~and~~accrued ~~Scioto~~in ~~Downs~~our ~~into~~consolidated ~~one~~balance ~~reportable~~sheets ~~segment~~at March 31, 2015 and December 31, 2014.

The recorded ~~NOTE~~estimate ~~12—SUBSEQUENT~~is ~~EVENTS~~ subject to revision based upon future changes in the revenue assumptions utilized to develop the estimate. Our estimated total obligation at March 31, 2015 and December 31, 2014 was $4.9 million and $5.0 million, respectively, and is accrued in the respective accompanying consolidated balance sheets. As of and during the three months ended March 31, 2015, our total estimated liability increased as a result of changes in the forecasted assumptions utilized in the model by $20,000 and was recognized in gaming operating expenses. The Company paid $0.1 million and $0.1 million during the three months ended March 31, 2015 (Successor) and 2014 (Predecessor), respectively.

In NOTE ~~October 2014, the Company repurchased $10.0 million in aggregate principle amount of our~~ 11~~.25%~~—SEGMENT ~~Senior Secured Second Lien Notes, at a price of $110.25 per $100 in principal amount of the purchased notes, which approximated their carrying value as of September 30, 2014.~~ INFORMATION

25 The Company, through our wholly owned subsidiaries, owns and operates Mountaineer Casino, Racetrack & Resort in Chester, West Virginia, Presque Isle Downs & Casino in Erie, Pennsylvania, and Scioto Downs in Columbus, Ohio. Scioto Downs, through its subsidiary RacelineBet, Inc., also operates Racelinebet.com. Management reviews our operations on a property-by-property basis. Therefore we believe that each property is an operating segment. Based on the similar geographic and economic characteristics of our properties, we believe it is appropriate to aggregate Mountaineer, Presque Isle Downs and Scioto Downs into one reportable segment.

NOTE 12—RELATED PARTY

We paid ERI $1.8 million for allocated corporate general and administrative costs incurred during the three months ended March 31, 2015.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Overview

We were incorporated in March 1988 in Delaware under the name "Secamur Corporation," a wholly-owned subsidiary of Buffalo Equities, Inc. In 1996, we were renamed MTR Gaming Group, Inc. and, since 1998, we have operated only in the racing, gaming and entertainment businesses. We operate racino properties, all of which include gaming and dining facilities, and some of which include hotel, retail and other amenities. The majority of our revenue is gaming revenue, derived primarily from gaming on slot machines and, to a lesser extent, table games and poker. Other revenues are derived from our racing operations, hotel, dining, retail and entertainment offerings.

Through our wholly-owned subsidiaries, we own and operate Mountaineer Casino, Racetrack & Resort in Chester, West Virginia ("Mountaineer"),; Presque Isle Downs & Casino in Erie, Pennsylvania ("Presque Isle Downs"),; and Scioto Downs in Columbus, Ohio. ~~We consider these three properties, which are located in contiguous states, to be our core assets.~~ Scioto Downs, through its subsidiary RacelineBet, Inc., also operates Racelinebet.com, a national account wagering service that offers online and telephone wagering on horse races as a marketing affiliate of ~~TwinSpires.com,~~ ~~an affiliate of~~ Churchill Downs, Inc.

Our Properties:

We operate racino properties, all of which include gaming and dining facilities, and some of which include hotel, retail and other amenities. The majority of our revenue is gaming revenue, derived primarily from gaming on slot machines and, to a lesser extent, table games. Other revenues are derived from our racing operations, hotel, dining, retail and entertainment offerings. Our gaming operations are highly dependent on the volume and spending levels of our customers, which, in turn, may affect the prices we can charge for our hotel, dining and other amenities. Our properties generate significant operating cash flow, which is essential to debt service and to funding maintenance capital expenditures.

Mountaineer ~~currently~~ operates 2,~~107~~102 slot machines, 12 poker tables and 39 casino table games. and offers live thoroughbred horse racing during the months of March through December, operating 210 live race days with on-site pari-mutuel wagering year-round.

Presque Isle Downs ~~currently~~ operates 1,720 slot machines, 9 poker tables and 3736 casino table games. In addition, Presque Isle Downs offers live thoroughbred horse racing during the months of May through September, operating 100 live race days with pari-mutuel wagering year-round.

Scioto Downs ~~currently~~ operates 2,~~112~~146 VLTs and offers live harness horse racing from May through September, operating 9095 live racing days and year- round pari-mutuel wagering.

Merger with Eldorado:

In September 2013, we entered into a merger agreement to facilitate a business combination with Eldorado HoldCo LLC, a Nevada limited liability company ("Eldorado") , and formed several entities to facilitate the merger: Eclair Holdings Company, a Nevada corporation and wholly owned subsidiary of the Company ("NewCo"), Ridgeline Acquisition Corp., a Delaware corporation and wholly owned subsidiary of NewCo ("Merger Sub A"), and Eclair Acquisition Company, LLC, a Nevada limited liability company and wholly owned subsidiary of NewCo ("Merger Sub B"). These entities had no assets or operations for ~~fiscal~~the ~~year~~three ~~2013~~months ended March 31, 2014.

On September 19, 2014 (the "Acquisition Date"), MTR merged with and into Merger Sub A, with MTR surviving the merger (the "MTR Merger"), and Eldorado merged with and into Merger Sub B, with Eldorado surviving the merger (the "Eldorado Merger" and, together with the MTR Merger, the ~~"Mergers"). As a result of the Mergers, NewCo became the holding company for the Company and Eldorado and was renamed Eldorado Resorts, Inc. ("ERI").~~

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In"Mergers"). ~~accordance~~As ~~with~~a ~~U.S. GAAP,~~result ~~we have separated our historical financial results for the Successor period and the Predecessor period. To facilitate discussion~~ of ~~our operating performance compared to~~ the ~~prior year period~~Mergers, ~~the~~NewCo ~~Company~~became ~~presents certain financial information for~~ the ~~Successor~~holding ~~and~~company ~~Predecessor periods on an aggregated basis~~ for the ~~three~~Company and ~~nine~~Eldorado ~~months ended September 30, 2014 including the effects of purchase accounting. We believe that the aggregated results are useful to investors to assist in their evaluation of our results for the three~~ and ~~nine~~ ~~months~~was ~~ended~~renamed ~~September 30,~~Eldorado ~~2014 compared to the prior year periods. The aggregated financial information does not comply with U.S. GAAP and should not be considered an alternative to net income or cash flow from operations~~Resorts, ~~as determined in accordance with U.S.~~ ~~GAAP~~Inc. ("ERI").

The terms of the transaction and Merger agreement are explained in greater detail in the registration statement on Form S-4 filed by NewCo with the Securities and Exchange Commission (the "SEC"), which is available on the SEC's website at www.sec.gov under "Eldorado Resorts, Inc."

Significant Factors Impacting Operating Trends

Key Performance Metrics:

Our operating results are highly dependent on the volume of customers visiting and staying at our properties. Key performance indicators such as table game drop and slot handle refer to amounts wagered by our customers. The amount of volume we retain, which is not fully controlled by us, is recognized as gaming revenues and is referred to as our win or hold. In addition, average daily room rate ("ADR") and revenue per available room ("RevPAR") are used to measure our hotel volume and efficiency. ADR is calculated by dividing total room revenue, including the retail value of promotional allowances (less service charges, if any) by total rooms occupied including complimentary rooms. We calculate ADR with and without the impact of complimentary rooms. RevPAR is calculated by dividing total room revenue including the retail value of promotional allowances (less service charges, if any) by total rooms available. Occupancy is calculated by dividing total occupied rooms, including complimentary rooms, by the total rooms available. The primary drivers in changes to our ADR and RevPAR calculations include: room inventory, which from time to time is impacted by renovations and maintenance; retail room rates, which are reviewed periodically and may fluctuate based on day of the week, group utilization, etc.; and the mix of cash and complimentary patron volumes which impact our occupancy levels. For the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015 and ~~2013~~2014, our ADR was $7978 and $8281, respectively, excluding complimentary rooms, and $45 and $4744, respectively, including complimentary rooms. Room inventory ~~and~~was ~~room~~consistent ~~revenue~~for ~~decreased~~2015 ~~in 2014~~ compared to ~~2013~~2014; ~~due~~however tooccupancy ~~hotel~~levels ~~renovations~~and revenue decreased. RevPAR for the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015 and ~~2013~~ 2014 was ~~approximately~~ $3836 and $4237, respectively, including complimentary rooms.

Economic ~~Expansion of Regional Gaming~~Impact:

~~All~~The ofeconomic ~~our~~downturn ~~properties~~and ~~experience~~the ~~varying~~slow ~~competitive~~pace ~~pressures,~~of ~~from~~recovery ~~casinos~~continue into ~~western~~adversely ~~Pennsylvania,~~influence ~~western~~consumers' ~~New York~~confidence, ~~northern~~discretionary ~~West~~spending ~~Virginia~~levels and ~~eastern~~travel ~~Ohio~~patterns. We believe the ~~expansion~~weak ofdemand, ~~gaming~~high ~~in Ohio~~unemployment, ~~which~~record ~~includes~~number ~~casinos~~of ~~that~~home ~~opened~~foreclosures, inincreased ~~Cleveland~~competition ~~in May 2012~~ and ~~Columbus~~volatility inof ~~October~~the ~~2012~~economy ~~and~~have ~~additional~~had ~~casinos~~a insignificant ~~Cincinnati and~~negative ~~Toledo,~~impact ason ~~well as~~ the ~~installation~~gaming ofand ~~VLTs~~tourism atindustries, ~~existing~~and, ~~horse~~as ~~race~~a ~~tracks near Cleveland~~result, ~~one~~our ofoperating ~~which~~performance ~~opened~~over ~~in April 2013 and~~ the ~~other~~past inseveral ~~December~~years. ~~2013~~In ~~and~~response to the ~~relocation~~difficult ofeconomic ~~a racetrack to Austintown~~environment, ~~Ohio,~~our ~~which~~management ~~opened~~has inimplemented cost ~~September~~savings ~~2014,~~measures and will ~~have~~continue ato ~~negative~~review ~~impact~~our onoperations ~~our~~to ~~results~~look offor ~~operations~~opportunities atto ~~all~~further ~~our~~reduce ~~properties~~expenses and ~~such~~maximize ~~impact~~cash ~~may be material~~flows. InWhile ~~order~~there tohas ~~sustain~~been ~~our~~some ~~market~~improvement ~~share~~ in the ~~increased competitive environment~~economy, we believe ~~continuously~~the ~~reevaluate~~current ~~our~~economic ~~advertising~~conditions will ~~strategies~~continue ~~and~~to ~~promotional~~negatively ~~offers~~affect to our ~~guests~~operating toresults ~~ensure~~for ~~our~~some ~~reinvestment~~period ~~levels~~of ~~reflect~~time. ~~the~~We ~~appropriate~~remain ~~level~~uncertain ~~of offerings~~as to ~~sustain~~the ~~our~~duration ~~margins.~~and Inmagnitude ~~addition,~~of wethe ~~believe~~impact ~~economic~~on ~~uncertainty,~~our ~~gaming~~operations ~~market saturation~~ and ~~slower~~the ~~than~~length ~~anticipated~~and ~~economic~~sustainability of the recovery ~~continues~~from tothe ~~impact~~economic ~~overall gaming results in our regional markets~~downturn.

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Expansion of Regional Gaming:

All of our properties experience varying competitive pressures, from casinos in western Pennsylvania, western New York, northern West Virginia and eastern Ohio. We believe the expansion of gaming in Ohio, which includes casinos that opened in Cleveland in May 2012 and Columbus in October 2012 and additional casinos in Cincinnati and Toledo, as well as the installation of VLTs at existing horse race tracks near Cleveland, one of which opened in April 2013 and the other in December 2013 and the relocation of a racetrack to Austintown, Ohio, which opened in September 2014, have had, and are expected to continue to have a negative impact on our results of operations at all our properties and such impact may be material. In order to sustain our market share in the increased competitive environment, we continuously reevaluate our advertising strategies and promotional offers to our guests to ensure our reinvestment levels reflect the appropriate level of offerings to sustain our margins.

Other Matters:

On August 26, 2014, the Board of Health of Hancock County, West Virginia ~~(the "Board of Health")~~ adopted and approved the Clean Air Regulation Act of 2014 ("Regulation"), which will be effective July 1, 2015. The Regulation, as currently adopted, will ban smoking in public places in Hancock County including at Mountaineer. We are continuing to evaluate the Regulation, its impact on our Mountaineer facility, ~~which~~and westeps ~~anticipate~~to ~~could~~become compliant with the Regulation upon its effective date. We expect that the Regulation will have a ~~significant~~ negative impact on our business and results of operations at Mountaineer, and ~~steps~~such toimpact ~~become~~may ~~compliant~~be ~~with the Regulation upon its effective date~~material.

~~Results of Operations~~ 25

Financial results for the three months ended September 30, 2014 (aggregated Successor and Predecessor periods) compared to the three months ended September 30, 2013.

The results of continuing operations for the Period September 19 through September 30, 2014 (Successor) and July 1 through September 18, 2014 (Predecessor) compared to the three months ended September 30, 2013 are summarized below (unaudited, in thousands):

	Successor			Predecessor			Aggregated			Predecessor
	(a) Period from September 19 to September 30			(b) Period from July 1 to September 18			(a) + (b) Three Months Ended September 30			Three Months Ended September 30
	2014			2014			2014			2013
Operating Revenues:
Gaming	$	14,399		$	100,760		$	115,159		$	115,268
Pari-mutuel commissions		446			3,391			3,837			4,133
Food and beverage		1,270			8,460			9,730			9,804
Hotel		199			1,053			1,252			1,451
Other		773			3,345			4,118			3,791

		17,087			117,009			134,096			134,447
Less—promotional allowances		(776	)		(4,860	)		(5,636	)		(5,584	)

Net operating revenues		16,311			112,149			128,460			128,863

Operating expenses:
Gaming		8,659			59,644			68,303			68,444
Pari-mutuel commissions		520			3,077			3,597			3,548
Food and beverage		1,031			6,810			7,841			8,170
Hotel		114			590			704			779
Other		475			2,015			2,490			2,618
Marketing and promotions		889			3,397			4,286			4,165
General and administrative		2,754			15,664			18,418			15,883
Depreciation and amortization		1,289			6,742			8,031			7,691

Total operating expenses		15,731			97,939			113,670			111,298

Strategic transaction costs		618			6,716			7,334			2,723
Loss on the sale or disposal of property		—			139			139			161

Operating (loss) income		(38	)		7,355			7,317			14,681

Interest expense, net		(1,812	)		(15,055	)		(16,867	)		(17,389	)
Provision for income taxes		(1,307	)		(687	)		(1,994	)		(921	)

Loss	$	(3,157	)	$	(8,387	)	$	(11,544	)	$	(3,629	)

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Summary Financial Results

Financial results for the three months ended March 31, 2015 (Successor) compared to the three months ended March 31, 2014 (Predecessor).

The results of continuing operations for the three months ended March 31, 2015 (Successor) and 2014 (Predecessor) are summarized below (unaudited, in thousands):

	Successor			Predecessor

	Three Months Ended March 31, 2015			Three Months Ended March 31, 2014


Operating Revenues:
Gaming	$	101,309		$	106,950
Pari-mutuel commissions		1,205			1,280
Food and beverage		7,717			7,807
Hotel		1,148			1,188
Other		2,464			2,421

		113,843			119,646
Less—promotional allowances		(4,779	)		(4,818	)

Net operating revenues		109,064			114,828

Operating expenses:
Gaming		62,233			66,335
Pari-mutuel commissions		1,696			1,742
Food and beverage		5,302			4,731
Hotel		337			344
Other		1,181			1,366
Marketing and promotions		3,254			3,307
General and administrative		15,949			16,488
Depreciation and amortization		10,539			7,784

Total operating expenses		100,491			102,097

Strategic transaction costs		84			521
(Gain) loss on the sale or disposal of property		(1	)		18

Operating income		8,490			12,192

Interest expense, net		(13,398	)		(17,388	)
Provision for income taxes		(2,903	)		(1,017	)

Loss	$	(7,811	)	$	(6,213	)

Net Operating Revenues

Net operating revenues for the three months ended ~~September~~March 3031, ~~2014~~2015, comprised of $~~119~~102.05 million in gaming and pari-mutuel revenues (9294% of total net revenues), $1511.13 million of non-gaming revenues (1210% of total net revenues) less $54.68 million of promotional allowances (-–4% of total ~~net~~ net revenues), decreased $05.48 million, or 05.30%, compared to net operating revenues for the three months ended ~~September~~March 3031, ~~2013~~2014, comprised of $~~119~~108.42 million in gaming and pari-mutuel revenues (9294% of total net revenues), $1511.04 million of non-gaming revenues (1210% of total net revenues) less $54.68 million of promotional allowances (-–4% of total ~~net~~ net revenues). The decrease was primarily attributable to the factors detailed below.

~~Gaming~~ 26

Gaming revenues are comprised of the net win from our slot operations, table games and poker. Gaming revenues for the three months ended September 30, 2014 of $115.2 million represents a $0.1 million, or 0.1%, decrease compared to the prior year period. The decrease of $0.1 million is comprised of a decrease in slot revenue of $0.3 million, offset an increase in table gaming and poker revenue of $0.2 million. The decrease in gaming revenues was primarily due to continued competitive pressures principally from a new racino near Cleveland, which opened in December 2013, and to a lesser extent, a new racino in Austintown, Ohio, which opened in September 2014.

Gaming revenue at Mountaineer decreased slightly to $44.1 million for the three months ended September 30, 2014, compared to the prior year period. The decrease is comprised of a decrease in slot and table gaming revenue of $0.1 million each, offset by an increase in poker revenue of $0.1 million

Gaming revenue at Presque Isle Downs decreased by $2.5 million, or 6.5%, to $35.8 million for the three months ended September 30, 2014, compared to the prior year period. The decrease is comprised of a decrease in slot and poker revenue of $2.6 million and $0.1 million, respectively, offset by an increase in table gaming revenue of $0.1 million.

Gaming revenue at Scioto Downs increased by $2.5 million, or 7.6%, to $35.3 million for the three months ended September 30, 2014, compared to the prior year period. The increase is comprised entirely of an increase in slot revenue.

Pari-Mutuel Commissions

Pari-mutuel commissions consist of commissions earned from thoroughbred and harness racing and importing/exporting of simulcast signals from/to other race tracks. Pari-mutuel commissions for the three months ended September 30, 2014 of $3.8 million represents a $0.3 million, or 7.1%, decrease compared to the prior year period.

Pari-mutuel commissions at Mountaineer decreased by $0.3 million, or 16.6%, to $1.6 million for the three months ended September 30, 2014, compared to prior year period. The decrease is primarily due to a reduction in the number of races during the third quarter of 2014 as a result of a decrease in the number of races held per live race day.

Pari-mutuel commissions at Presque Isle Downs decreased by $0.1 million, or 4.0%, to $1.3 for the three months ended September 30, 2014 compared to the prior year period primarily due to decrease in wagering on live racing compared to the prior year period.

Pari-mutuel commissions at Scioto Downs increased by $0.1 million, or 7.9%, to $1.0 for the three months ended September 30, 2014 compared to the prior year period. The increase is primarily attributable to an increase in the number of live race days and a greater number races per day during the third quarter of 2014 compared to the prior year period.

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Food and Beverage

Revenue from our food and beverage operations for the three months ended September 30, 2014 of $9.7 million represents a $0.1 million, or 0.8%, decrease compared to the prior year period.

Food and beverage revenue at Mountaineer decreased by $0.1 million, or 16.6%, to $3.7 million for the three months ended September 30, 2014, compared to the prior year period. The decrease is consistent with the decrease in gaming revenue and overall decline in patron traffic.

Food and beverage revenue at Presque Isle Downs was relatively flat at $3.2 million for the three months ended September 30, 2014, compared to the prior year period. Although there was a decrease in gaming revenue and a decline in patron traffic compared to the prior year period, food and beverage revenue was flat primarily due to an increase in promotional offerings during the third quarter of 2014.

Food and beverage revenue at Scioto Downs was relatively flat at $2.8 million for the three months ended September 30, 2014, compared to the prior year period.

Hotel

Revenue from hotel operations at Mountaineer for the three months ended September 30, 2014 of $1.3 million represents a $0.2 million, or 13.7%, decrease compared to the prior year period. The decrease is primarily attributable to a decrease in ADR and RevPAR. Room inventory and room revenue decreased in 2014 compared to 2013 due to hotel renovations.

Other Revenues

Other revenues are primarily derived from operations of Mountaineer's Spa, Fitness Center, retail outlets and golf course; from the sale of programs, admission fees, and lottery tickets; from check cashing and ATM services and from special events at our entertainment and convention centers. Other revenues for the three months ended September 30, 2014 of $4.1 million represent a $0.3 million, or 8.6%, increase compared to the prior year period. The increase is primarily due to a $0.2 million increase at our Scioto Downs property from increased commissions earned from check cashing and ATM services and an increase in entertainment revenue, and a $0.1 million increase at Presque Isle Downs from an increase in racing program sales and commissions earned from ATM services.

Promotional Allowances

Promotional allowances of $5.6 million for the three months ended September 30, 2014 increased slightly compared to the prior year period. The increase in promotional allowances is comprised of an increase of $0.1 million at Mountaineer, offset by a decrease at Presque Isle Downs and Scioto Down of $0.1 million and $45,000, respectively.

Operating Expenses

Gaming

Gaming ~~expense~~revenues are comprised of the net win from our slot operations, table games and poker. Gaming revenues for the three months ended ~~September~~March 3031, ~~2014~~2015 of $68101.13 million ~~represents~~represent a $05.36 million, or 05.43%, decrease compared to the prior year period. The decrease of $05.36 million is comprised of a decrease in ~~other~~slot ~~gaming~~revenues ~~operating costs~~ of $06.42 million, offset by an increase in table gaming ~~taxes and~~revenue ~~assessments~~ of $0.16 million. The decrease in slot revenues associated with the decline in slot volume was primarily due to continued competitive pressures principally from the two racinos near Cleveland, which opened in April 2013 and December 2013, and to a lesser extent, a new racino in Austintown, Ohio, which opened in September 2014. The increase in table games revenues was a result of an increase in the table games hold percentage, which more than offset a decrease in table games drop for the three months ended March 31, 2015 compared to the prior year period.

Gaming ~~taxes~~revenues ~~and~~at ~~assessments~~Mountaineer asdecreased ~~a percentage of gaming revenues varies~~ by ~~the states in which our properties operate~~$5.9 million, Onor ~~a blended basis~~14.2%, ~~our gaming taxes (excluding charges for other gaming assessment costs) as a percentage of gaming revenue increased~~ to 52$36.2%1 million for the three months ended ~~September~~March 3031, ~~2014~~2015, compared to ~~51.5% for~~ the prior year period. The ~~increase~~decrease is ~~primarily~~ ~~due~~comprised toof ana ~~increase~~decrease in ~~the~~slot ~~effective~~revenue ~~tax~~of ~~rate~~$6.4 million, atoffset ~~Presque~~by ~~Isle~~an ~~Downs~~increase ~~and~~in ~~Scioto~~table ~~Downs~~gaming revenue of 1$0.~~3% and 1~~4 million.~~7%,~~

30 Gaming revenues at Presque Isle Downs decreased by $1.5 million, or 4.9%, to $29.9 million for the three months ended March 31, 2015, compared to the prior year period. The decrease is comprised of a decrease in slot revenue of $1.7 million, offset by an increase in table gaming revenue of $0.2 million.

~~Table~~ Gaming revenues at Scioto Downs increased by $1.8 million, or 5.5%, to $35.3 million for the three months ended March 31, 2015, compared to the prior year period. The increase in gaming revenues at Scioto Downs was primarily due to an increase in our share of ~~Contents~~the Columbus slot market compared to the prior year period.

respectively. The increase of 1.3% in the effective tax rate at Presque Isle Downs to 57.5% for the three months ended September 30, 2014 is largely due to impact of the fixed annual $10 million local share assessment to slot revenue on a smaller revenue base. The increase of 1.7% in the effective tax rate at Scioto Downs to 44.3% for the three months ended September 30, 2014, is due the requirement, effective July 1, 2013, to remit 0.3% of its gross VLT revenue to provide funding support for programs that provide for gaming addiction and other related addiction services. Additionally, effective January 1, 2014, the amounts contributed to the Ohio horsemen for racing purses increased by 1.5% to 10.5% of gross VLT revenue. Mountaineer's gaming taxes as a percentage of gaming revenue at 54.3% for the three months ended September 30, 2014 was consistent with the prior year period.

The decrease in other gaming operating costs of $0.3 million is primarily due to the reduction of compensation related costs at all of our properties.

Pari-Mutuel

Pari-mutuel expense was relatively flat at $3.6 million for the three months ended September 30, 2014, compared to the prior year period. Our gross profit margin for the three months ended September 30, 2014 decreased to 7.0% from 14.2% in the prior year period primarily attributable to our Scioto Downs property which had an increase in compensation related costs in excess of revenue increases due to a greater number of live race days and races per day during the third quarter of 2014 compared to the prior year period.

Food and Beverage

Food and beverage expense decreased by $0.3 million, or 4.0%, to $7.8 million for the three months ended September 30, 2014, compared to the prior year period. Our gross profit margin for the three months ended September 30, 2014 increased to 19.4% from 16.7% in the prior year period primarily due to decreased food and compensation related costs in excess of revenue changes that were flat or declined slightly.

Hotel

Hotel expense decreased by $0.1 million, or 9.7%, to $0.7 million for the three months ended September 30, 2014, compared to the prior year period. The decrease was consistent with the decline in hotel revenues primarily attributable to a decrease in room inventory during 2014 compared to 2013 due to hotel renovations. Our gross profit margin for the three months ended September 30, 2014 decreased to 43.8% from 46.3% in the prior year period because a significant portion of our hotel expenses are fixed and cannot be proportionately reduced to offset decreases in hotel revenue.

Other

Other expense decreased by $0.1 million, or 4.9%, to $2.5 million for the three months ended September 30, 2014, compared to the prior year period attributable primarily to a decrease in entertainment and valet parking expenses at Presque Isle Downs and a reduction in golf course operating expenses at Mountaineer.

Marketing and Promotions

Marketing and promotions expense decreased by $0.1 million, or 2.9%, to $4.3 million for the three months ended September 30, 2014, compared to the prior year period. The decrease was primarily attributable to a decrease of $0.2 million in direct and incentive compensation and related benefits due to the effective control of variable compensation, and a decrease of $0.2 million in consulting expenses due to cost containment initiatives as current year operating results declined. The

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decreases were offset by an increase of $0.5 million in advertising costs for direct mail promotions and sponsorships.

General and Administrative

General and administrative expense increased by $2.5 million, or 16.0%, to $18.4 million for the three months ended September 30, 2014, compared to the period year period. Significant factors contributing to the increase in general and administrative expense, as compared to the prior year period, were:

Strategic transaction costs

As a result of the strategic business combination with Eldorado entered into on September 9, 2013, we incurred costs of $7.3 million and $2.7 million during the three months ended September 30, 2014 and 2013, respectively. These costs were comprised primarily of legal, financial advisory, accounting and consulting costs.

Depreciation and amortization

Depreciation expense increased by $0.3 million, or 4.4%, to $8.0 million for the three months ended September 30, 2014, compared to the prior year period. The increase was primarily attributable to an increase at Presque Isle Downs and Mountaineer of $0.2 million and $0.1 million, respectively, due to an increase in capital expenditures placed in service during 2013. During 2013, the additions at Presque Isle Downs predominately consisted of new slot machines and the construction of barns, while the additions at Mountaineer primarily included new slot machines and casino renovations.

Interest Expense, net

Interest expense, net decreased by $0.5 million, or 3.0%, to $16.7 million for the three months ended September 30, 2014, compared to the prior year period. The decrease was attributable to the fair value accounting in connection with the Mergers. The long term debt assumed on the Acquisition Date was fair valued based on quoted market prices, resulting in the elimination of deferred financing costs and the amortization of a premium on the fair value adjustment during the Successor period.

Income Taxes

The income tax provision results in an effective tax rate that has an unusual relationship to the Company's pretax income (loss). This is due to an increase in the federal and state valuation allowances on the Company's deferred tax assets as discussed below.

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The difference between the effective rate and the statutory rate is attributed primarily to the federal and state valuation allowances on the Company's deferred tax assets as discussed below. As a result of our net operating losses and the net deferred tax asset position (after exclusion of certain deferred tax liabilities that generally cannot be offset against deferred tax assets, known as "Naked Credits"), we expect to continue to provide for a full valuation allowance against all of our net federal and our net state deferred tax assets. During the three months ended September 30, 2014, our tax expense was $2.0 million. The third quarter of 2014 provision reflects the recording of additional naked credit amortization in the amount of $1.4 million and a local income tax provision of $0.6 million. During the three months ended September 30, 2013, our tax expense was $0.9 million. The third quarter of 2013 provision reflects the recording of additional naked credit amortization in the amount of $0.8 million and a local income tax provision of $0.1 million.

Financial results for the nine months ended September 30, 2014 (aggregated Successor and Predecessor periods) compared to the nine months ended September 30, 2013.

The results of continuing operations for the Period September 19 through September 30, 2014 (Successor) and January 1 through September 18, 2014 (Predecessor) compared to the nine months ended September 30, 2013 are summarized below (unaudited, in thousands):

	Successor			Predecessor			Aggregated			Predecessor
	(a) Period from September 19 to September 30			(b) Period from January 1 to September 18			(a) + (b) Nine Months Ended September 30			Nine Months Ended September 30
	2014			2014			2014			2013
Operating Revenues:
Gaming	$	14,399		$	320,366		$	334,765		$	349,223
Pari-mutuel commissions		446			8,014			8,460			8,932
Food and beverage		1,270			25,319			26,589			27,452
Hotel		199			3,489			3,688			4,099
Other		773			9,619			10,392			9,582
		17,087			366,801			383,894			399,288
Less—promotional allowances		(776	)		(14,930	)		(15,706	)		(16,321	)
Net operating revenues		16,311			351,877			368,188			382,967
Operating expenses:
Gaming		8,659			190,305			198,964			205,533
Pari-mutuel commissions		520			8,053			8,573			8,525
Food and beverage		1,031			21,222			22,253			23,071
Hotel		114			2,087			2,201			2,307
Other		475			5,740			6,215			6,315
Marketing and promotions		889			10,467			11,356			11,882
General and administrative		2,754			47,081			49,835			47,380
Depreciation and amortization		1,289			22,231			23,520			22,782
Total operating expenses		15,731			307,186			322,917			327,795
Strategic transaction costs		618			7,620			8,238			2,723
Loss (gain) on the sale or disposal of property		—			184			184			68
Operating (loss) income		(38	)		36,887			36,849			52,381
Interest expense, net		(1,812	)		(49,832	)		(51,644	)		(52,150	)
Provision for income taxes		(1,307	)		(2,837	)		(4,144	)		(2,260	)
(Loss) Income	$	(3,157	)	$	(15,782	)	$	(18,939	)	$	(2,029	)

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Net Operating Revenues

Net operating revenues for the nine months ended September 30, 2014, comprised of $343.2 million in gaming and pari-mutuel revenues (93% of total net revenues), $40.7 million of non-gaming revenues (11% of total net revenues) less $15.7 million of promotional allowances (-4% of total net revenues), decreased $14.8 million, or 3.9%, compared to net operating revenues for the nine months ended September 30, 2013, comprised of $358.2 million in gaming and pari-mutuel revenues (93% of total net revenues), $41.1 million of non-gaming revenues (11% of total net revenues) less $16.3 million of promotional allowances (-4% of total net revenues). The decrease in net operating revenues was primarily attributable to the factors described below.

Gaming

Gaming revenues for the nine months ended September 30, 2014 of $334.8 million represents a $14.5 million, or 4.1%, decrease compared to the prior year period. The decrease of $14.5 million is comprised of a decrease in slot, table gaming and poker revenue of $12.8 million, $1.6 million and $0.1 million, respectively. The decrease in gaming revenues was primarily due to continued competitive pressures principally from the two new racinos near Cleveland, which opened in April 2013 and December 2013, and to a lesser extent, a new racino in Austintown, Ohio, which opened in September 2014.

Gaming revenues at Mountaineer decreased by $6.2 million, or 4.6%, to $129.1 million for the nine months ended September 30, 2014, compared to the prior year period. The decrease is comprised of a decrease in slot and table gaming revenue of $5.4 million and $0.9 million, respectively, offset by an increase in poker revenue of $0.1 million.

Gaming revenues at Presque Isle Downs decreased by $11.2 million, or 9.9%, to $101.9 million for the nine months ended September 30, 2014, compared to the prior year period. The decrease is comprised of a decrease in slot, table gaming and poker revenue of $10.3 million, $0.7 million and $0.2 million, respectively.

Gaming revenues at Scioto Downs increased by $2.9 million, or 2.9%, to $103.8 million for the nine months ended September 30, 2014, compared to the prior year period. The increase in gaming revenue was primarily a result of an increase in our share of the Columbus slot market between the two periods, as well as overall growth in the Columbus slot market.

Pari-Mutuel Commissions

Pari-mutuel commissions consist of commissions earned from thoroughbred and harness racing and importing/exporting of simulcast signals from/to other race tracks. Pari-mutuel commissions for the ~~nine~~three months ended ~~September~~March 3031, ~~2013~~2015 of $81.52 million ~~represent~~represents a decrease of $0.51 million, or 5.39%, ~~decrease~~ compared to the prior year period.

Pari-mutuel commissions at Mountaineer decreased by $0.51 million, or 1018.46%, to $30.96 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015, compared to the prior year period. The decrease is primarily due to a ~~reduction~~decrease in the number of ~~races related to weather conditions during 2014 and a reduction in the number of races per~~ live race ~~day,~~days ~~and~~during ~~to a lesser extent, an overall decline in import and export simulcast handle from depressed racing conditions nationwide. According to Equibase, national wagering on races has decreased by 2.53% for~~ the ~~nine~~first ~~months~~quarter ~~ended~~of ~~September 30, 2014,~~2015 compared to the prior year period.

Pari-mutuel commissions at Presque Isle Downs and Scioto Downs of $0.2 million and $0.4 million, respectively, were relatively flat for the ~~nine~~three months ended ~~September~~ March 3031, ~~2014~~2015, compared to the prior year period.

Food and Beverage

~~Revenue~~Revenues from our food and beverage operations for the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015 of $267.67 million represents a $0.91 million, or 31.1%, decrease compared to the prior year period.

34 Food and beverage revenues at Mountaineer decreased by $0.2 million, or 7.1%, to $3.2 million for the three months ended March 31, 2015, compared to the prior year period. The decrease is consistent with the decrease in gaming revenues and overall decline in patron traffic.

Food and beverage revenues at Presque Isle Downs increased by $0.2 million, or 11.3%, for the three months ended March 31, 2015, compared to the prior year period. The increase is primarily due to an increase in complimentary sales during the first quarter of 2015 compared to the prior year period.

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Food and beverage ~~revenue~~revenues at ~~Mountaineer~~Scioto Downs decreased by $0.31 million, or 24.31%, ~~to $10.7 million~~ for the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015, compared to the prior year period. The decrease ~~was~~is primarily ~~consistent~~attributable ~~with~~to changes in the ~~decrease~~promotional inbuffet ~~gaming~~offerings ~~revenue~~for ~~and~~certain ~~overall~~card ~~decline~~levels resulting in ~~patron~~a ~~traffic~~decrease in complimentary sales.

Food and beverage revenue at Presque Isle Downs decreased by $0.5 million, or 6.0%, to $8.1 million for the nine months ended September 30, 2014, compared to the prior year period. The decrease was consistent with the decrease in gaming revenue and overall decline in patron traffic.

Food and beverage revenue at Scioto Downs decreased by $0.1 million, or 1.2%, to $7.8 million for the nine months ended September 30, 2014, compared to the prior year period. The decrease was primarily attributable to changes in the promotional buffet offerings for certain card levels.

Hotel

Revenue from hotel operations at Mountaineer of $1.1 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015 ofdecreased $3slightly compared to the prior year period.~~7 million~~ ~~represents~~There was a ~~$0.4 million,~~ ordecrease 10in the hotel occupancy rate to 80.01% for the three months ended March 31, ~~decrease~~2015 compared to 83.7% in the prior year period., ~~The~~offset ~~decrease~~by isan increase ~~primarily~~in ~~attributable~~the tohotel ~~a decrease in~~ ADR ~~and~~of ~~RevPAR.~~$45 ~~Room~~for ~~inventory~~the ~~and~~three ~~room~~months ~~revenue~~ended ~~decreased~~March 31, in2015 ~~2014~~ compared to ~~2013~~$44 ~~due~~in tothe ~~hotel~~prior ~~renovations~~year period.

Other Revenues

Other revenues ~~for~~are ~~the~~primarily ~~nine~~derived ~~months~~from ~~ended~~operations ~~September 30, 2014~~ of ~~$10.4 million~~Mountaineer's ~~represent a $0.8 million~~Spa, orFitness ~~8.4%~~Center, ~~increase~~ ~~compared~~retail tooutlets ~~the~~and ~~prior~~golf ~~year~~course; ~~period.~~from ~~The~~the sale ~~increase is comprised~~ of aprograms, ~~$0.5 million~~admission ~~increase~~fees, atand ~~Scioto~~lottery ~~Downs~~tickets; ~~which~~from ischeck ~~primarily~~cashing ~~attributed~~and toATM ~~increased~~services ~~entertainment~~and ~~revenue~~ from ~~an expanded~~special ~~summer~~events ~~concert~~at ~~series~~our inentertainment ~~2014~~ and ~~commissions~~convention ~~earned~~centers. ~~from~~Other ~~check~~revenues ~~cashing~~for ~~and~~the ~~ATM~~three ~~services~~months ended March 31, a2015 of $0.2.5 million ~~increase~~represent ata ~~Mountaineer~~slight ~~primarily~~increase ~~attributed~~compared to ~~increased~~the ~~convention~~prior ~~center revenue,~~year ~~and $0~~period.~~1 million~~ The increase atis ~~Presque~~primarily ~~Isle~~due ~~Downs~~an ~~mostly~~increase in commissions earned from ~~retail~~check ~~sales~~cashing and ATM services.

Promotional Allowances

Promotional allowances ~~decreased~~of by $04.~~6 million, or 3.~~8~~%, to $15.7~~ million for the ~~nine~~three months ended ~~September~~ March 3031, ~~2014,~~2015 increased slightly compared to the prior year period. The ~~decrease~~increase in promotional allowances is comprised of aan ~~decrease~~increase at Mountaineer and ~~Presque~~Scioto ~~Isle~~ Downs of $0.42 million and $0.21 million, respectively., ~~Decreases~~offset inby ~~promotional~~a ~~allowances~~decrease ~~over~~at Presque Isle Downs of $0.3 million. Management actively reviews the ~~prior~~effectiveness ~~year~~of ~~are~~its ~~due~~promotions and direct mail programs to ~~changes~~expand insuccessful ~~the~~promotions ~~promotional~~while ~~offerings~~eliminating ofor reducing less profitable promotions. Promotional activities reflect our ~~frequent~~efforts ~~player~~to ~~program~~maintain ~~for~~our ~~certain~~share ~~card~~of ~~levels,~~the ~~as well~~gaming ~~as,~~markets ain ~~decrease~~which we operate in ~~overall~~an ~~redemption~~effort asto ~~revenues~~mitigate ~~have~~the ~~declined~~impact of increasing competition.

Operating Expenses

Gaming

Gaming expense for the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015 of $~~199~~62.03 million represents a $64.61 million, or 36.2%, decrease compared to the prior year period. The decrease of $64.61 million is comprised of a decrease in gaming taxes and assessments of $53.16 million and a decrease in other gaming operating costs of $10.5 million.

~~The~~Gaming ~~decrease in gaming~~ taxes ~~during the third quarter of 2014 is consistent with the decrease in gaming revenues at Mountaineer~~ and ~~Presque Isle Downs. Gaming taxes and~~ assessments as a percentage of gaming revenues varies by the states in which our properties operate. On a blended basis, our gaming taxes (excluding charges for other gaming assessment costs) as a percentage of gaming revenue ~~increased~~decreased to 5251.23% for the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015, compared to 51.59% for the prior year period,. ~~primarily~~Table ~~due~~game torevenues anhave ~~increase~~a lower ~~in the~~ effective tax rate atthan ~~Presque~~slot ~~Isle Downs~~revenues, and ~~Scioto~~therefore ~~Downs~~the ~~of 1.2% and 1.7%, respectively. The~~ increase ~~of 1.2%~~ in the ~~effective~~table ~~tax~~game ~~rate~~revenues atwhile ~~Presque~~slot ~~Isle~~revenues ~~Downs~~declined compared to ~~57.4% for~~ the ~~nine~~prior ~~months~~year ~~ended~~period ~~September 30,~~resulted ~~2014~~in ~~is largely due to impact of~~ the ~~fixed~~decrease ~~annual~~in ~~$10 million~~gaming taxes ~~local~~and ~~share~~assessments ~~assessment~~as ~~to slot revenue on~~ a ~~smaller~~percentage ~~revenue base, as well as the forgiveness~~ of ~~the~~gaming 1revenues.5% ~~administration fee on slot and table games for Pennsylvania~~

35 The decrease in other gaming operating costs of $0.5 million is primarily due to the reduction of compensation related costs at all of our properties.

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gaming facilities due to budget surplus for two months during the second quarter of 2013. The increase of 1.7% in the effective tax rate at Scioto Downs to 44.3% is due the requirement, effective July 1, 2013, to remit 0.3% of its gross VLT revenue to provide funding support for programs that provide for gaming addiction and other related addiction services. Additionally, effective January 1, 2014, the amounts contributed to the Ohio horsemen for racing purses increased by 1.5% to 10.5% of gross VLT revenue. Mountaineer's gaming taxes as a percentage of gaming revenue was 54.4% for the three months ended September 30, 2014 compared to 54.3% in the prior year period.

Other gaming operating costs decreased by $1.5 million to $22.9 million for the nine months ended September 30, 2014 compared to the prior year period, primarily due to the reduction of compensation related costs at all of our properties as well as a reduction of slot lease expense at Presque Isle Downs.

Pari-Mutuel

Pari-mutuel expense ~~increased~~was byrelatively ~~$48,000,~~flat orat ~~0.6%, to~~ $81.67 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015, compared to ~~the prior year period. The increase is primarily attributable~~ to ~~an increase in compensation related costs at Scioto Downs as a result of a greater number of live race days during~~ the ~~year compared to the~~ prior ~~year period. The increase at Scioto Downs was offset by a decrease in expenses at Mountaineer primarily attributable to due to a reduction in the number of races related to weather~~ ~~conditions during 2014 and a reduction in the number of races per live race day compared to the prior~~ year period.

Food and Beverage

Food and beverage expense increased by $0.36 million, or 112.21%, to $225.3 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2013~~2015, compared to the prior year period. Our gross profit margin ~~decreased to 16.3%~~ for the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015 decreased to 31.3% from 1939.94% in the prior year period. ~~The overall gross profit margin percentage decline was~~ primarily ~~related to our Mountaineer and Presque Isle Downs facility~~ due ~~to increased food and compensation costs related to the buffet that was~~ ~~renovated during the fourth quarter of 2014, coupled with a decline in food and beverage revenue due~~ to ~~a reduction in patron traffic. Our Mountaineer and Scioto Downs facilities reported~~ increased ~~gross~~ ~~profit margins over the prior year period due to~~ food and compensation related costs ~~declining~~ in excess of revenue ~~declines~~changes.

Hotel

~~Expense~~Hotel ~~from~~expense ~~the~~of ~~hotel~~$0.3 million ~~operations at Mountaineer~~ for the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015 ofdeclined ~~$2.2 million~~slightly ~~represents a $0.1 million, or 4.6%, decrease~~ compared to the prior year period. ~~The~~which ~~decrease~~was isconsistent ~~primarily~~with ~~attributable to a decrease in room inventory during 2014 compared to 2013 due to~~ hotel ~~renovations~~ revenues.

Other

Other expense ofdecreased by $0.2 million, or 13.6%, to $1.2 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2014 represents a $0.1 million~~2015, ~~or 1.6%,~~ ~~decrease~~ compared to the prior year period. ~~The~~attributable ~~decrease is~~ primarily ~~due~~ to a ~~reduction in entertainment costs at Presque Isle Downs and Mountaineer, a~~ decrease in ~~valet~~other ~~parking~~entertainment ~~expenses at Presque Isle Downs,~~ and aconvention ~~decrease~~center ~~in golf course operating~~ expenses at Mountaineer. ~~The decreases were offset by an increase in entertainment costs at Scioto Downs and an increase in retail expenses at Presque Isle Downs.~~

Marketing and Promotions

Marketing and promotions expense decreased by $0.51 million, or 41.46%, to $113.43 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015, compared to the prior year period. ~~The decrease was~~ primarily due to a ~~decrease of $1.1 million at Presque Isle Downs related to a~~ reduction in ~~the~~compensation ~~redemption~~related ofcosts.

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certain promotional offerings from reduced patron volume, reduced advertising costs in response to managing costs on declining revenue and a reduction in the cost of complimentary soft drinks provided in our self-serve beverage stations. In addition, we saw a decrease of $0.4 million at our corporate office as a result of the departure of our Chief Marketing Officer in January 2014; partially offset by an increase at Mountaineer and Scioto Downs of $0.5 million and $0.4 million, respectively, primarily attributed to increased promotions and advertising expense during 2014.

General and Administrative

General and administrative expense ~~increased~~decreased by $20.5 million, or 53.2%, to $4915.89 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015, compared to the period year period. Significant factors contributing to the ~~increase~~decrease in general and administrative expense, as compared to the prior year period, include: a decrease of $0.8 million in compensation and related benefits and a decrease of $0.9 million in severance costs due to the departure of certain executive officers at our corporate office and key employees in January 2014 and other cost containment measures; a decrease in legal and professional fees of $0.3 million; a decrease of $0.2 million in utilities due to the decline in energy costs; and a decrease of $0.1 million in Board of Director fees as a result of the Mergers. The decreases were: offset by an increase of $1.8 million for the allocation of ERI corporate general and administrative costs during the three months ended March 31, 2015.

Strategic transaction costs

As a result of the strategic business combination with Eldorado entered into on September 9, 2013 and completed on September 19, 2014, we incurred costs of $80.21 million and $20.75 million during the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015 and ~~2013~~2014, respectively. These costs were comprised primarily of legal, financial advisory, accounting and consulting costs.

Depreciation and amortization

Depreciation and amortization expense increased by $02.78 million, or 335.24%, to $2310.5 million for the ~~nine~~three months ended ~~September~~ March 3031, ~~2014~~ 2015, compared to the prior year period. ~~The~~During ~~increase~~the ~~was~~three ~~primarily~~months ~~attributable~~ended toMarch 31, an2015 ~~increase~~we atrecognized ~~Presque~~amortization ~~Isle~~expense ~~Downs and Mountaineer~~ of $01.49 million ~~and~~related ~~$0.3 million, respectively, due~~ to anthe ~~increase~~intangible assets recognized in ~~capital~~purchase ~~expenditures~~accounting ~~placed~~ in ~~service~~connection ~~during~~with ~~2013. During 2013,~~ the ~~additions~~Mergers. atDepreciation ~~Presque~~expense ~~Isle~~related ~~Downs primarily included new slot machines and the construction of barns, while the additions at Mountaineer primarily included new slot machines and casino renovations.~~

~~Interest Expense, net~~ 29

Interest expense, net decreased by $0.5 million, or 1.0%, to $51.6 million for the nine months ended September 30, 2014, compared to the prior year period. The decrease was attributable to the fair value accounting in connection with the Mergers. The long term debt assumed on the Acquisition Date

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~~was~~to ~~fair~~property ~~valued~~and ~~based~~equipment onincreased ~~quoted~~by ~~market~~$0.9 million ~~prices~~for the three months ended March 31, ~~resulting~~2015, incompared to the ~~elimination~~prior ofyear ~~deferred~~period. ~~financing~~In ~~costs~~connection with the Mergers, property and equipment were adjusted to the ~~amortization~~estimated offair avalues ~~premium~~using the cost approach on the ~~fair~~Acquisition ~~value~~date ~~adjustment~~and ~~during~~additional depreciation expense was recognized in the Successor period in association with a decrease in the remaining useful life assigned to certain assets.

Interest Expense, net

Interest expense, net decreased by $4.0 million, or 22.9%, to $13.4 million for the three months ended March 31, 2015, compared to the prior year period. The decrease was attributable to the fair value accounting in connection with the Mergers. The long term debt assumed on the Acquisition Date was fair valued based on quoted market prices, resulting in the elimination of deferred financing costs and the amortization of a premium on the fair value adjustment during the Successor period.

Income Taxes

The income tax provision results in an effective tax rate that has an unusual relationship to the Company's pretax ~~income (~~loss). This is due to an increase in the federal and state valuation allowances on the Company's deferred tax assets as discussed below.

The difference between the effective rate and the statutory rate is attributed primarily to the federal and state valuation allowances on the Company's deferred tax assets ~~as discussed below~~. As a result of our net operating losses and the net deferred tax asset position (after exclusion of certain deferred tax liabilities that generally cannot be offset against deferred tax assets, known as "Naked Credits"), we expect to continue to provide for a full valuation allowance against all of our net federal and our net state deferred tax assets. During the three months ended March 31, 2015 and 2014, our tax expense was $2.9 million and $1.0 million, respectively.

The difference between the effective rate and the statutory rate is attributed primarily to the federal and state valuation allowances on the Company's deferred tax assets as discussed below. As a result of our net operating losses and the net deferred tax asset position (after exclusion of certain deferred tax liabilities that generally cannot be offset against deferred tax assets, known as "Naked Credits"), we expect to continue to provide for a full valuation allowance against all of our net federal and our net state deferred tax assets. During the nine months ended September 30, 2014, our tax expense was $4.1 million. The nine months ended September 30, 2014 provision reflects the recording of additional naked credit amortization in the amount of $3.4 million and a local income tax provision of $0.9 million. For the nine months ended September 30, 2013, our tax expense was $2.3 million. The nine months ended September 30, 2013 provision reflects the recording of additional naked credit amortization in the amount of $2.6 million and a local income tax provision of $0.3 million. Additionally, during the nine months ended September 30, 2013, the Company released unrecognized tax benefits of $0.6 million, which included $0.2 million of accrued interest, as a result of the lapse in the statute of limitations for the original tax return years and subsequent loss carryback periods.

Adjusted EBITDA

Adjusted EBITDA (defined below), a non GAAP financial measure, has been presented as a supplemental disclosure because it is a widely used measure of performance and basis for valuation of companies in our industry and we believe that this non GAAP supplemental information will be helpful in understanding the Company's ongoing operating results. Adjusted EBITDA represents (losses) earnings before interest expense (income), income tax expense (benefit), depreciation and amortization, (loss) gain on the sale or disposal of property, other regulatory gaming assessment costs, loss on asset impairment, project opening costs, strategic transaction costs, loss (gain) on debt modification and extinguishment and equity in loss on unconsolidated joint venture, to the extent that such items existed in the periods presented. Adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with GAAP, is unaudited and should not be considered an alternative to, or more meaningful than, net income (loss) as an indicator of our operating performance. Uses of cash flows that are not reflected in Adjusted EBITDA include capital expenditures, interest payments, income taxes, debt principal repayments and certain regulatory gaming assessments, which can be significant. As a result, Adjusted EBITDA should not be considered as a measure of our liquidity. Other companies that provide EBITDA information may calculate EBITDA differently than we do. The definition of Adjusted EBITDA may not be the same as the definitions used in any of our debt agreements.

~~The following table summarizes our net revenues by property, our Consolidated Adjusted EBITDA, and Adjusted EBITDA by property for the Successor and Predecessor Periods compared to~~ 30

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The following table summarizes our net revenues by property, our Consolidated Adjusted EBITDA, and Adjusted EBITDA by property for the three months ended ~~September~~ March 3031, 2015 (Successor) and 2014 (Predecessor), in addition to reconciling Adjusted EBITDA to net income (loss) in accordance with U.S. GAAP (unaudited, in thousands):

	Successor			Predecessor			~~Aggregated~~			~~Predecessor~~
	(a)			(b)			(c)
	Three Months Ended March 31, 2015			Three Months Ended March 31, 2014
	Period from September 19 to September 30			Period from July 1 to September 18			Three Months ended September 30			Three Months ended September 30
Net Revenues:
	2014			2014			2014			2013
Mountaineer Casino, Racetrack & Resort	$	39,676		$	45,929
Net Revenues:
Presque Isle Downs & Casino		31,669			33,115
Mountaineer Casino, Racetrack & Resort	$	6,106		$	43,973		$	50,079		$	50,606
Scioto Downs		37,719			35,784
Presque Isle Downs & Casino		4,927			34,502			39,429			42,038
Corporate		—			—
Scioto Downs		5,278			33,674			38,952			36,219
Net revenues	$	109,064		$	114,828
Corporate		—			—			—			—
Adjusted EBITDA:
Net revenues	$	16,311		$	112,149		$	128,460		$	128,863
Mountaineer Casino, Racetrack & Resort	$	5,139		$	7,238
Adjusted EBITDA from continuing operations:
Presque Isle Downs & Casino		3,547			4,133
Mountaineer Casino, Racetrack & Resort	$	1,032		$	8,114		$	9,146		$	9,682
Scioto Downs		13,059			11,989
Presque Isle Downs & Casino		344			5,413			5,757			6,199
Corporate expenses		(2,653	)		(2,862	)
Scioto Downs		1,615			11,187			12,802			11,641
Consolidated Adjusted EBITDA	$	19,092		$	20,498
Corporate expenses		(799	)		(3,762	)		(4,561	)		(2,282	)
Mountaineer Casino, Racetrack & Resort:
Consolidated Adjusted EBITDA	$	2,192		$	20,952		$	23,144		$	25,240
Net (loss) income	$	(2,916	)	$	4,937
Mountaineer Casino, Racetrack & Resort:
Provision for income taxes		3,909			—
Net income	$	508		$	5,756		$	6,264		$	7,452
Depreciation and amortization		4,146			2,302
Interest income		—			—			—			—
Gain on the sale or disposal of property		—			(1	)
(Benefit) provision for income taxes		(60	)		413			353			—
Adjusted EBITDA	$	5,139		$	7,238
Depreciation and amortization		585			1,970		$	2,555			2,251
Presque Isle Downs & Casino:
Gain on the sale or disposal of property		(1	)		(25	)		(26	)		(21	)
Net (loss) income	$	(679	)	$	1,443
Adjusted EBITDA	$	1,032		$	8,114		$	9,146		$	9,682
Provision for income taxes		1,606			621
Presque Isle Downs & Casino:
Depreciation and amortization		2,641			2,068
Net (loss) income	$	(879	)	$	2,175		$	1,296		$	3,373
Other regulatory gaming assessments		(20	)		(17	)
Interest income		—			(1	)		(1	)		(1	)
(Gain) loss on the sale or disposal of property		(1	)		18
Provision for income taxes		676			1,273			1,949			621
Adjusted EBITDA	$	3,547		$	4,133
Depreciation and amortization		453			1,803			2,256			2,040
Scioto Downs:
Other regulatory gaming assessments		94			—			94			(16	)
Net income	$	4,114		$	8,171
Loss on the sale or disposal of property		—			163			163			182
Interest expense		16			18
Adjusted EBITDA	$	344		$	5,413		$	5,757		$	6,199
Provision for income taxes		5,191			396
Scioto Downs:
Depreciation and amortization		3,738			3,404
Net income	$	349		$	7,777		$	8,126		$	7,942
Adjusted EBITDA	$	13,059		$	11,989
Interest expense		18			1			19			22
Provision for income taxes		769			447			1,216			287
Depreciation and amortization		479			2,961			3,440			3,390
Loss on disposal of property		—			1			1			—
Adjusted EBITDA	$	1,615		$	11,187		$	12,802		$	11,641

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	Successor			Predecessor			~~Aggregated~~			~~Predecessor~~
	(a)			(b)			(c)
	Three Months Ended March 31,			Three Months Ended March 31,
	Period from September 19 to September 30			Period from July 1 to September 18			Three Months ended September 30			Three Months ended September 30
	2015			2014
	2014			2014			2014			2013
Corporate:
Corporate:
Net loss	$	(8,330	)	$	(20,764	)
Net loss	$	(3,135	)	$	(24,095	)	$	(27,230	)	$	(22,396	)
Interest expense, net of interest income		13,382			17,370
Interest expense, net of interest income		1,794			15,055			16,849			17,368
Benefit for income taxes		(7,803	)		—
(Benefit) provision for income taxes		(78	)		(1,446	)		(1,524	)		13
Depreciation		14			10
Depreciation		1			8			9			10
Loss on the sale or disposal of property		—			1
Loss on the sale or disposal of property		1			—			1			—
Strategic transaction costs		84			521
Strategic transaction costs		618			6,716			7,334			2,723
Adjusted EBITDA	$	(2,653	)	$	(2,862	)
Adjusted EBITDA	$	(799	)	$	(3,762	)	$	(4,561	)	$	(2,282	)
MTR Gaming Group, Inc. (consolidated)
MTR Gaming Group, Inc. (consolidated)
Net loss	$	(7,811	)	$	(6,213	)
Net loss	$	(3,157	)	$	(8,387	)	$	(11,544	)	$	(3,629	)
Interest expense, net of interest income		13,398			17,388
Interest expense, net of interest income		1,812			15,055			16,867			17,389
Provision for income taxes		2,903			1,017
Provision for income taxes		1,307			687			1,994			921
Depreciation and amortization		10,539			7,784
Depreciation and amortization		1,518			6,742			8,260			7,691
Other regulatory gaming assessments		(20	)		(17	)
Other regulatory gaming assessments		94			—			94			(16	)
(Gain) loss on the sale or disposal of property		(1	)		18
Loss on the sale or disposal of property		—			139			139			161
Strategic transaction costs		84			521
Strategic transaction costs		618			6,716			7,334			2,723
Consolidated Adjusted EBITDA	$	19,092		$	20,498
Consolidated Adjusted EBITDA	$	2,192		$	20,952		$	23,144		$	25,240

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The following table summarizes our net revenues by property, our Consolidated Adjusted EBITDA, and Adjusted EBITDA by property for the Successor and Predecessor Periods compared to the nine months ended September 30, 2014, in addition to reconciling Adjusted EBITDA to net income (loss) in accordance with U.S. GAAP (unaudited, in thousands):

	Successor			Predecessor			Aggregated			Predecessor
	(a)			(b)			(c)
	Period from September 19 to September 30			Period from January 1 to September 18
							Nine Months ended September 30			Nine Months ended September 30
	2014			2014			2014			2013
Net Revenues:
Mountaineer Casino, Racetrack & Resort	$	6,106		$	138,685		$	144,791		$	151,507
Presque Isle Downs & Casino		4,927			105,319			110,246			121,706
Scioto Downs		5,278			107,873			113,151			109,754
Corporate		—			—			—			—

Net revenues	$	16,311		$	351,877		$	368,188		$	382,967


Adjusted EBITDA from continuing operations:
Mountaineer Casino, Racetrack & Resort	$	1,032		$	24,140		$	25,172		$	27,858
Presque Isle Downs & Casino		344			15,401			15,745			19,857
Scioto Downs		1,615			36,179			37,794			37,218
Corporate expenses		(799	)		(8,715	)		(9,514	)		(7,258	)

Consolidated Adjusted EBITDA	$	2,192		$	67,005		$	69,197		$	77,675


Mountaineer Casino, Racetrack & Resort:
Net income	$	508		$	17,234		$	17,742		$	21,210
Interest income		—			—			—			(2	)
(Benefit) provision for income taxes		(60	)		413			353			—
Depreciation and amortization		585			6,527			7,112			6,701
Gain on the sale or disposal of property		(1	)		(34	)		(35	)		(51	)

Adjusted EBITDA	$	1,032		$	24,140		$	25,172		$	27,858


Presque Isle Downs & Casino:
Net (loss) income	$	(879	)	$	6,700		$	5,821		$	12,294
Interest income		—			(2	)		(2	)		(2	)
Provision for income taxes		676			2,514			3,190			1,862
Depreciation and amortization		453			5,898			6,351			5,863
Other regulatory gaming assessments		94			83			177			(279	)
Loss on the sale or disposal of property		—			208			208			119

Adjusted EBITDA	$	344		$	15,401		$	15,745		$	19,857


Scioto Downs:
Net income	$	349		$	24,997		$	25,346		$	25,968
Interest expense		18			38			56			61
Provision for income taxes		769			1,356			2,125			997
Depreciation and amortization		479			9,779			10,258			10,192
Loss on disposal of property		—			9			9			—

Adjusted EBITDA	$	1,615		$	36,179		$	37,794		$	37,218

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	Successor			Predecessor			Aggregated			Predecessor
	(a)			(b)			(c)
	Period from September 19 to September 30			Period from January 1 to September 18
							Nine Months ended September 30			Nine Months ended September 30
	2014			2014			2014			2013
Corporate:
Net loss	$	(3,135	)	$	(64,713	)	$	(67,848	)	$	(61,501	)
Interest expense, net of interest income		1,794			49,796			51,590			52,093
Benefit for income taxes		(78	)		(1,446	)		(1,524	)		(599	)
Depreciation		1			27			28			—
Loss on the sale or disposal of property		1			1			2			26
Strategic transaction costs		618			7,620			8,238			2,723

Adjusted EBITDA	$	(799	)	$	(8,715	)	$	(9,514	)	$	(7,258	)


MTR Gaming Group, Inc. (consolidated)
Net loss	$	(3,157	)	$	(15,782	)	$	(18,939	)	$	(2,029	)
Interest expense, net of interest income		1,812			49,832			51,644			52,150
Provision for income taxes		1,307			2,837			4,144			2,260
Depreciation and amortization		1,518			22,231			23,749			22,782
Other regulatory gaming assessments		94			83			177			(279	)
Loss on the sale or disposal of property		—			184			184			68
Strategic transaction costs		618			7,620			8,238			2,723

Consolidated Adjusted EBITDA	$	2,192		$	67,005		$	69,197		$	77,675

Liquidity and Capital Resources

The primary sources of liquidity and capital resources have been existing cash, cash flow from operations, borrowings from banks and proceeds from the issuance of debt securities.

At ~~September~~March 3031, ~~2014~~2015, our cash and cash equivalents, excluding restricted cash, totaled $6239.68 million. As of ~~September~~March 3031, ~~2014~~2015, Mountaineer has contributed funds ~~for~~ for racing purses, which exceed our purse payment obligations by $24.21 million. This amount is available for payment of future purse obligations at our discretion, and is held in bank accounts ~~owned~~ owned by the horsemen's association.

At ~~September~~March 3031, ~~2014~~2015, we had total debt in the aggregate principal amount of $~~624~~608.51 million, net of premiums, all of which was secured, and cash collateralized letters of credit of approximately $1.1 million. ~~At September 30, 2014, there were no borrowings under the $20 million senior secured revolving credit facility.~~

We believe that our cash balances on hand, cash flow from operations, ~~availability under the credit facility~~ and any proceeds from the sale of non-core assets will be sufficient to fund our liquidity needs, including debt service of our Senior Secured Second Lien Notes and any other contemplated capital expenditures and short-term funding requirements for the next twelve months.

We cannot assure you that estimates of our liquidity needs are accurate or that any new business developments or other unforeseen events will not occur. If any of these events occur, it may require additional liquidity to continue to execute our business strategy. We anticipate that, to the extent that we require additional liquidity, it will be funded through the incurrence of indebtedness, capital contributions from the proceeds of equity offerings by ERI or a combination of potential sources of liquidity, although no assurance can be given that such forms of capital will be available to us or available to us on terms which are acceptable, at such time.

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Cash Flow

A summary of cash flows from operating, investing and financing activities for the periods indicated are shown in the following table (unaudited, in thousands):

	Successor			Predecessor
	Period from September 19 to September 30			Period from January 1 to September 18
	Three Months Ended March 31, 2015			Three Months Ended March 31, 2014
							Nine Months Ended September 30
Cash flow summary
	2014			2014			2013
Net cash used in operating activities	$	(12,756	)	$	(11,627	)
Cash flow summary
Net cash used in investing activities		(8,107	)		(4,043	)
Net cash provided by (used in) operating activities	$	7,464		$	(10,048	)	$	7,579
Net cash provided by financing activities		—			264
Net cash provided by (used in) investing activities		1,576			(6,919	)		(36,950	)
Net decrease in cash and cash equivalents	$	(20,863	)	$	(15,406	)
Net cash (used in) provided by financing activities		—			(29,604	)		333

Net increase (decrease) in cash and cash equivalents	$	9,040		$	(46,571	)	$	(29,038	)

Operating Cash Flow

Our operating cash inflows are used for operating expenses, debt service, working capital needs and capital expenditures in the normal course of business.

Net cash ~~provided~~used byin operating activities ~~approximated~~was $712.58 million during the ~~Successor~~three ~~period~~months ~~and~~ended ~~net~~March 31, ~~cash used in operating activities approximated $10.0 during the Predecessor period~~2015, compared to net cash ~~provided~~used byin operating activities of $711.6 million during the ~~nine~~three months ended ~~September~~March 3031, ~~2013~~2014. Current period non-cash expenses included in operating activities of $3110.95 million consist primarily of $2610.05 million of depreciation and amortization, $2.6 million of deferred income taxes, offset by $2.7 million for the amortization of the debt premium. In ~~2013~~2014, non-cash expenses of $2910.1 million included depreciation and amortization of $257.68 million, $0.9 million for the amortization of the debt discount, and $0.9 million of deferred income taxes. Additionally, net cash used in operating activities included changes in operating assets and liabilities of approximately $15.15 million ~~and~~during the three months ended March 31, 2015 and $1915.5 million during the ~~nine~~three months ended ~~September~~March 3031, 2014 ~~and 2013, respectively~~.

Investing Cash Flow

Net cash ~~provided~~used byin investing activities was $18.61 million during the ~~Successor~~three ~~period~~months ~~and~~ended ~~net cash used in investing activities was $6.9~~March ~~million during the Predecessor period~~31, 2015 compared to net cash used in investing activities of $374.0 million during the ~~nine~~three months ended ~~September~~March 3031, ~~2013~~2014. During the ~~Successor~~ ~~period~~three months ended March 31, 2015, net cash used in investing activities comprised primarily of acapital ~~decrease~~expenditures of $5.5 million and an increase in restricted cash of $12.96 million due to aan ~~decrease~~increase in funds related to horsemen's fines and ~~simulcasting~~ simulcasting funds that are restricted to payments for improving horsemen's facilities and racing purses at Scioto Downs,. ~~offset~~Net bycash ~~capital~~used ~~expenditures~~in ofinvesting ~~$0.3 million.~~activities ~~During~~during the ~~Predecessor period,~~three ~~net~~months ~~cash~~ended ~~used~~March 31, ~~in investing activities~~ 2014 comprised primarily of capital expenditures (net of reimbursements) of $102.6 million, and an increase in ~~deposits and other of $0.4 million, offset by a decrease in~~ restricted cash of $4.1.5 million due to aan ~~decrease~~increase in funds related to horsemen's fines and simulcasting funds that are restricted to payments for improving horsemen's facilities and racing purses at Scioto Downs. During the nine months ended September 30, 2013, net cash used in investing activities was $37.0 million, comprised primarily of the $25.0 million payment of the Ohio VLT license fee and capital expenditures (net of reimbursements) of $12.1 million, offset by proceeds from the sale of property and equipment of $0.2 million.

Financing Cash Flow

No cash was provided by or used in financing activities during the ~~Successor~~three ~~period~~months ended March 31, 2015 compared to cash provided by financing activities of $0.3 million during the three months ended March 31, 2014. Cash ~~used~~provided inby financing activities during the ~~Predecessor~~ ~~period~~three ~~was~~months ~~$29.6~~ended March ~~million~~31, ~~compared~~2014 towas comprised of $0.3 million ~~cash~~in proceeds from the exercise of stock options.

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provided by financing activities during the nine months ended September 30, 2013. Cash provided by financing activities during the Predecessor period comprised of $30.0 million due to repurchasing shares of MTR common stock in connection with the Mergers, $0.4 million for the purchase and retirement of treasury stock, partially offset by $0.8 million in proceeds from the exercise of stock options. Cash provided by financing activities was $0.3 million during the nine months ended September 30, 2013, comprised of $0.5 million in proceeds from the exercise of stock options, partially offset by $0.2 million due to the purchase and retirement of treasury stock.

Capital Expenditures

During the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015, additions to property and equipment and other capital projects aggregated $103.9 million, ~~net of reimbursements,~~ which included $42.~~3 million for hotel renovations at Mountaineer; $4.~~1 million for new slot machines and ~~conversions~~other gaming equipment primarily at Mountaineer and Presque Isle Downs; $0.39 million infor ~~grandstand~~the ~~clubhouse~~construction ~~renovations~~of a restaurant at Scioto Downs; and $0.9 million in other renovation and maintenance related expenditures ~~of $2.1 million~~ between all of our properties. ~~The renovations to the hotel at Mountaineer were completed during October 2014.~~

Under legislation approved by West Virginia in July 2011, Mountaineer participates in a modernization fund which provides for reimbursement from amounts paid to the West Virginia Lottery Commission in an amount equal to $1 for each $2 expended for certain qualifying capital expenditures having a useful life of more than three years and placed into service after July 1, 2011. Qualifying capital expenditures include the purchase of slot machines and related equipment to the extent such slot machines are retained by Mountaineer at its West Virginia location for not less than five years. Any unexpended balance from a given fiscal year will be available for one additional fiscal year, after which time the remaining unused balance carried forward will be forfeited. ~~During~~ ~~the~~Mountaineer ~~nine~~did ~~months~~not ~~ended~~receive ~~September 30,~~any ~~2014,~~reimbursements ~~Mountaineer~~during ~~was~~the ~~reimbursed~~three ~~$0.6 million~~months onended ~~qualified~~March 31, ~~capital expenditures~~2015. As of ~~September~~March 3031, ~~2014~~2015, Mountaineer remains eligible for ~~approximately~~ $36.75 million under annual modernization fund grants that expire in varying dates through June 30, 2016. Additionally, we have received notification from the West Virginia Lottery Commission that Mountaineer is eligible for another estimated $3.6 million of reimbursement from the modernization fund, which will be effective for the period July 1, 2014 through June 30, 2016. We can make no assurances we will be able to make qualifying capital expenditures purchases sufficient to receive reimbursement of the available funds prior to their expiration.

We anticipate spending up to a total of approximately $320.~~9 million, exclusive of $~~3.0 million ~~that has been allotted for potential development at Scioto Downs~~, or $016.54 million after anticipated reimbursements from West Virginia, on capital expenditures during the remainder of ~~2014~~2015.

Debt

Second ~~Credit~~Lien ~~Facility~~Notes

On August 1, 2011, we ~~entered~~completed ~~into a senior secured revolving credit facility (~~the ~~"Credit~~offering ~~Facility") with a borrowing availability~~ of $20565.0 million ~~and~~in aaggregate ~~maturity~~principal ~~date~~amount of ~~August 1,~~senior ~~2016.~~secured ~~The~~second lien ~~interest~~notes ~~rate per annum applicable to loans under~~ (the ~~Credit~~"Second ~~Facility~~Lien ~~will be, at the Company's option, either (i~~Notes") ~~LIBOR~~ ~~plus~~due ~~a spread of 4.0%~~August 1, or2019 ~~(ii) base~~at ~~rate,~~an ~~which~~issue ~~will~~price beequal ~~the~~to ~~"prime~~97% ~~rate"~~ of ~~interest~~the inaggregate ~~effect~~principal onamount ~~the day~~ of the ~~borrowing~~Second ~~request~~Lien asNotes. ~~published~~The inSecond ~~the~~Lien ~~Wall~~Notes ~~Street~~mature ~~Journal~~on August 1, ~~plus a~~2019, ~~spread~~with ofinterest ~~3.0%.~~payable ~~There~~semi-annually ~~were~~in noarrears ~~borrowings~~on ~~outstanding~~February 1 atand ~~September~~August ~~30,~~1 ~~2014~~of each year.

The ~~Credit~~Second ~~Facility~~Lien isNotes and the guarantees are senior secured obligations and are jointly and severally, fully, and unconditionally guaranteed by ~~substantially~~our ~~the~~current ~~same~~and ~~assets~~future ~~securing~~domestic ~~the~~restricted subsidiaries, ~~11.5%~~other ~~Senior~~than ~~Secured~~our immaterial subsidiaries. The Second Lien Notes ~~due~~are ~~August 1,~~secured ~~2019~~by ~~(the~~a ~~"Notes"),~~second ~~discussed~~priority ~~below~~lien ~~(and including~~on ~~securities~~substantially all of the assets of the Company's ~~subsidiaries~~and tothe guarantors, other than excluded property, as defined in the ~~extent~~Senior ~~permitted~~Secured bySecond ~~law)~~Lien Indenture. ~~Borrowings~~The ~~under~~Second ~~the~~Lien ~~Credit~~Notes ~~Facility~~and the guarantees are ~~guaranteed~~effectively byjunior ~~all~~to any of ~~our~~the ~~existing~~Company's and ~~future~~the ~~domestic~~guarantors' ~~restricted~~existing and ~~subsidiaries.~~future ~~The~~debt ~~security~~that ~~interest~~is insecured by senior or prior liens on the collateral to the extent of the value of the collateral securing such obligations.

44 The indenture governing the Second Lien Notes contains a number of customary covenants, including limitations on restricted payments and investments, additional liens, transactions with affiliates, additional debt, dispositions of property, mergers and similar transactions, and events of default. In addition, if the consolidated total debt ratio of the Company is equal to or greater than 4.0 to 1.0 and such offer is permitted pursuant to the terms of the Company's credit facilities, we are required to repay debt under its credit facility or make an offer to purchase Second Lien Notes with the excess cash flow amounts (as such term is defined in the indenture governing the Second Lien Notes). As of March 31, 2015, the Company was in compliance with the covenants under the indenture relating to the Second Lien Notes.

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~~collateral~~ We ~~that~~may ~~secures~~redeem some or all of the ~~Credit~~Second ~~Facility~~Lien isNotes ~~senior~~prior to August 1, 2015 at a redemption price of 100% of the ~~security~~principal amount thereof plus a "make whole premium" together with accrued and unpaid interest inthereon. ~~the~~On ~~collateral~~or ~~that~~after ~~secures~~August 1, 2015, we may redeem the Second Lien Notes. at the following redemption prices (expressed as a percentage of principal amount) plus any accrued and unpaid interest thereon:

The Credit Facility contains a number of customary covenants and certain financial covenants, including (i) a maximum leverage ratio of 6.75:1.00 for the fiscal quarters ending September 30, 2014 through March 31, 2015 and 7.00:1.00 for fiscal quarters ending June 30, 2015 through December 31, 2015 and thereafter and (ii) a minimum interest coverage ratio of 1.25:1.00 for the fiscal quarters ending September 30, 2014 and thereafter and (iii) a minimum consolidated EBITDA requirement of $80.0 million for the four quarters ending on September 2014 and thereafter. Capital expenditures are also limited to $25.0 million per annum, with carryover provisions (as defined), throughout the term of the Credit Facility.

Year beginning June 15,

2015	106.00	%
2016	103.00	%
2017 and thereafter	100.00	%

~~Permitted~~In ~~indebtedness~~October ~~under~~2014, ~~the~~we ~~Credit~~repurchased ~~Facility~~$10 million ~~includes~~in ~~furniture and equipment financing provided that the~~ aggregate principal ~~amounts~~amount of ~~such~~our ~~indebtedness~~Second ~~outstanding~~Lien Notes, at ~~any~~a ~~time shall~~price ~~not exceed the greater~~ of $20110.~~0 million~~25 ~~and~~per ~~4.5%~~$100 ofin ~~consolidated~~principal ~~net~~amount ~~tangible~~of ~~assets,~~the aspurchased ~~defined;~~notes. ~~other~~The repurchase ~~unsecured~~resulted ~~indebtedness~~in ata ~~any time not to exceed~~ $51.02 million; ~~and~~annual ~~other indebtedness~~savings toin ~~finance~~interest ~~the~~expense. ~~acquisition,~~After ~~development~~giving oreffect ~~construction of any future gaming property provided that (i) such indebtedness shall be unsecured and subordinated~~ to the ~~Credit Facility,~~repurchase ~~(ii) no part~~ of the ~~principal~~bonds orin ~~interest~~October of2014, ~~such~~the ~~indebtedness~~annual isinterest ~~required~~expense toon bethe ~~paid~~Second ~~prior~~Lien Notes toapproximates ~~six~~$64.5 million. ~~months~~Additionally, ~~after~~annual ~~the~~amortization ~~maturity date~~ of the ~~Credit~~premium ~~Facility~~on ~~and (iii) upon~~ the ~~incurrence~~ ofSecond ~~such~~Lien ~~indebtedness~~Notes ~~and~~is ~~after~~approximately ~~giving pro forma effect thereto there shall be no default or event of default and that we shall be in pro forma compliance with the financial covenants~~$10.9 million.

Senior Secured Second Lien Notes

On August 1, 2011, we completed the offering of $565.0 million in aggregate principal amount of the Notes at an issue price equal to 97% of the aggregate principal amount of the Notes. The Notes will mature on August 1, 2019, with interest payable semi-annually in arrears on February 1 and August 1 of each year.

In October 2014, the Company repurchased $10 million in aggregate principle amount of our 11.25% Senior Secured Second Lien Notes, at a price of $110.25 per $100 in principal amount of the purchased notes, which approximated their carrying value as of September 30, 2014. The repurchase resulted in a $1.2 million annual savings in interest expense.

After giving effect to the repurchase of the bonds in October 2014, the annual interest expense on the Notes approximates $64.5 million. Additionally, annual amortization of the premium on the Notes approximates $10.9 million.

Contractual Obligations

There have been no material changes during the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015 to our contractual obligations as disclosed in in our Annual Report on Form 10-K for the year ended December 31, ~~2013~~2014.

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Other Liquidity Matters

We are faced with certain contingencies involving litigation and environmental remediation and compliance. These commitments and contingencies are discussed in greater detail in "Part II, Item 1. "Legal Proceedings" and Note 10 to our consolidated financial statements, both of which are included elsewhere in this report. In addition, new competition may have a material adverse effect on our revenues, and could have a similar adverse effect on our liquidity. See "Part I, Item 1A. Risk Factors—Risks Related to Our Business" which is included in our Annual Report on Form 10-K for the year ended December 31, 2013.

Critical Accounting Policies

Our critical accounting policies disclosures are included in our Annual Report on Form 10-K for the year ended December 31, 2013. Management believes that there have been no material changes since December 31, 2013. We have not substantively changed the application of our policies and there have been no material changes in assumptions or estimation techniques used as compared to prior periods, except as discussed below.

Business Combinations

We apply the provisions of ASC 805, Business Combinations, in the accounting for our acquisition. It requires us to recognize, the assets acquired and the liabilities assumed at their acquisition date fair values, separately from goodwill. Goodwill as of the acquisition date is measured as the excess of

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~~consideration~~ The ~~transferred~~recorded ~~over~~estimate ~~the~~is ~~net~~subject ofto ~~the~~revision ~~acquisition~~based ~~date~~upon ~~fair~~future ~~values~~changes ofin the ~~assets~~revenue ~~acquired and the liabilities assumed. While we use our best estimates and~~ assumptions utilized to ~~accurately~~develop ~~value assets acquired and liabilities assumed at~~ the ~~acquisition date, our estimates are inherently uncertain and subject to refinement~~estimate. AsOur aestimated ~~result,~~total ~~during~~obligation ~~the~~at ~~measurement~~March 31, ~~period, which may be up to one~~ ~~year~~2015 ~~from~~was ~~the~~$4.9 million ~~acquisition~~and ~~date,~~is weaccrued ~~record~~in ~~adjustments to~~ the ~~assets~~respective ~~acquired~~accompanying ~~and~~consolidated ~~liabilities~~balance ~~assumed~~sheets. ~~with~~The ~~the~~Company ~~corresponding~~paid ~~offset to goodwill~~$0.1 million ~~Upon~~during the ~~conclusion~~three ofmonths ~~the~~ended ~~measurement period or final determination of the values of assets acquired or liabilities assumed~~March 31, ~~whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations~~2015.

~~Accounting~~We ~~for~~are ~~business~~faced ~~combinations~~with ~~requires~~certain ~~our~~contingencies ~~management~~involving tolitigation ~~make~~and ~~significant~~environmental ~~estimates~~remediation and ~~assumptions,~~compliance. ~~especially~~These atcommitments ~~the~~and ~~acquisition~~contingencies ~~date~~are ~~including~~discussed ~~our~~in ~~estimate~~greater ofdetail ~~intangible~~in ~~assets~~"Part II, ~~which include gaming licenses, trade names and customer loyalty programs~~Item 1. "Legal ~~Although~~Proceedings" ~~we believe the assumptions~~ and ~~estimates~~Note 10 weto ~~have made have been reasonable and appropriate, they are inherently uncertain. For~~ our ~~gaming~~consolidated ~~license~~financial ~~valuation~~statements, ~~our~~both ~~properties~~of ~~estimated~~which ~~future cash flows~~ are ~~the~~included ~~primary~~elsewhere ~~assumption~~ in ~~the~~this ~~respective intangible valuations~~report. ~~Cash~~In ~~flow estimates include assumptions regarding factors such as recent and budgeted operating performance~~addition, ~~net~~new ~~win~~competition ~~per~~may ~~unit~~have ~~(revenue),~~a ~~patron~~material ~~visits,~~adverse ~~growth~~effect ~~percentages which were developed considering general macroeconomic~~on ~~conditions~~our asrevenues, ~~well as competitive impacts from current~~ and ~~anticipated~~could ~~competition~~have ~~through~~ a ~~review~~similar ofadverse ~~customer~~effect ~~market~~on ~~data,~~our ~~operating margins, and current regulatory, social and economic climates~~liquidity. ~~The~~ ~~most~~See ~~significant of the assumptions used in the valuations include: (1)~~"Part ~~revenue~~I, ~~growth/decline percentages; (2)~~Item ~~discount~~1A. ~~rates;~~Risk ~~(3) effective~~Factors—Risks ~~income~~Related ~~tax~~to ~~rates;~~Our ~~(4) future~~Business" ~~terminal~~which ~~values~~is ~~and (5) capital~~included ~~expenditure~~in ~~assumptions. These assumptions are developed for each of~~ our ~~properties~~Annual Report ~~based~~ on ~~historical~~Form 10-K ~~trends~~for in the ~~current~~year ~~competitive~~ended ~~markets in which they operate~~December 31, ~~and projections of future performance and competitions~~2014. ~~The primary assumptions with respect to our trade names and customer loyalty program intangibles are selecting the appropriate royalty rates and cost estimates for replacement cost analyses.~~

In ~~addition, uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We~~ ~~reevaluate these items quarterly based upon facts and circumstances that existed as of the acquisition date with any adjustments to our preliminary estimates being recorded to goodwill if identified~~ ~~within the measurement period. Subsequent to the measurement period or our final determination of the tax allowance's or contingency's estimated value, whichever comes first, changes to these~~ ~~uncertain tax positions and tax related valuation allowances will affect our provision for income taxes in our consolidated statement of operations and could have material impact on our results of~~ ~~operations~~ Critical ~~and~~Accounting ~~financial position.~~ Policies

Our critical accounting policies disclosures are included in our Annual Report on Form 10-K for the year ended December 31, 2014. Management believes that there have been no material changes since December 31, 2014. We have not substantively changed the application of our policies and there have been no material changes in assumptions or estimation techniques used as compared to prior periods.

Off-Balance Sheet Arrangements

We are not a party to any off-balance sheet arrangements.

Cautionary Statement Regarding Forward-Looking Information

This report includes "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. Forward-looking statements include statements regarding our strategies, objectives and plans for future development or acquisitions of properties or operations, as well as expectations, future operating results and other information that is not historical information. When used in this report, the terms or phrases such as "anticipates"," "believes"," "projects"," "plans"," "intends"," "expects"," "might"," "may"," "estimates"," "could"," "should"," "would"," "will likely continue"," and variations of such words or similar expressions are intended to identify forward-looking statements. Forward-looking statements speak only as of the date they are made, and we assume no duty to update forward-looking statements. Although our expectations, beliefs and projections are expressed in good faith and ~~are~~with ~~based~~what ~~on assumptions that~~ we believe ~~are~~ is a reasonable basis, there can be no assurance that these expectations, beliefs and projections will be realized. There are a number of risks and uncertainties that could cause our actual results to differ materially from those expressed in the forward-looking statements which are included elsewhere in this report. Other factors beyond those listed below could also adversely affect us. Such risks, uncertainties and other important factors include, but are not limited to:

•: Our substantial indebtedness and significant financial commitments could adversely affect our results of operations and our ability to service such obligations;
•: We may not be able to refinance our substantial outstanding indebtedness on terms that are satisfactory to us, or at all;
•: Restrictions and limitations in agreements governing our debt could significantly affect our ability to operate our business and our liquidity;
•: Our facilities operate in very competitive environments and we face increasing competition;

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•: Our operations are particularly sensitive to reductions in discretionary consumer spending and are affected by changes in general economic and market conditions;
•: Our gaming operations are highly regulated by governmental authorities and the cost of complying or the impact of failing to comply with such regulations;
•: Increases in gaming taxes and fees in jurisdictions in which we operate;
•: Risks relating to pending claims or future claims that may be brought against us;
•: Changes in interest rates and capital and credit markets;
•: Our ability to comply with certain covenants in our debt documents;
•: The effect of disruptions to our information technology and other systems and infrastructure;
•: Construction factors relating to maintenance and expansion of operations;
•: Our ability to attract and retain customers;
•: Weather or road conditions limiting access to our properties;
•: The effect of war, terrorist activity, natural disasters and other catastrophic events;
•: The intense competition to attract and retain management and key employees in the gaming industry; and
•: the other factors set forth in Part I, Items 1A. "Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2014.

There are a number of risks and uncertainties that could cause our actual results to differ materially from those expressed in the forward-looking statements which are included elsewhere in this report. Such risks, uncertainties and other important factors include, but are not limited to:

In light of these and other risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur. Any forward-looking statement speaks only as of the date on which that statement is made. We do not intend to update publicly any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made, except as may be required by law.

You should also be aware that while we from time to time communicate with securities analysts, we do not disclose to them any material non-public information, internal forecasts or other confidential business information. Therefore, you should not assume that we agree with any statement or report issued by any analyst, irrespective of the content of the statement or report. To the extent that reports issued by securities analysts contain projections, forecasts or opinions, those reports are not our responsibility and are not endorsed by us.

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes which are contained elsewhere in this report.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

WeMarket ~~are~~risk ~~exposed~~is ~~to changes in interest rates primarily from our variable rate long-term debt arrangements. However, with~~ the ~~issuance~~risk of ~~the~~ ~~Notes~~loss onarising ~~August 1,~~from ~~2011,~~adverse ~~our exposure to interest rate~~ changes ~~will~~in bemarket ~~limited~~rates toand ~~amounts~~prices, ~~which~~such ~~may be outstanding under our Credit Facility. There were no amounts outstanding under our Credit Facility~~ as ofinterest ~~September 30~~rates, ~~2014.~~foreign ~~(See~~currency exchange ~~Liquidity~~rates and ~~Capital~~commodity ~~Resources~~prices. ~~included~~We ~~elsewhere~~are ~~within~~exposed ~~this~~to ~~report~~changes ~~and~~in ~~"Part II, Item 7.~~interest ~~Management's~~rates ~~Discussion~~primarily ~~and~~from ~~Analysis~~variable ofrate ~~Financial~~long-term ~~Condition~~debt ~~and~~arrangements, ~~Results~~ of ~~Operations—Liquidity and Sources of Capital"~~ which is ~~included~~there inare ~~our~~none ~~Annual~~outstanding ~~Report~~at ~~on Form~~March ~~10-K for the year ended December~~ 31, ~~2013)~~2015.

~~Assuming~~The ~~that~~Company ~~the~~evaluates ~~entire~~its ~~amount~~exposure ofto ~~borrowings~~market ~~permitted~~risk ~~under~~by monitoring interest rates in the ~~Credit~~marketplace ~~Facility~~and ~~was~~has, ~~outstanding~~on occasion, autilized ~~hypothetical~~derivative ~~100~~financial ~~basis~~instruments ~~point~~to ~~(1%)~~help ~~change~~manage inthis risk. ~~interest~~The ~~rates~~Company ~~would~~does ~~result~~not utilize derivative financial instruments for trading purposes. There were no material quantitative changes in anour ~~annual interest~~market ~~expense~~risk ~~change~~exposure, ofor uphow tosuch ~~approximately~~risks ~~$0.2~~are managed, for the three months ended March ~~million~~31, 2015.

At September 30, 2014, the fair value of amounts outstanding under our Credit Facility and other long-term debt approximates the carrying value, except for our Notes, for which the fair value was determined based upon Level 2 inputs (as defined by ASC 820, Fair Value Measurements and Disclosures) including quoted market prices and bond terms and conditions. The aggregate fair value of the Notes was $624.5 million at September 30, 2014. 37

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ITEM 4. CONTROLS AND PROCEDURES.

(a): Evaluation of Disclosure Controls and Procedures

We have established and maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports that we file under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized, evaluated and reported within the time periods specified in the rules and forms of the ~~Securities and Exchange Commission ("~~SEC"), and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

In designing and evaluating the disclosure controls and procedures, management ~~recognized~~recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily ~~was~~is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) as of the end of the period covered by this Form 10-Q Quarterly Report ~~(the "Evaluation Date")~~. They have concluded that our disclosure controls and procedures are effective to ensure that the information required to be disclosed by us in the reports that we file under the Exchange Act is recorded, processed, summarized, evaluated and reported within the time periods specified in SEC rules and forms.

(b): Changes in Internal Controls

There were no significant changes in our internal control over financial reporting identified in connection with the above evaluation that occurred during the period covered by this Form 10-Q Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II
OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

InPresque ~~Re:~~Isle ~~MTR Gaming Group~~Downs, Inc. ~~Stockholder~~v ~~Litigation. In~~Dwayne ~~connection~~Cooper ~~with the Mergers~~Enterprises, Inc. ~~three~~et ~~putative~~al; ~~class~~Civil ~~action~~Action ~~lawsuits~~No. 10493-2009; ~~were filed~~Court ~~by purported~~of ~~stockholders~~Common Pleas of ~~the~~Erie ~~Company~~County, Pennsylvania. On ~~challenging~~April 17, ~~the~~2010, ~~Mergers.~~Presque ~~All~~Isle ~~three~~Downs, Inc. ~~cases~~initiated ~~were~~legal ~~filed~~action in the ~~Delaware~~ Court of ~~Chancery.~~Common ~~The~~Pleas ~~first~~of ~~case~~Erie ~~was~~County, ~~filed~~Pennsylvania, onagainst defendants ~~September~~Dwayne Cooper Enterprises, 23Inc. ("DCE"), ~~2013~~Turner ~~and~~Construction isCompany ~~captioned Harris~~("Turner"), v.and ~~MTR~~Rectenwald ~~Gaming~~Buehler ~~Group~~Architects, Inc., etf/k/a ~~al.,~~Weborg ~~Case~~Rectenwald ~~No.~~Buehler Architects, ~~8937-VCG~~Inc. (~~the~~ "~~Harris Case~~RB"); to recover damages arising out of failures of the ~~second~~surveillance ~~case~~system ~~was~~installed ~~filed~~during onthe ~~September 27,~~original ~~2013 and~~construction isof ~~captioned~~the ~~Julian~~casino v.facilities ~~MTR~~at ~~Gaming~~Presque ~~Group, Inc~~Isle Downs., etDCE supplied ~~al.~~and installed the surveillance system, ~~Case~~RB ~~No. 8950-VCG~~acted (as the ~~"Julian~~project ~~Case");~~architect, and Turner served as the ~~third~~construction ~~case~~manager ~~was~~on ~~filed~~the project. Shortly after Presque Isle Downs opened on ~~October~~February 1428, ~~2013~~2007, ~~and~~it isdiscovered ~~captioned~~that ~~Morse~~certain v.components ~~MTR~~of ~~Gaming, Inc.,~~the etsurveillance ~~al.~~system were defective, ~~Case~~malfunctioning Noor missing. ~~9001~~ ~~(the~~After ~~"Morse~~efforts ~~Case").~~to ~~All~~remediate ~~three~~the ~~cases~~deficiencies ~~have~~in ~~been~~the system were ~~consolidated~~unsuccessful, ~~into~~it Inbecame ~~Re:~~necessary ~~MTR~~to ~~Gaming~~replace ~~Group, Inc.~~certain ~~Stockholder~~components ~~Litigation~~of ~~Consol.~~the ~~C.A.No. 8937—VCP.~~surveillance ~~This~~system ~~consolidated~~at ~~case~~a cost of $1.9 million, ~~which purported~~and to bewrite-off ~~brought~~approximately as$1.5 million ~~class~~related ~~actions~~to onthe ~~behalf~~net ofbook value ~~all~~ of the ~~Company's~~equipment ~~stockholders~~that was replaced. On April 5, ~~excluding~~2011, ~~the~~Presque ~~members~~Isle ofDowns obtained a default judgment against DCE in the ~~board~~amount of ~~directors,~~$2.7 million. ~~alleged,~~Efforts ~~among~~to ~~other~~enforce ~~things,~~the ~~that~~judgment against DCE are ongoing but the ~~consideration~~assets of DCE appear to be ~~received~~ bymodest and materially insufficient to pay the ~~MTR~~judgment. ~~stockholders~~Any inproceeds ~~connection~~that ~~with~~may ~~the~~be ~~Mergers~~received ~~was~~will ~~inadequate~~be ~~and~~recorded ~~that~~as the ~~MTR's~~amounts ~~directors~~are ~~breached~~realized. Defendant ~~their~~RB ~~fiduciary~~joined ~~duties~~five toadditional ~~stockholders~~vendors/subcontractors as additional defendants in ~~negotiating~~the case. Each of the defendants and ~~approving~~all but one of the ~~Merger~~additional defendants filed motions or objections ~~Agreement.~~requesting ~~The~~that ~~complaint~~the inCourt dismiss the ~~Harris~~claims ~~Case~~against ~~also~~it. ~~alleges~~After ~~that~~these ~~MTR~~motions and ~~the~~objections ~~Company~~were ~~aided~~denied and ~~abetted~~the parties engaged in limited discovery, the ~~alleged~~parties ~~breaches~~agreed byto ~~MTR's~~submit ~~directors~~the case to mediation. The ~~complaints~~mediation occurred on February 10, 2015, and resulted in an agreement under which the ~~Julian~~sum ~~and~~of ~~Morse~~$0.7 million ~~Cases~~would ~~allege~~be ~~that MTR,~~paid ~~NewCo,~~to ~~Merger~~Presque ~~Sub~~Isle ADowns, Inc. ~~Merger~~in ~~Sub~~exchange B,for a ~~HoldCo,~~general ~~Gary~~release ~~Carano,~~of ~~Thomas~~the ~~Reeg~~defendants (except DCE) and ~~Robert~~the Tadditional defendants. ~~Jones~~A ~~aided~~draft settlement agreement has been prepared and ~~abetted~~is ~~the~~currently ~~alleged~~under ~~breaches~~review by ~~MTR's~~all ~~directors~~parties. OnIt ~~August 25,~~is ~~September 17,~~anticipated ~~and~~that the ~~October 9,~~settlement ~~2014~~will ~~Plaintiffs~~be ~~separately~~concluded ~~moved~~and tothe case voluntarily ~~dismiss~~dismissed ~~their~~by ~~claims~~June 30, 2015.

State ex rel. Walgate v. Kasich; Case No. 11 CV -10 -13126; Court of Common Pleas of Franklin County, Ohio. On October 21, 2011, the aOhio ~~complaint~~Roundtable ~~was~~ filed by a ~~public~~complaint ~~policy~~in ~~group~~the Court of Common Pleas in Franklin County, Ohio ~~challenging~~against ~~certain~~a ~~aspects~~number of defendants, including the ~~casino~~Governor, ~~referendum~~the Ohio Lottery Commission and the Ohio ~~Governor's~~Casino ~~and~~Control Commission. ~~legislature's~~The ~~approval~~complaint ofalleges ~~legislation~~a ~~authorizing~~variety ~~VLTs~~of atsubstantive ~~Ohio's seven~~and ~~horse~~procedural ~~racetracks.~~defects ~~Relators,~~relative to the ~~plaintiffs,~~approval ~~among~~and ~~other~~implementation ~~claims~~of ~~against~~video ~~Ohio's~~lottery ~~casinos,~~terminals ~~allege~~as ~~that~~well ~~VLTs~~as ~~were~~several ~~not~~counts ~~contemplated~~dealing bywith ~~Ohio's~~the taxation ~~constitutional~~of ~~amendment~~standalone ~~permitting~~ casinos. inAs ~~Ohio. Scioto~~interveners, ~~Downs~~we, inalong ~~order~~with tofour ~~protect~~of ~~its~~the ~~right~~other toracinos ~~VLT~~in ~~gaming~~Ohio, ~~pursuant~~filed tomotions ~~its~~for ~~conditional~~judgment ~~License~~on ~~granted by~~ the ~~Ohio~~pleadings ~~Lottery~~to ~~Commission,~~supplement ~~filed~~the aposition ~~motion~~of tothe ~~intervene~~Racing onCommission. ~~February 2,~~In May 2012~~. Dispositive~~, ~~Motions~~the ~~were~~Court ~~filed~~of byCommon ~~the~~Pleas ~~Ohio~~dismissed ~~Attorney~~the ~~General,~~case; ~~Scioto Downs~~however, ~~Inc.~~ ~~and~~the ~~others~~plaintiffs onfiled ~~February 20,~~an ~~2012,~~appeal and, oral arguments were held on ~~May~~January 3017, ~~2012,~~2013 in the ~~litigation~~10th District ~~was~~Court of ~~dismissed~~Appeals. On In March ~~13,~~ 2013, the ~~appeals~~Court ~~court~~of ~~affirmed~~Appeals upheld the ~~lower~~ruling. ~~court~~The decision. Onof ~~April 26, 2013,~~ the ~~plaintiffs~~Appeals ~~filed~~Court awas ~~notice~~appealed ~~of Appeal~~ to the Ohio Supreme Court. Onby ~~July~~the plaintiffs on April 2430, 2013 ~~The Ohio~~and the Ohio Supreme Court ~~granted~~has ~~allocatur,~~elected ~~agreeing~~ to ~~hear~~accept ~~this matter upon~~ the ~~outcome~~appeal. ofThe ~~another~~Ohio ~~case~~Supreme ~~with~~Court ~~comparable~~temporarily ~~legal~~stayed ~~issues that was before~~ the ~~court.~~appeal Onuntil ~~June 10,~~it ~~2014,~~first ~~the~~ruled ~~Ohio~~on ~~Supreme Court~~a ~~affirmed~~matter ~~the~~with ~~dismissal~~similar ofprocedural ~~the~~issues. ~~appeal~~A ofdecision ~~the~~was ~~matter~~issued ~~involving~~on ~~the~~that ~~comparable~~case on ~~legal~~June 10, ~~issues~~2014. InAccordingly, ~~light~~along ofwith the ~~decision~~State onAppellees, ~~the~~a ~~comparable~~motion ~~matter,~~to ~~Scioto~~dismiss ~~Downs~~as ~~and~~improvidently ~~the~~granted ~~other~~was ~~parties,~~filed onwhich ~~July 2,~~was partially ~~2014,~~granted. ~~filed~~The aremaining ~~joint~~propositions ~~motion~~of tolaw ~~dismiss~~have ~~the~~been ~~appeal~~briefed ofby ~~this~~both ~~matter,~~parties ~~which~~and isoral ~~still~~argument ~~pending~~is ~~before~~scheduled ~~the~~for ~~Court~~June 23, 2015.

Legal matters are discussed in greater detail in "Part I, Item 3. Legal Proceedings" and Note 16 to our Consolidated Financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013. 39

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Legal matters are discussed in greater detail in "Part I, Item 3. Legal Proceedings" and Note 14 to our Consolidated Financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2014.

ITEM 1A. RISK FACTORS.

A description of our risk factors can be found in "Part I, Item 1A. Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, ~~2013, and the registration statement on Form S-4 filed by Eclair Holdings Company and available on the Securities and Exchange Commission's website (www~~2014.~~sec.gov).~~ ~~Other~~There ~~than changes resulting from the consummation of the Mergers, which eliminated the risks related to the possibility that the Mergers would not be consummated, there~~ were no material changes to those risk factors during the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not Applicable.

ITEM 5. OTHER INFORMATION.

InNot ~~connection with the consummation of the Mergers, MTR's certificate of incorporation and bylaws were amended and restated on September 19, 2014~~Applicable. ~~Copies of the amended and restated certificate of incorporation and bylaws are attached hereto as Exhibit 3.1 and 3.2.~~

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ITEM 6. EXHIBITS

	Description of Exhibit	~~Method of Filing~~
3.1	Amended and Restated Certificate of Incorporation of MTR Gaming Group, Inc.	Filed herewith.
31.1	Certification of Gary L. Carano pursuant to Rule 13a-14a and Rule 15d-14(a) (filed herewith).
3.2	Amended and Restated Bylaws of MTR Gaming Group, Inc.	Filed herewith.
31.2	Certification of Robert M. Jones pursuant to Rule 13a-14a and Rule 15d-14(a) (filed herewith).
31.1	Certification of Gary L. Carano pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith.
101.1	XBRL Instance Document
31.2	Certification of Robert M. Jones pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith.
101.2	XBRL Taxonomy Extension Schema Document
32.1	Certification of Gary L. Carano in accordance with 18 U.S.C. Section 1350	Filed herewith.
101.3	XBRL Taxonomy Extension Calculation Linkbase Document
32.2	Certification of Robert M. Jones in accordance with 18 U.S.C. Section 1350	Filed herewith.
101.4	XBRL Taxonomy Extension Definition Linkbase Document
101.1	XBRL Instance Document
101.5	XBRL Taxonomy Extension Label Linkbase Document
101.2	XBRL Taxonomy Extension Schema Document
101.6	XBRL Taxonomy Extension Presentation Linkbase Document
101.3	XBRL Taxonomy Extension Calculation Linkbase Document
101.4	XBRL Taxonomy Extension Definition Linkbase Document
101.5	XBRL Taxonomy Extension Label Linkbase Document
101.6	XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

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

Date: November 14, 2014	MTR GAMING GROUP, INC.
	MTR GAMING GROUP, INC.
	By:	/s/ GARY L. CARANO Gary L. Carano CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD
Date: May 11, 2015	By:	/s/ GARY L. CARANO Gary L. Carano CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD
	By:	/s/ ROBERT M. JONES Robert M. Jones EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
Date: May 11, 2015	By:	/s/ ROBERT M. JONES Robert M. Jones EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)

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EXHIBIT INDEX

	Description of Exhibit	Method of Filing
3.1	Amended and Restated Certificate of Incorporation of MTR Gaming Group, Inc.	Filed herewith.
3.2	Amended and Restated Bylaws of MTR Gaming Group, Inc.	Filed herewith.
31.1	Certification of Gary L. Carano pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith.
31.2	Certification of Robert M. Jones pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith.
32.1	Certification of Gary L. Carano in accordance with 18 U.S.C. Section 1350	Filed herewith.
32.2	Certification of Robert M. Jones in accordance with 18 U.S.C. Section 1350	Filed herewith.
101.1	XBRL Instance Document
101.2	XBRL Taxonomy Extension Schema Document
101.3	XBRL Taxonomy Extension Calculation Linkbase Document
101.4	XBRL Taxonomy Extension Definition Linkbase Document
101.5	XBRL Taxonomy Extension Label Linkbase Document
101.6	XBRL Taxonomy Extension Presentation Linkbase Document

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