UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-K

(Mark One)



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

For the fiscal year ended December 31, ~~2014~~2015



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

For the transition period from __________ to __________

________________________________________________________________________________________________________________________

Commission file number: 000-52975

________________________________________________________________________________________________________________________

American Casino & Entertainment Properties LLC

(Exact name of registrant as specified in its charter)

________________________________________________________________________________________________________________________



Delaware	20-0573058
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)



2000 Las Vegas Boulevard South Las Vegas, NV (Address of principal executive offices)	89104 (Zip code)

(702) 380-7777

(Registrant’s telephone number, including area code)

__________________________________________________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Class A Membership Interests

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ¨ No ý

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý No ¨

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 ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§220.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form

10-K. ¨

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 the definition of “large accelerated filer," "accelerated filer” and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer ¨ Non-Accelerated filer ý Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No ý

As of the last business day of the registrant’s most recently completed second fiscal quarter, none of the voting and non-voting common equity was held by non-affiliates.

The registrant’s common equity is not listed or traded on any exchange or market.

AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC

ANNUAL REPORT ON FORM 10-K FOR THE FISCAL

YEAR ENDED DECEMBER 31, ~~2014~~2015

TABLE OF CONTENTS

			Page
PART I
	Item 1.	Business	3
	Item 1A.	Risk Factors	18
	Item 1B.	Unresolved Staff Comments	27
	Item 2.	Properties	27
	Item 3.	Legal Proceedings	27
	Item 4.	Reserved	27
PART II
	Item 5.	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	28
	Item 6.	Selected Financial Data	2930
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3941
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	4245
	Item 8.	Financial Statements and Supplementary Data	4346
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	6571
	Item 9A(T).	Controls and Procedures	6571
	Item 9B.	Other Information	6571
PART III
	Item 10.	Directors, Executive Officers and Corporate Governance	6672
	Item 11.	Executive Compensation	6975
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	7783
	Item 13.	Certain Relationships and Related Transactions and Director Independence	7783
	Item 14.	Principal Accountant Fees and Services	7884
PART IV
	Item 15.	Exhibits and Financial Statement Schedules	7985

PART I

ITEM 1. BUSINESS

General

American Casino & Entertainment Properties LLC, or ACEP, was formed in Delaware on December 29, 2003. ACEP owns and operates the Stratosphere Casino Hotel & Tower, or the Stratosphere, Arizona Charlie’s Decatur and Arizona Charlie’s Boulder in Las Vegas, Nevada, and the Aquarius Casino Resort, or the Aquarius, in Laughlin, Nevada.

On January 24, 2008, the Nevada Gaming Commission issued an order of registration of ACEP. The order (1) prohibits W2007/ACEP Managers Voteco, LLC, or Voteco, or its affiliates from selling, assigning, transferring, pledging or otherwise disposing of our membership interests or any other security convertible into or exchangeable for our Class A membership interests, or Class A Interests, or Class B membership interests, or Class B Interests, without the prior approval of the Nevada Gaming Commission, (2) prohibits the direct or indirect members of Voteco from selling, assigning, transferring, pledging or otherwise disposing of any direct or indirect membership interest in Voteco without the prior administrative approval of the Chairman of the Nevada State Gaming Control Board or his designee, and (3) prohibits ACEP from declaring cash dividends or distributions on any class of membership interest of ACEP beneficially owned in whole or in part by W2007/ACEP Holdings, LLC, or Holdings, an affiliate of Whitehall Street Real Estate Funds, or Whitehall, a series of real estate investment funds affiliated with Goldman, Sachs & Co., or Voteco, or their respective affiliates, without the prior approval of the Nevada Gaming Commission.

On February 20, 2008, ACEP, Voteco and Holdings entered into an Amended and Restated Limited Liability Company Agreement of ACEP, or the Amended Operating Agreement.

On February 20, 2008, each member of Voteco, Holdings and Voteco entered into a Transfer Restriction Agreement. The Transfer Restriction Agreement provides, among other things, that:

•

Holdings has the right to acquire our Class A Interests from Voteco on each occasion that Class B Interests held by Holdings would be transferred to a proposed purchaser who, in connection with such proposed sale, has obtained all licenses, permits, registrations, authorizations, consents, waivers, orders, findings of suitability or other approvals required to be obtained from, and has made all findings, notices or declarations required to be made with, all gaming authorities under all applicable gaming laws,


•	A specific purchase price, as determined in accordance with the Transfer Restriction Agreement, will be paid to acquire the Class A Interests from Voteco, and


•	Voteco will not transfer ownership of Class A Interests owned by it except pursuant to such option of Holdings.

Pursuant to the Amended Operating Agreement, holders of Class A Interests are entitled to one vote per interest in all matters to be voted on by our voting members. Except as otherwise expressly required by law, holders of Class B Interests have no right to vote on any matters to be voted on by our members. Holders of Class A Interests and Class B Interests have no preemptive rights, no other rights to subscribe for additional interests, no conversion rights and no redemption rights, do not benefit from any sinking fund, and do not have any preferential rights upon a liquidation.

On July 37, ~~2013~~2015, ACEP, or the Company, and certain of its subsidiaries, or the Guarantors, entered into athe ~~First~~2015 ~~Lien~~ Credit ~~and Guaranty~~ Agreement~~, or First Lien Credit Agreement~~. Pursuant to the terms of the ~~First~~2015 ~~Lien~~ Credit Agreement, the ~~First Lien~~ Lenders provided the Company with senior secured loan facilities in an aggregate principal amount of $~~230~~310 million, consisting of $~~215~~295 million of senior secured term loans, or ~~First~~the ~~Lien~~2015 Term Loans, and a $15 million ~~of senior secured~~ revolving credit facility, or the New Revolving Facility. (The proceeds from the ~~Revolving~~2015 ~~Facility~~Term ~~together~~Loans ~~with~~were used to redeem the First Lien Term Loans, ~~the~~and ~~“First~~Second Lien ~~Facilities”)~~Term Loans.

OnThe ~~July~~2015 3,Term ~~2013,~~Loans ~~ACEP~~bear ~~and~~interest ~~the~~either ~~Guarantors~~at ~~entered into~~ a ~~Second~~base ~~Lien~~rate ~~Credit~~plus ~~and~~2.75% ~~Guaranty~~per ~~Agreement,~~annum or ~~Second~~at ~~Lien~~the ~~Credit~~reserve-adjusted ~~Agreement~~eurodollar rate plus 3.75% ~~Pursuant~~per toannum. In the ~~terms~~case of ~~the~~eurodollar ~~Second~~rate ~~Lien~~loans, ~~Credit~~interest ~~Agreement,~~is computed on the ~~Second~~basis ~~Lien~~of ~~Lenders~~a ~~provided~~360-day year and the ~~Company~~actual ~~with~~number ~~secured~~of ~~second~~days ~~lien~~between ~~term~~interest ~~loans~~periods, inwith ~~the~~interest ~~aggregate~~payable ~~principal~~on ~~amount~~the oflast ~~$120~~day ~~million,~~of oreach ~~the~~interest ~~Second~~period ~~Lien~~of ~~Term~~one ~~Loans.~~month, ~~The~~two ~~proceeds~~months, ~~from~~or ~~the~~three ~~First~~months, ~~Lien~~or, ~~Term~~in ~~Loans~~the ~~and~~case ~~Second~~of ~~Lien~~interest ~~Term~~periods ~~Loans~~longer ~~were~~than ~~used~~three tomonths, ~~purchase~~every ~~the~~three ~~outstanding~~months. ~~11%~~The ~~Senior~~2015 ~~Secured~~Term ~~Notes~~Loans ~~due~~are ~~2014~~subject ~~that~~to ~~were~~scheduled ~~tendered~~principal inpayments ~~connection~~on ~~with~~the ~~ACEP's~~last ~~previously~~day ~~announced~~of ~~tender~~each ~~offer~~calendar ~~and~~quarter toin ~~redeem~~an ~~the~~amount ~~remaining~~equal ~~outstanding~~to 110.25% ~~Senior~~of ~~Secured~~the ~~Notes~~original principal balance.

On ~~February~~July 243, ~~2014~~2013, weACEP ~~entered~~and ~~into~~certain anof ~~amendment~~its ofsubsidiaries, ~~the~~or Guarantors, entered into a First Lien Credit ~~Agreement.~~and ~~Among~~Guaranty ~~other changes~~Agreement, ~~the~~or ~~Amendment~~First ~~reduced~~Lien ~~the~~Credit ~~interest~~Agreement. ~~rates~~Pursuant onto the ~~Term~~terms ~~Loans~~of bythe ~~125~~First ~~basis~~Lien ~~points~~Credit ~~per~~Agreement, ~~annum.~~the ~~Interest~~First ~~will~~Lien ~~now~~Lenders ~~accrue,~~provided atthe ~~our~~

~~election,~~Company ~~(i)~~with atsenior ~~the~~secured ~~adjusted~~loan ~~eurodollar~~facilities ~~rate~~in ~~plus~~an ~~3.50%~~aggregate ~~per~~principal ~~annum~~amount orof ~~(ii)~~$230 atmillion, ~~the~~consisting ~~Base~~of ~~Rate~~$215 ~~plus~~million ~~2.50%~~of ~~per~~senior ~~annum. Additionally~~secured term loans, ~~the~~or ~~minimum~~First ~~adjusted~~Lien ~~eurodollar~~Term ~~rate~~Loans, ~~was~~and ~~reduced~~a by$15 25million ~~basis~~senior ~~points~~secured ~~from~~revolving ~~1.25%~~credit ~~per~~facility, ~~annum~~or tothe ~~1.00%~~Revolving ~~per~~Facility ~~annum.~~(the Revolving Facility together with the First Lien Term Loans, the “First Lien Facilities”).

On July 3, 2013, ACEP and the Guarantors entered into a Second Lien Credit and Guaranty Agreement, or Second Lien Credit Agreement. Pursuant to the terms of the Second Lien Credit Agreement, the Second Lien Lenders provided the Company with secured second lien term loans in the aggregate principal amount of $120 million, or the Second Lien Term Loans. The proceeds from the First Lien Term Loans and Second Lien Term Loans were used to purchase the outstanding 11% Senior Secured Notes due 2014 that were tendered in connection with ACEP's previously announced tender offer and to redeem the remaining outstanding 11% Senior Secured Notes.

On February 24, 2014, we entered into an amendment of the First Lien Credit Agreement. Among other changes, the Amendment reduced the interest rates on the Term Loans by 125 basis points per annum. Interest accrued at our election, (i) at the adjusted eurodollar rate plus 3.50% per annum or (ii) at the Base Rate plus 2.50% per annum. Additionally, the minimum adjusted eurodollar rate was reduced by 25 basis points from 1.25% per annum to 1.00% per annum.

Our executive offices are located at 2000 Las Vegas Boulevard South, Las Vegas, Nevada 89104 and our telephone number is (702) 380-7777.

Cautionary Statement Pursuant to the U.S. Private Securities Litigation Reform Act of 1995

We have included or incorporated by reference in this Annual Report on Form 10-K, and from time to time our management may make, statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts but instead represent only our beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside our control. These statements include statements other than historical information or statements of current condition and may relate to our future plans and objectives and results, among other things, as well as statements about the objectives and effectiveness of our risk management policies, statements about trends in or growth opportunities for our businesses, and statements about our future status, activities or regulation by the Nevada Gaming Commission and the Nevada State Gaming Control Board. By identifying these statements for you in this manner, we are alerting you to the possibility that our actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Important factors that could cause our actual results and financial condition to differ from those indicated in the forward-looking statements include, among others, those discussed below and under “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.

Summary

As used in this Annual Report on Form 10-K, the terms ‘‘ACEP’’, ‘‘we’’, ‘‘our’’, ‘‘ours’’ and ‘‘us’’ refer to American Casino & Entertainment Properties LLC, or ACEP, or the Company, unless the context suggests otherwise.

Our four properties primarily target middle-market, value-oriented gaming customers. We generate a significant amount of our business from both the fly-in and drive-in markets. We are committed to providing our customers a high level of customer service. In the last few years, we have invested significant capital into targeted improvements at each of our properties. This has included making renovations to the hotel rooms and common areas at the Stratosphere, including refreshing the entrances, restrooms, restaurants, pool and gaming floor. We have also invested capital in making renovations at the Aquarius, including renovations to the standard rooms and suites, gaming floor, common areas and restaurants. We believe these improvements allow us to continue to offer high quality products to our customers and position us for revenue growth as the Las Vegas and Laughlin gaming markets continue to recover.

Our Strengths

Diverse Gaming Portfolio

Our four gaming properties operate in three distinct Nevada gaming markets: Las Vegas ~~Strip~~destination travelers, Las Vegas locals and Laughlin, Nevada. Our properties attract a mix of local gaming customers and destination travelers, and we generate business from both the fly-in and drive-in markets. We believe that the diverse nature of our properties and the markets in which they operate provide a more stable revenue stream and customer base as compared to casino operators in Nevada that target only a single market.

AsThe ~~a Las Vegas Strip property, the~~ Stratosphere appeals to destination travelers, with approximately 7677% of identified tracked play for the year ended December 31, ~~2014~~2015 coming from outside a 51 mile radius.

The Arizona Charlie’s properties primarily serve local Las Vegas customers and their guests. The Arizona Charlie’s properties provide an alternative for locals who prefer a local gaming experience to the Las Vegas Strip atmosphere. For the year ended December 31, ~~2014~~2015, approximately 97% of tracked locals play comes from players within a ten mile radius. Arizona Charlie’s Boulder serves the locals market in the eastern metropolitan area of Las Vegas and Arizona Charlie’s Decatur serves the locals market in the heavily populated west Las Vegas area.

We believe that the Aquarius is a leader in its market. The Aquarius appeals to local Laughlin customers, but it is also positioned as an alternative value destination for customers traveling from Nevada, Arizona and Southern California. For the year ended December 31, ~~2014~~2015, the local market contributed 30% of the tracked play, with 70% coming from outside a 51 mile radius.

Lower Risk Revenue Stream

Each of our casinos emphasizes slot play, with substantially more slot machines than other games. Our marketing efforts and rewards programs target and incentivize slot play and help drive slot revenues. For the year ended December 31, ~~2014~~2015, slot revenues represented 85.23% of total gaming revenue, while table revenue and other casino revenue contributed 11.46% and 3.41%, respectively. We believe that revenue from slot play is less volatile than revenue from table game play (particularly high-end table game play) and, as a result, our revenue stream from casino play is less volatile than that of gaming operators that rely more on high-end table game play. Our ability to attract customers, create a defined hold percentage and select the denominations and types of games on our slot floor help promote the predictability of our slot play revenue.

Revenue volatility is also mitigated because we cater to middle-market customers, and we generally do not attract high-end customers. As a result, we do not issue significant amounts of credit to our customers, the need to accept discounts on losses is rare and our revenues are not tied to whether a small group of high-end customers win or lose in their wagering.

Capital Expenditures Focused on Value Enhancing Projects

Our capital programs are focused on renovating and improving the amenities offered at our properties with the goal of encouraging our guests to spend more time and money at our properties.

These projects have included room renovations, new restaurants, gaming floor improvements, gaming equipment upgrades and replacements, pool renovations and other capital improvements. The most significant investments have been at the Stratosphere and Aquarius. At the Stratosphere, we have focused our investments on room and casino renovations, food and beverage amenities and new attractions. At the Aquarius, we have focused our investments on renovations to the rooms and suites, gaming floor, common areas, restaurants and the pool.

We believe that we continue to see benefits of this investment as noted above. At the Stratosphere, average daily room rate, or ADR, increased 211.34% from ~~2013~~2014 to ~~2014~~2015 and revenue per available room, or RevPAR, increased 1317.2% in ~~2014~~2015 compared to 83.49% for the broader Las Vegas market in ~~2014~~2015. We believe these results were driven by our ability to capitalize on the overall growth in visitation to Las Vegas coupled with the property improvements made by our management. At the Aquarius, RevPAR grew 62.79% from ~~2013~~2014 to ~~2014~~2015. ADR ~~was~~increased ~~up 1~~3.84% in ~~2014~~2015 as compared to ~~2013~~2014. This compared to the overall Laughlin market that experienced an increase in ADR of 23.91% in ~~2014~~2015 compared to ~~2013~~2014.

At the Stratosphere, our non-gaming business is also benefiting, with food revenue per occupied room increasing 30.92% in ~~2014~~2015 as compared to ~~2013~~2014. At the Aquarius, gaming revenue performance has been resilient. During ~~2014~~2015, gaming revenues grew 13.96% as compared to ~~2013~~2014 while gaming revenues for the Laughlin market increased 1.0%.

~~We believe that the properties are well positioned to maximize revenues from our existing customers, encourage repeat visits and increase cash flow as the market continues to recover.~~5

We believe that the properties are well positioned to maximize revenues from our existing customers, encourage repeat visits, generate visits from new customers and increase cash flow as the market continues to recover.

Experienced Management Team

Since our acquisition in 2008, we have been managed by a team with extensive experience in gaming operations. Frank Riolo, who was named our CEO in April 2008, was formerly the CEO of the Viejas Casino. Ned Martin, who was named our CFO in October 2008, and COO in August 2015, has held senior-level positions in finance, operations and gaming development with Station Casinos, Inc., Silverton Casino, LLC and the Maloof Companies. ~~Mssrs~~Messrs. Riolo and Martin are supported by property-level general managers that each have more than 20 years of experience in the gaming and hotel industries. The management team is focused on designing and executing key operating strategies to grow the revenues and profitability of the portfolio.

Our Business Strategy

Our management team has developed a strategy that focuses on increasing the amount of time and money spent at our properties, strengthening our market position, attracting new customers, maximizing yield on existing gaming customers, and increasing productivity throughout the portfolio.

Provide a Value-Oriented Experience

We cater to middle-market gaming customers by offering, in each of our properties, a value-oriented experience that provides competitive odds in our casinos, quality rooms in our hotels, high-quality dining facilities and, at the Stratosphere and the Aquarius, competitive, value-oriented entertainment attractions.

The mix of slot play product is regularly modified to maximize revenues while also providing customers with the most current and popular games available. In addition, our ace|PLAY program enables customers to earn points that may be used towards rewards, further encouraging recurring visits by our customers.

Delivering a High Level of Customer Service

Our employees participate in regular customer service training programs. We routinely conduct comprehensive customer surveys at all of our properties, and we pursue a process of continuous improvement at our properties based on the information gathered from our customer satisfaction surveys. We believe the value we offer our customers, together with a strong focus on customer service, will enable us to continue to attract and retain customers to our properties.

Position Our Properties to Better Target Their Respective Markets

Our management team continues to focus on improving our existing facilities, customer service, and positioning each property to target its respective market. We deploy capital strategically into value-enhancing projects to help increase the amount of time and money spent at our properties and to attract new customers. We continue to focus on rationalizing our marketing by focusing on customer reinvestment rates and working to maximize yield on existing customers. Our strategy for each property is summarized below:

Stratosphere

We seek to position the Stratosphere as the property of choice in the middle-market segment on the Las Vegas Strip. Our key objectives are to attract customers to the Stratosphere with a high propensity to gamble, and once they are at the Stratosphere, to increase the length of stay and the amount of time and money they spend at the property. To achieve these objectives, we have invested in targeted improvements to the hotel rooms and common areas, including the entrances, restrooms, restaurants, pool and gaming floor.

Arizona Charlie’s Properties

At our Arizona Charlie’s properties, we are focused on maintaining market share and customer loyalty in the local Las Vegas market while preserving discipline in our promotional incentives. We use targeted promotional initiatives as part of our rewards program and we believe that these initiatives will help us increase player spend and differentiate the properties from their competitors. We also invest capital in projects to maintain the overall appeal of the properties.

Aquarius

We are focused on positioning the Aquarius as the high-end gaming venue in Laughlin and increasing market share and cash flow. We work to rationalize our marketing expense and player reinvestment rates in order to increase yield on gaming customers. We believe that renovations of the hotel rooms, the gaming floor and the pool area attract both tourists and locals, helping us to increase cash flow and increase or maintain our average daily room rate.

Our Gaming and Entertainment Properties

Stratosphere, Casino Hotel & Tower: Our largest property is the Stratosphere, a gaming and entertainment complex that comprises the Stratosphere Tower, a casino, a hotel and a retail center. The Stratosphere is located on approximately 34 acres of land at the northern end of the Las Vegas Strip, of which approximately 17 acres have been developed.

The Stratosphere offers the tallest free-standing observation tower in the United States and, at 1,149 feet, is the tallest building west of the Mississippi River and a well-recognized landmark in Las Vegas. The Stratosphere Tower boasts amenities including an award-winning, 358-seat revolving restaurant with unparalleled views of Las Vegas, known as the Top of the World, the highest indoor/outdoor observation deck in Las Vegas, and the highest amusement rides in the world, including Sky Jump Las Vegas. The Stratosphere Tower also has a bar overlooking the Las Vegas Strip and a 150-seat cocktail lounge inside Top of the World, a wedding chapel and an event space.

As of December 31, ~~2014~~2015, the Stratosphere’s casino contained approximately 80,000 square feet of gaming space, with approximately ~~816~~798 slot machines, 4544 table games, a 167-table poker room and a race and sports book. The Stratosphere’s hotel has a total of 2,427 rooms, including 909 Stratosphere Select rooms and 132 suites.

The retail center, located on the second floor of the building, occupies approximately 150,000 square feet of developed retail space and approximately 80,000 square feet of undeveloped space. Adjacent to the retail center is a 550-seat music venue that is currently home to our show ~~PIN-UP,~~PINUP ~~featuring Claire Sinclair, 2011 Playboy’s Playmate of the Year~~ and ~~Bettie~~MJ ~~Page~~LIVE. Both ~~Clothing~~shows ~~model~~are ~~in a high energy, original show,~~ designed to appeal to our value-oriented Las Vegas visitors. In addition, there are also a number of dining venues available including Roxy’s Diner, ~~Tower~~Nunzio's Pizzeria, ~~and~~Carvery ~~our~~108, ~~newest restaurant~~ McCall’s Heartland Grill, ~~which opened in late October 2012 and has received critical acclaim from numerous Las Vegas publications~~Mookies, ~~as well as~~ Fellini’s Ristorante®, McDonald’s®, El Nopal®, Chicago Hot Dog®, ~~Starbucks®, Tropical Smoothie®,~~ and ~~Fat Tuesday~~Starbucks®.

We believe that the distinctive amenities of the Stratosphere, together with our dedication to providing a quality, value-oriented experience, have significantly contributed to our ability to maintain relatively high occupancy and visitor levels and enhanced the Stratosphere’s competitive position with respect to other operators targeting middle-market visitors to Las Vegas.

Arizona Charlie’s Decatur: Arizona Charlie’s Decatur is a full-service casino and hotel geared toward residents of Las Vegas and the surrounding communities. Arizona Charlie’s Decatur is located on approximately 17 acres of land approximately four miles west of the Las Vegas Strip in the heavily populated west Las Vegas area. The property is easily accessible from Route 95, a major highway in Las Vegas.

As of December 31, ~~2014~~2015, the casino at Arizona Charlie’s Decatur contained approximately 55,200 square feet of gaming space with 1,~~139~~137 slot machines, 1011 table games, a bingo parlor, a keno lounge, a race and sports book and a poker lounge. Arizona Charlie’s Decatur emphasizes slot play because it is popular with local players and generates high volumes of play and, as a result, Arizona Charlie’s Decatur derives a significant proportion of its revenue from the casino. Most table games at Arizona Charlie’s Decatur are devoted to double-deck, hand-dealt blackjack play. AsThe ~~of December 31, 2014, the~~ hotel at Arizona Charlie’s Decatur has ~~258~~259 rooms, including 9 suites. Arizona Charlie’s Decatur has three restaurants, including its premium restaurant, Ron’s Steakhouse. In addition, Arizona Charlie’s Decatur has a Subway® and a Noble Roman’s Pizza®. Arizona Charlie’s Decatur also has one bar in the bingo area and three bars in the casino area, one of which includes a lounge with live entertainment nightly.

Arizona Charlie’s Boulder: Arizona Charlie’s Boulder is a full-service casino, hotel and recreational vehicle, or RV park, geared toward residents of Las Vegas and the surrounding communities. Arizona Charlie’s Boulder is situated on approximately 24 acres of land located on Boulder Highway, in an established retail and residential neighborhood in the eastern metropolitan area of Las Vegas. The property is easily accessible from I-515, the most heavily traveled east/west highway in Las Vegas.

As of December 31, ~~2014~~2015, the casino at Arizona Charlie’s Boulder contained approximately 47,500 square feet of gaming space with ~~881~~853 slot machines, 108 table games, a bingo parlor and a race and sports book. Arizona Charlie’s Boulder targets local slot players and, as a result, a significant proportion of its revenue is derived from the casino. As of December 31, ~~2014~~2015, the hotel at ~~Arizona Charlie’s Boulder has 303 rooms, including 219 suites. Arizona Charlie’s Boulder has four restaurants and three bars in the casino area.~~

ofArizona ~~services,~~Charlie’s ~~including~~Boulder ~~laundry~~has ~~facilities~~303 rooms, ~~game~~including ~~and~~219 ~~exercise~~suites. ~~rooms,~~Arizona aCharlie’s ~~swimming~~Boulder ~~pool,~~has afour ~~whirlpool,~~restaurants ~~shower~~and ~~facilities~~three ~~and~~bars ~~Wi-Fi~~in ~~access~~the casino area.

Arizona Charlie’s Boulder also has an RV park. The RV park is one of the largest short-term RV parks on the Boulder Strip with 30 to70-foot pull through stations and over 200 spaces. The RV park offers nightly, weekly and monthly rates and a range of services, including laundry facilities, game and exercise rooms, a swimming pool, a whirlpool, shower facilities and Wi-Fi access.

Hotel customers for Arizona Charlie’s Decatur and Boulder include local residents and their out-of-town guests, as well as those business and leisure travelers who, because of location or cost considerations, choose not to stay on the Las Vegas Strip or at other hotels in Las Vegas.

Aquarius Casino Resort: The Aquarius is a tourist, as well as locals, oriented gaming and entertainment destination property. The Aquarius is located on approximately 18 acres of land next to the Colorado River in Laughlin, Nevada. Completed capital improvements to the Aquarius include renovations to the casino and common areas, new slot machines, new signage, and renovations to our suites as well as our standard rooms.

As of December 31, ~~2014~~2015, the casino at Aquarius contained approximately 57,000 square feet of gaming space with approximately 1,~~222~~207 slot machines, 33 table games and a race and sports book.

The Aquarius is the largest hotel by number of rooms in Laughlin, Nevada, with 1,~~907~~906 hotel rooms, including 90 suites, in two 18-story towers. Hotel amenities include: an outdoor pool; lighted tennis courts; and three restaurants that we own: the Vineyard, which is designed for fine dining, the Windows on the River Buffet, ~~and~~ Café Aquarius, a 24 hour diner~~. The Aquarius has four nationally recognized leased restaurants: Outback Steakhouse®~~, ~~Subway®, McDonalds®,~~ and ~~Panda Express®. Additionally,~~ the ~~Aquarius operated a Starbucks® under license. The license agreement expired on February 28, 2013 and was not renewed. The space has been converted into~~ Duet Coffee and Wine, a new coffee and wine bar owned by us, which opened in August of 2013. The Aquarius has four nationally recognized leased restaurants: Outback Steakhouse®, Subway®, McDonalds®, and Panda Express®. The Aquarius also has three bars providing retail drinks and video poker to casino customers.

The Aquarius contains approximately 35,000 square feet of meeting space, with approximately 19,300 square feet devoted to a pavilion which can accommodate up to 2,100 guests. The property also has a ~~club~~live entertainment lounge that is situated on the first floor adjacent to the casino and can accommodate up to 300 guests. In addition to meeting rooms, the facility offers a wedding chapel with a wide variety of ceremony packages.

Marketing Strategy

Our strategy is to provide value to our customers through pricing, competitive gaming odds and attentive customer service.

Our casinos feature diverse slot and video poker machines and table games. We tailor our selection of games to our targeted customers’ expectations.

Our properties are marketed to both the tourist and local resident markets. The primary market for the Stratosphere is the middle-market, value-oriented Las Vegas visitor. Arizona Charlie’s Decatur and Arizona Charlie’s Boulder cater to the local Las Vegas resident market. The Aquarius targets the middle to high-end visitor to Laughlin, Nevada as well as local residents.

ace|PLAY is our cross property player rewards program, created to attract and retain customers by offering opportunities to accumulate points which can be exchanged for cash, slot play or complimentary goods and services. We believe the ace|PLAY player rewards program is competitive in our respective markets.

Our database technology supports marketing efforts through direct mail, e-mail and telemarketing programs. We use print, billboards, radio, television, internet messaging and social networking to promote our properties and target customers.

In the Las Vegas ~~tourist~~destination market, we primarily target middle-market customers who desire value in their gaming, lodging, dining and entertainment experiences. We emphasize the Stratosphere as a destination property for visitors to Las Vegas by offering an attractive experience for the value minded consumer. The Stratosphere utilizes the unique amenities of its tower to entice visitors. Gaming products, food and beverage products, hotel rooms and entertainment are priced to appeal to the value-conscious middle-market Las Vegas visitor.

In the Las Vegas local market, Arizona Charlie’s Decatur and Arizona Charlie’s Boulder hotels and casinos cater to local residents of Las Vegas and the surrounding communities. We deliver value by offering payout ratios on our slot and video poker machines that we believe are among the highest in Las Vegas. The properties’ pricing and gaming odds make them two of the best values in the gaming industry. Their gaming products, hotel rooms, restaurants and other amenities attract local customers in search of reasonable prices, boutique casinos and more attentive service.

poker machines that we believe are among the highest in Las Vegas. Their gaming products, hotel rooms, restaurants and other amenities attract local customers in search of reasonable prices, boutique casinos and more attentive service.

The Laughlin market consists of travelers seeking a value-oriented destination that offers an alternative to the fast-paced Las Vegas experience. The Aquarius targets these mid to high-end Laughlin customers by providing a combination of amenities, updated facilities, and outstanding customer service, all at a great value.

Trademarks

We regard our trademarks, service marks, trade names and similar intellectual property as important to our success. We rely on a combination of laws and contractual restrictions with our employees, customers and others to establish and protect our proprietary rights. We have registered a large number of trademarks and service marks in the United States, including the names of our hotels and casinos. We use certain other trademarks, trade names, service marks and similar intellectual property owned by third parties in our business.

Seasonality

Generally, our Las Vegas gaming and entertainment properties are not materially affected by seasonal trends. However, our Laughlin gaming and entertainment property tends to have increased casino revenue from February through May.

Casino Credit

We extend credit on a discretionary basis to qualified customers. We maintain strong controls over the extension of credit and evaluate each individual patron’s creditworthiness before extending credit. We pursue collections by appropriate means, including legal proceedings when necessary. Historically, our casino credit is less than 10% of all table games wagering.

Competition

The hotel and casino industry in general, and the markets in which we compete in particular, are highly competitive. The Las Vegas market includes many world-class destination resorts, with numerous tourist attractions. Many Las Vegas hotel and casino resorts are themselves tourist attractions. Each of these resorts competes with us in our ability to attract visitors to the Stratosphere. The Stratosphere’s hotel and food and beverage operations compete directly with other properties targeting the value-oriented, middle-market Las Vegas visitor. The Stratosphere competes with other hotels and casinos on the Las Vegas Strip and in Downtown Las Vegas based on a mix of casino games, personal service, payout ratios, location, price of hotel rooms, restaurant value and promotions.

Arizona Charlie’s Decatur and Arizona Charlie’s Boulder compete primarily with other Las Vegas hotels and casinos for local customers. The Arizona Charlie’s properties compete with other casinos in the Las Vegas metropolitan area based on a mix of casino games, personal service, payout ratios, location, and price of hotel rooms, restaurant value, and promotions.

The Aquarius competes primarily with other Laughlin hotels and casinos located along the Colorado River. From a competitive standpoint, we believe that the Aquarius is the largest hotel in Laughlin based on the number of available rooms and we believe that the Aquarius casino has the second largest number of slot machines of its competitors. The Aquarius competes with other hotels and casinos in Laughlin based on a mix of casino games, personal service, payout ratios, price of hotel rooms, restaurant value and promotions.

The Las Vegas and Laughlin Markets

All of our properties are located in the Las Vegas and Laughlin, Nevada markets. Accordingly, our results of operations are driven by economic conditions in these markets.

Las Vegas is one of the largest entertainment markets in the country. We believe that Las Vegas hotel occupancy rates are among the highest of any major market in the United States. We believe that the Las Vegas gaming market has two distinct sub-segments: the tourist market, which tends to be concentrated on the Las Vegas Strip and Downtown Las Vegas, and the local market, which includes the surrounding Las Vegas area.

According to the Las Vegas Convention and Visitors Authority, or LVCVA, the number of visitors traveling to Las Vegas has increased over the last ten years from 3738.46 million visitors in ~~2004~~2005 to 4142.13 million visitors in ~~2014~~2015. The number of hotel and motel rooms in Las Vegas has increased from ~~131~~133,~~503~~186 at the end of ~~2004~~2005 to ~~150~~149,~~544~~213 at the end of ~~2014~~2015, giving Las Vegas the most hotel and motel rooms of any metropolitan area in the world. Despite this significant increase in the supply of rooms, the Las Vegas hotel average monthly occupancy rate exceeded 80% for each of the years from 2004 through 2014. Hotel occupancy increased 2.0 percentage points to 89.1% for 2014 compared to 87.1% in 2013, which is below the peak of 94.0% in

most hotel and motel rooms of any metropolitan area in the world. Despite this significant increase in the supply of rooms, the Las Vegas hotel average monthly occupancy rate exceeded 80% for each of the years from 2005 through 2015. Hotel occupancy increased 0.7 percentage points to 89.8% for 2015 compared to 89.1% in 2014, which is below the peak of 94.0% in 2007. According to the LVCVA, visitor volume increased by 32.79% in ~~2014~~2015 compared to ~~2013~~2014. The Las Vegas hotel ADR increased by 53.2% in ~~2014~~2015 compared to ~~2013~~2014.

Las Vegas Strip gaming revenues have grown as Las Vegas ~~visitations~~visitation and hotel room counts have grown. Between ~~2004~~2005 and ~~2014~~2015, gaming revenues on the Las Vegas Strip experienced a compound annual growth of 10.85%. Gaming revenues for ~~2014~~2015 totaled approximately $6.43 billion, a 20.14% decrease from ~~2013~~2014. A decline in baccarat play, which is favored by high-end international guests, was a significant contributor to the decline in gaming revenue on Las Vegas Strip in ~~2014~~2015. Our properties do not target the baccarat player.

According to the LVCVA, Las Vegas has been the United States’ top-ranked destination for trade shows for the last ten years. The number of trade show and convention attendees in Las Vegas decreased from approximately 56.72 million in ~~2004~~2005 to 5.29 million in ~~2014~~2015. Convention attendance increased 114.20% during ~~2014~~2015 compared to ~~2013~~2014 and has increased 1531.1% compared to 2009.

We believe that the growth in the Las Vegas tourist market has been enhanced by a dedicated program of the LVCVA and major Las Vegas hotels to promote Las Vegas as an exciting vacation destination and convention site, the increased capacity of McCarran International Airport and the introduction of large, themed destination resorts in Las Vegas.

Nevada has enjoyed population growth that includes an increasing number of retirees and other active gaming customers. A majority of Nevada’s growth has occurred in Las Vegas, which is located in Clark County. The population of Clark County has grown from 1.78 million people in ~~2004~~2005 to approximately 2.1 million people in ~~2014~~2015, a compound annual growth rate of 1.97%. In comparison, the United States population increased at a compound annual growth rate of 0.8% during this period. From ~~2013~~2014 to ~~2014~~2015, it is estimated that Las Vegas experienced a 2.04% increase in population.

The Laughlin area economy is primarily dependent on the gaming and tourism industry. Visitor volume and occupancy rates have declined on an annual basis over the past several years while the number of hotel rooms has remained fairly constant. Starting in March, 2014 the new Laughlin Events Center has hosted several headline concerts that have created successful events in the market. According to the LVCVA ~~in 2014~~, visitation declined 1.5.1% in 2015 compared to ~~2013~~2014. From 2007 to 2012, annual decreases in visitors averaged 7.5%. In 2013 and 2014, the decreases averaged 1.4%. ~~Although~~Laughlin ~~there~~gaming ~~were~~revenues ~~fewer visitors in 2014, visitors extended their stays and total room nights occupied~~ increased 21.37%, ~~which~~in ~~helped~~2015 ~~increase~~compared ~~hotel occupancy. Laughlin gaming revenues were relatively flat from 2012~~ to 2014 ~~including~~versus a 1.0% increase in 2014 compared to 2013. ~~This increase marks the first year-over-year increase in Laughlin since 2007.~~

Regulation and Licensing

Introduction

The ownership and operation of casino gaming facilities in the State of Nevada are subject to the Nevada Gaming Control Act and the regulations made under such Act, as well as various local ordinances. The gaming operations of our casinos are subject to the licensing and regulatory control of the Nevada Gaming Commission and the Nevada State Gaming Control Board. Our casinos’ operations are also subject to regulation by the Clark County Liquor and Gaming Licensing Board and the City of Las Vegas. These agencies are referred to herein collectively as the Nevada Gaming Authorities.

Our subsidiaries that operate casinos are licensed by the Nevada Gaming Authorities as limited liability company licensees, which we refer to herein as company licensees. Under their gaming licenses, company licensees are required to pay periodic fees and taxes. The gaming licenses are not transferable.

To date, our company licensees have obtained all gaming licenses necessary for the operation of their existing gaming operations; however, gaming licenses and related approvals are privileges under Nevada law, and we cannot assure you that any new gaming license or related approvals that may be required in the future will be granted, or that any existing gaming licenses or related approvals will not be limited, conditioned, suspended, revoked or renewed.

Registration Requirements

On ~~February~~December 2617, 2015, the Nevada Gaming Commission issued aan ~~Seventh~~Eighth Revised Order of Registration of ACEP as a publicly traded company, which we refer to herein as a registered company for purposes of the Nevada Gaming Control Act. The order amends and restates the provisions of the ~~Sixth~~Seventh Revised Order of Registration entered on February 2026, ~~2014~~2015, which (1) prohibits Holdings from selling, assigning, transferring, pledging or otherwise disposing of any direct or indirect interest in our membership interests or any other security convertible into or exchangeable into our Class B membership interests, without the prior approval of the Nevada Gaming Commission, (2) prohibits the members of Voteco from selling, assigning, transferring, pledging or otherwise disposing of any direct or indirect membership interest in Voteco without the prior approval of the Commission, (3) prohibits Strat Hotel Investor, L.P., Whitehall Parallel Global Real Estate Limited Partnership 2007, MLQ Stratosphere, LLC and W2007 Finance Sub, LLC from selling, assigning, transferring, pledging or otherwise disposing of any direct or indirect membership interest in W2007/ACEP Holdings or any other security that is convertible or exchangeable into a membership interest in Holdings without the prior approval of the Nevada Gaming Commission, and (4) prohibits ACEP, Voteco, Holdings, Strat Hotel Investor, L.P., MLQ Stratosphere, LLC or W2007 Finance Sub, LLC, without the prior approval of the Nevada Gaming Commission, from declaring cash dividends or distributions on any class of their securities to any person who has not been licensed or found suitable by the Nevada Gaming Commission, provided, however, that any of the foregoing entities may, with the prior approval of the Chairman of the Nevada State Gaming Control Board, pay dividends and make distributions to its direct or indirect equity owners who have not been licensed or found suitable by the Nevada Gaming Commission for the purpose of defraying tax liabilities and tax-related expenses of such direct or indirect equity owners that arise directly out of such direct or indirect ownership interest.

The ~~Seventh~~Eighth Revised Order of Registration also ~~licensed~~approved ACEP’s aspledge ~~sole~~of ~~member~~the membership interest of ~~ACEP~~Stratosphere ~~Interactive~~Holding, LLC., ~~The~~Charlies ~~statutory~~Holding ~~provisions~~LLC, ~~which~~Aquarius ~~govern~~Gaming ~~interactive~~LLC ~~gaming~~and inACEP ~~Nevada provide~~Interactive, ~~however,~~LLC ~~that~~to aDeutsche ~~license~~Bank toAG ~~operate~~New ~~interstate~~York ~~interactive~~Branch, ~~gaming~~as ~~does~~Collateral ~~not~~Agent, ~~become~~in ~~effective~~conjunction ~~until:~~with ~~(i)~~ a ~~federal~~credit ~~law~~and ~~authorizing~~guaranty ~~the~~agreement, ~~specific~~and ~~type of~~an ~~interactive~~amendment ~~gaming~~to ~~for~~its ~~which~~Order ~~the~~of ~~license~~Registration. ~~was~~Stratosphere ~~granted~~Holding, isLLC’s ~~enacted;~~pledge orof ~~(ii)~~ the ~~United~~membership ~~States~~interest ~~Department~~ of ~~Justice~~Stratosphere ~~notifies the Nevada~~ Gaming ~~Control~~LLC ~~Board or the Nevada Gaming Commission in writing that it is permissible under federal law~~ to ~~operate~~Deutsche ~~the~~Bank ~~specific~~AG ~~type~~New ofYork ~~interactive gaming for which the license was granted. The license received by ACEP Interactive~~Branch, ~~LLC, currently authorizes only intrastate interactive gaming~~ as ~~defined~~Collateral Agent in ~~Nevada~~conjunction ~~law~~with ~~to mean the conduct of gambling games through the use of communications technology that allows~~ a ~~person,~~credit ~~utilizing~~and ~~money,~~guaranty ~~checks~~agreement, ~~electronic~~and ~~checks, electronic transfers~~ of ~~money,~~Charlies ~~credit~~Holding ~~cards,~~LLC’s ~~debit~~pledge ~~cards~~of ormembership ~~any~~interest ~~other instrumentality, to transmit to a computer information to assist in the placing~~ of aArizona ~~bet~~Charlies, orLLC ~~wager~~ and ~~corresponding~~Fresca ~~information~~LLC ~~related~~ to ~~the~~Deutsche ~~display~~Bank ofAG ~~the~~New ~~game,~~York ~~game outcomes or other similar information~~Branch,” ~~including,~~as ~~without~~Collateral ~~limitation~~Agent, ~~“Internet~~in ~~poker”~~conjunction ~~but~~with ~~excluding “the operation of~~ a ~~race~~credit ~~book~~and orguaranty sports pool that uses communications technology approved by the Board pursuant to regulations adopted by the Commission to accept wagers originating within this state for races, or sporting events or other eventsagreement.”

ACEP has been registered with the Nevada Gaming Commission as a publicly traded corporation, found suitable by the Nevada Gaming Commission as the manager of Charlie’s Holding LLC, and as the sole member of Stratosphere Holding LLC, Charlie’s Holding and Aquarius Gaming LLC. Voteco has been registered as a holding company and found suitable by the Nevada Gaming Commission as the sole owner of our voting securities. Charlie’s Holding has been registered as an intermediary company and has been found suitable by the Nevada Gaming Commission to own the equity securities of its licensed subsidiaries, Arizona Charlie's, LLC and Fresca, LLC, each of which is a company licensee. Stratosphere LLC has been registered as an intermediary company and has been found suitable to own the equity securities of Stratosphere Gaming LLC, a company licensee, as its sole member.

Periodically, we are required to submit detailed financial and operating reports to the Nevada Gaming Commission and to provide any other information that the Nevada Gaming Commission may require. Substantially all of our material loans, leases, sales of securities and similar financing transactions must be reported to, or approved by, the Nevada Gaming Commission.

Policy Concerns of Gaming Laws

The laws, regulations and supervisory procedures of the Nevada Gaming Authorities are based upon declarations of public policy. These public policy concerns include, among other things:


•	preventing unsavory or unsuitable persons from being directly or indirectly involved with gaming at any time or in any capacity;


•	establishing and maintaining responsible accounting practices and procedures;


•	maintaining effective controls over the financial practices of licensees, including establishing minimum procedures for internal fiscal affairs, safeguarding assets and revenue, providing reliable recordkeeping and requiring the filing of periodic reports with the Nevada Gaming Authorities;


•	preventing cheating and fraudulent practices; and


•	providing a source of state and local revenue through taxation and licensing fees.

Changes in these laws, regulations and procedures could have significant negative effects on our gaming operations and our financial condition and results of operations.

Individual Licensing Requirements

All stockholders, members and limited partners with a 5% or less ownership interest in a corporate, limited liability company or limited partnership licensee (other than such an entity as is publicly traded and registered with the Nevada Gaming Commission), must register in that capacity with the Nevada Gaming Control Board and affirmatively state in writing that they submit to the board’s jurisdiction. Such registration must be made on forms prescribed by the chairman. A member who is required to be registered by this section shall apply for registration within 30 days after the member obtains an ownership interest in a limited-liability company licensee. No person, other than an institutional investor, may acquire more than 5% of the ownership interests in a corporate, limited liability company or limited partnership licensee, or receive any percentage of the profits of, a non-publicly traded holding or intermediary company or company licensee, without first obtaining licenses and approvals from the Nevada Gaming Authorities.

The Nevada Gaming Authorities may investigate any individual who has a material relationship to or material involvement with our gaming operations to determine whether the individual is suitable or should be licensed as a business associate of a gaming licensee. Key employees of a company licensee may also be required to file such applications.

Under certain circumstances, an “institutional investor,” as defined in the Nevada Gaming Control Act, that intends to acquire any security issued by a corporate, limited liability company or limited partnership licensee or a holding company (which, in any such case, is not publicly traded), may apply to the Nevada Gaming Control Board and the Nevada Gaming Commission for a waiver of the otherwise applicable requirements for licensing or a finding of suitability if such institutional investor intends to and does hold the securities for investment purposes only. An institutional investor is not eligible to receive or hold a waiver if the institutional investor will own, directly or indirectly, more than 15% of the securities of the licensee or a holding company on a fully diluted basis where any such securities are to be acquired other than through a debt restructuring. Securities acquired before a debt restructuring and retained after a debt restructuring or as a result of an exchange, exercise or conversion, after a debt restructuring, of any securities issued to an institutional investor through a debt restructuring, are deemed to have been acquired through a debt restructuring. Such a waiver is effective only as long as the institutional investor’s direct or indirect ownership interest in such securities meets the limitations set forth above. An institutional investor is not deemed to hold a security issued by a corporate, limited partnership of limited liability company licensee or a holding company for investment purposes only unless the securities will be acquired and held in the ordinary course of business as an institutional investor and do not, directly or indirectly, allow the institutional investor to vote for the election of members of the board of directors, for the election of a general partner or the appointment of a manager, as the case may be, or to cause any change in the organic documents, management, policies or operations of the licensee or the holding company, or cause any other action which the commission finds to be inconsistent with investment purposes only. The following activities are not deemed to be inconsistent with holding securities for investment purposes only:

(a) Serving as a member of any committee of creditors or security holders in connection with debt restructuring;

(b) Nominating any candidate for election or appointment to a board of directors or the equivalent in connection with a debt restructuring;

(c) Making financial and other inquiries of management of the type normally made by securities analysts for informational purposes and not to cause a change in management, policies or operations; and

(d) Such other activities as the commission may determine to be consistent with such investment intent.

The Nevada Gaming Authorities may deny an application for licensing for any cause which they deem reasonable. A finding of suitability is comparable to licensing, and both require submission of detailed personal and financial information followed by a thorough investigation. An applicant for licensing or an applicant for a finding of suitability must pay or must cause to be paid all the costs of the investigation. Changes in licensed positions must be reported to the Nevada Gaming Authorities and, in addition to their authority to deny an application for a finding of suitability or licensing, the Nevada Gaming Authorities have the jurisdiction to disapprove a change in a corporate position.

If the Nevada Gaming Authorities were to find an equity or debt security holder, officer, director or key employee unsuitable for licensing or unsuitable to continue having a relationship with us, we would have to sever all relationships with that person. In addition, the Nevada Gaming Commission may require us to terminate the employment of any person who refuses to timely

~~thorough~~file ~~investigation~~appropriate applications. AnDeterminations ~~applicant for licensing or an applicant for a finding~~ of suitability ~~must pay~~ or ~~must~~questions ~~cause~~pertaining to be paid all the costs of the investigation. Changes in licensed positions must be reported to the Nevada Gaming Authorities and, in addition to their authority to deny an application for a finding of suitability or licensing, ~~the~~are ~~Nevada~~not ~~Gaming~~subject ~~Authorities have the jurisdiction~~ to ~~disapprove~~judicial areview ~~change~~ in ~~a corporate position~~Nevada.

Consequences of Violating Gaming Laws

If the Nevada Gaming Commission decides that we have violated the Nevada Gaming Control Act or any of its regulations, it could limit, condition, suspend or revoke our registrations and gaming licenses. In addition, we, and the persons involved, could be subject to substantial fines for each separate violation of the Nevada Gaming Control Act, or of the regulations of the Nevada Gaming Commission, at the discretion of the Nevada Gaming Commission. Further, the Nevada Gaming Commission could seek the appointment of a supervisor to conduct the operations of our casinos and, under specified circumstances, earnings generated during the supervisor’s appointment, except for the reasonable rental value of the premises, could be forfeited to the State of Nevada. Limitation, conditioning or suspension of any of our gaming licenses and the appointment of a supervisor could, and revocation of any gaming license would, have a significant negative effect on our gaming operations.

Review and Approval of Transactions

Substantially all material loans, leases, sales of securities and similar financing transactions by us and our subsidiaries must be reported to, or approved by, the Nevada Gaming Authorities.

Requirements for Equity Security Holders of Publicly Traded Entities

Regardless of the number of equity interests held, any beneficial holder of a registered company's voting or non-voting securities may be required to file an application, be investigated and have that person’s suitability as a beneficial holder of voting or non-voting securities determined if the Nevada Gaming Commission has reason to believe that the ownership would otherwise be inconsistent with the declared policies of the State of Nevada. If the beneficial holder of the voting or non-voting securities who must be found suitable is a corporation, partnership, limited partnership, limited liability company or trust, it must submit detailed business and financial information, including a list of its beneficial owners. The applicant must pay all costs of the investigation incurred by the Nevada Gaming Authorities in conducting any investigation.

The Nevada Gaming Control Act requires any person who acquires more than 5% of the voting securities of a registered company to report the acquisition to the Nevada Gaming Commission. The Nevada Gaming Control Act requires beneficial owners of more than 10% of a registered company’s voting securities to apply to the Nevada Gaming Commission for a finding of suitability within 30 days after the Chairman of the Nevada State Gaming Control Board mails the written notice requiring such filing. Under certain circumstances, an “institutional investor,” as defined in the Nevada Gaming Control Act, which acquires more than 10%, but not more than 25%, of the registered company’s voting securities may apply to the Nevada Gaming Commission for a waiver of a finding of suitability if the institutional investor holds the voting securities for investment purposes only. In certain circumstances, an institutional investor that has obtained a waiver can own up to 29% of a registered company’s voting securities if such additional ownership results from a stock repurchase program conducted by the publicly traded corporation and upon the condition that the institutional investor does not purchase or otherwise acquire any additional voting securities of the publicly traded corporation that would result in an increase in the institutional investor’s ownership percentage. An institutional investor will not be deemed to hold voting securities for investment purposes unless the voting securities were acquired and are held in the ordinary course of business as an institutional investor and not for the purpose of causing, directly or indirectly, the election of a majority of the members of the board of directors of the registered company, a change in the corporate charter, bylaws, management, policies or operations of the publicly traded registered company, or any of its gaming affiliates, or any other action which the Nevada Gaming Commission finds to be inconsistent with holding the registered company’s voting securities for investment purposes only. Activities which are not deemed to be inconsistent with holding voting securities for investment purposes only include:


•	voting on all matters voted on by stockholders or interest holders;


•	making financial and other inquiries of management of the type normally made by securities analysts for informational purposes and not to cause a change in its management, policies or operations; and


•	other activities that the Nevada Gaming Commission may determine to be consistent with such investment intent.

A registered company is required to maintain a current stock ledger in Nevada, which may be examined by the Nevada Gaming Authorities at any time. If any securities are held in trust by an agent or by a nominee, the record holder may be required to disclose the identity of the beneficial owner to the Nevada Gaming Authorities. A failure to make the disclosure may be grounds for finding the record holder unsuitable. We will be required to render maximum assistance in determining the identity of the beneficial owner of any of our voting securities. The Nevada Gaming Commission has the power to require the stock certificates of any registered company to bear a legend indicating that the securities are subject to the Nevada Gaming Control Act and certain restrictions imposed by applicable gaming laws. To date, this requirement has not been imposed on us.

of the beneficial owner of any of our voting securities. The Nevada Gaming Commission has the power to require the stock certificates of any registered company to bear a legend indicating that the securities are subject to the Nevada Gaming Control Act and certain restrictions imposed by applicable gaming laws. To date, this requirement has not been imposed on us.

Consequences of Being Found Unsuitable

Any person who fails or refuses to timely apply for a finding of suitability or a license within 30 days after being ordered to do so by the Nevada Gaming Commission or by the Chairman of the Nevada State Gaming Control Board, or who refuses or fails to pay the investigative costs incurred by the Nevada Gaming Authorities in connection with the investigation of its application, may be found unsuitable. The same restrictions apply to a record owner if the record owner, after request, fails to identify the beneficial owner. Any person found unsuitable and who holds, directly or indirectly, any beneficial ownership of any voting security or debt security of a registered company beyond the period of time as may be prescribed by the Nevada Gaming Commission may be guilty of a criminal offense. A registered company will be subject to disciplinary action if, after it receives notice that a person is unsuitable to hold an equity interest or to have any other relationship with, it:


•	pays that person any dividend or interest upon any voting securities;


•	allows that person to exercise, directly or indirectly, any voting right held by that person;


•	pays remuneration in any form to that person for services rendered or otherwise; or


•	fails to pursue all lawful efforts to require the unsuitable person to relinquish such person’s voting securities including, if necessary, the immediate purchase of the voting securities for cash at fair market value.

Requirements for Debt Security Holders

The Nevada Gaming Commission may, in its discretion, require the holder of any debt or similar security of a registered company to file an application, be investigated and be found suitable to own the debt or other security of the registered company if the Nevada Gaming Commission has reason to believe that such ownership would otherwise be inconsistent with the declared policies of the State of Nevada. If the Nevada Gaming Commission decides that a person is unsuitable to own the security, then under the Nevada Gaming Control Act, the registered company can be sanctioned, including the loss of its approvals if, without the prior approval of the Nevada Gaming Commission, it:


•	pays to the unsuitable person any dividend, interest or any distribution whatsoever;


•	recognizes any voting right by the unsuitable person in connection with the securities;


•	pays the unsuitable person remuneration in any form; or


•	makes any payment to the unsuitable person by way of principal, redemption, conversion, exchange, liquidation or similar transaction.

If the Nevada Gaming Authorities require that a person who is a holder or the beneficial owner of notes be licensed, qualified or found suitable under applicable gaming laws, such holder or beneficial owner, as the case may be, shall apply for a license, qualification or a finding of suitability within the required time period. If such person fails to apply or become licensed or qualified or is found unsuitable the Nevada Gaming Laws limit the rights of the holder as follows: (i) any person required to be licensed or found suitable and who is denied a license or found unsuitable shall not hold directly or indirectly the beneficial ownership of any voting security or debt security of a publicly traded corporation which is registered with the Commission beyond the time prescribed by the Commission; and (ii) shall not accept more for his interest than he paid for it or the market value on the date of the denial of the license or finding of unsuitability.

With respect to any other jurisdiction, if a holder of notes fails to apply or become licensed or qualified or is found unsuitable the holder shall comply with the laws of that jurisdiction governing such matters and the continued ownership of the notes and such regulatory orders as may be entered in conjunction therewith and pursuant thereto or, in the absence thereof, we shall have the right, at our option:


•	to require the holder to dispose of its notes or beneficial interest therein within 30 days of receiving notice of our selection or such earlier date as may be requested or prescribed by a gaming authority; or

•

to redeem the notes at a redemption price equal to the lesser of (1) the holder’s cost, plus accrued and unpaid interest, if any, to the earlier of the redemption date and the date of the finding of unsuitability or failure to comply or (2) 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the earlier of the redemption date and the date of the finding of unsuitability or failure to comply, which may be less than 30 days following the notice of redemption if so requested or prescribed by the gaming authority.

We will not be responsible for any costs or expenses incurred by any such holder or beneficial owner in connection with its application for a license, qualification or finding of suitability.

Approval of Public Offerings

Neither we nor any of our affiliates may make a public offering of our securities without the prior approval of the Nevada Gaming Commission if the proceeds from the offering are intended to be used to construct, acquire or finance gaming facilities in Nevada, or to retire or extend obligations incurred for those purposes or for similar transactions. Any approval that we might receive in the future relating to future offerings will not constitute a finding, recommendation or approval by any of the Nevada Gaming Control Board or the Nevada Gaming Commission as to the accuracy or adequacy of the offering memorandum or the investment merits of the securities. Any representation to the contrary is unlawful.

Approval of Changes in Control

A registered company must obtain prior approval of the Nevada Gaming Commission with respect to a change in control through:


•	merger;


•	consolidation;


•	stock or asset acquisitions;


•	management or consulting agreements; or


•	any act or conduct by a person by which the person obtains control of us.

Entities or persons seeking to acquire control of a registered company must satisfy the Nevada State Gaming Control Board and Nevada Gaming Commission with respect to a variety of stringent standards before assuming control of the registered company. The Nevada Gaming Commission may also require controlling stockholders, officers, directors and other persons having a material relationship or involvement with the entity proposing to acquire control to be investigated and licensed as part of the approval process relating to the transaction.

Approval of Defensive Tactics

The Nevada legislature has declared that some corporate acquisitions opposed by management, repurchases of voting securities and corporate defense tactics affecting Nevada gaming licensees or affecting registered companies that are affiliated with the operations permitted by Nevada gaming licensees may be harmful to stable and productive corporate gaming. The Nevada Gaming Commission has established a regulatory scheme to reduce the potentially adverse effects of these business practices upon Nevada’s gaming industry and to further Nevada’s policy to:


•	assure the financial stability of corporate gaming operators and their affiliates;


•	preserve the beneficial aspects of conducting business in the corporate form; and


•	promote a neutral environment for the orderly governance of corporate affairs.

Approvals may be required from the Nevada Gaming Commission before we can make exceptional repurchases of voting securities above their current market price and before a corporate acquisition opposed by management can be consummated. The Nevada Gaming Control Act also requires prior approval of a plan of recapitalization proposed by a registered company’s board of directors in response to a tender offer made directly to its stockholders for the purpose of acquiring control.

Fees and Taxes

License fees and taxes, computed in various ways depending on the type of gaming or activity involved, are payable to the State of Nevada and to the counties and cities in which the licensed subsidiaries respective operations are conducted. Depending upon the particular fee or tax involved, these fees and taxes are payable monthly, quarterly or annually and are based upon:


•	a percentage of gross revenues received;


•	the number of gaming devices operated; or


•	the number of table games operated.

A live entertainment tax is also paid by casino operations where entertainment is furnished in connection with an admission charge and the selling or serving of food, refreshments or merchandise. Our casinos are also subject to a state payroll tax based on the wages paid to their employees.

Foreign Gaming Investigations

Any person who is licensed, required to be licensed, registered, required to be registered, or is under common control with those persons, which we refer to as licensees, and who proposes to become involved in a gaming venture outside of Nevada, is required to deposit with the Nevada State Gaming Control Board, and thereafter maintain, a revolving fund in the amount of $10,000 to pay the expenses of investigation by the Nevada State Gaming Control Board of the licensee’s or registrant’s participation in such foreign gaming. The revolving fund is subject to increase or decrease in the discretion of the Nevada Gaming Commission. Licensees and registrants are required to comply with the reporting requirements imposed by the Nevada Gaming Control Act. A licensee or registrant is also subject to disciplinary action by the Nevada Gaming Commission if it:


•	knowingly violates any laws of the foreign jurisdiction pertaining to the foreign gaming operation;


•	fails to conduct the foreign gaming operation in accordance with the standards of honesty and integrity required of Nevada gaming operations;


•	engages in any activity or enters into any association that is unsuitable because it poses an unreasonable threat to the control of gaming in Nevada, reflects or tends to reflect, discredit or disrepute upon the State of Nevada or gaming in Nevada, or is contrary to the gaming policies of Nevada;


•	engages in activities or enters into associations that are harmful to the State of Nevada or its ability to collect gaming taxes and fees; or


•	employs, contracts with or associates with a person in the foreign operation who has been denied a license or finding of suitability in Nevada on the ground of unsuitability.

Local License for Conduct of Gaming and Sale of Alcoholic Beverages

The conduct of gaming activities and the service and sale of alcoholic beverages by our casinos are subject to licensing, control and regulation by the Clark County Liquor and Gaming Licensing Board and the City of Las Vegas. In addition to approving our casinos, the Clark County Liquor and Gaming License Board and the City of Las Vegas have the authority to approve all persons owning or controlling the equity of an entity which holds or controls an entity which holds a gaming license. All licenses are revocable and are not transferable. The county and city agencies have full power to limit, condition, suspend or revoke any license. Any disciplinary action could, and revocation would, have a substantial negative impact upon our operations.

Environmental Matters

Employees

At December 31, ~~2014~~2015, we had approximately 4,300 employees, of which approximately 1,600 were covered by various collective bargaining agreements providing, generally, for basic pay rates, working hours, other conditions of employment, and orderly settlement of labor disputes. We historically have had good relationships with the unions representing our employees and believe that our employee relations are good. At the Stratosphere, our collective bargaining agreement with the Professional, Clerical and Miscellaneous Employees, Teamsters Local Union 986 (995 merged with 986 in 2014 ) ~~expired~~expires on March 31, ~~2013, and was renewed by both parties until March 31,~~ 2018. The collective bargaining agreement at the Stratosphere with the Culinary Workers Union, Local 226 and Bartenders Union, Local 165 ~~expired~~expires on May 31, ~~2012 and was renewed by both parties until May 31,~~ 2018. The contract with the International Union of Operating Engineers, Local 501, AFL-CIO expired on October 14, 2014, however the agreement is considered extended indefinitely unless we are notified in writing. We have not been notified in writing. At the Aquarius, the collective bargaining agreement with the International Union of Operating Engineers, Local 501, AFL-CIO expired on March 31, 2012 and was ~~renewed~~canceled by the ~~parties~~union ~~until~~effective ~~March~~December 31, 2016. The agreement at the Aquarius with the International Alliance of Theatrical Stage Employees, Moving Picture Technicians, Artist and Allied Crafts of the United States, Its Territories and Canada, Local 720, Las Vegas, Nevada expired on November 30, 2012 and was extended by the parties until November 30, 2017. The collective bargaining agreement at the Aquarius with the United Steelworkers of America expired on April 1, ~~2013,~~ 2015, however, ~~the~~negotiations ~~agreement is considered extended indefinitely unless we are notified in writing~~continue. ~~We have not been notified in writing. The agreement with the Security, Police, and Fire Professional of America expired February 28, 2012, was renewed by both parties until February 28, 2017.~~

At the Aquarius, the collective bargaining agreement with the International Union of Operating Engineers, Local 501, AFL-CIO expires on March 31, 2016. The agreement at the Aquarius with the International Alliance of Theatrical Stage Employees, Moving Picture Technicians, Artist and Allied Crafts of the United States, Its Territories and Canada, Local 720, Las Vegas, Nevada expires on November 30, 2017. The collective bargaining agreement at the Aquarius with the United Steelworkers of America expired on April 1, 2013, however, the agreement is considered extended indefinitely unless we are notified in writing. We have not been notified in writing. The agreement with the Security, Police, and Fire Professional of America expires on February 28, 2017.

We do not expect any work stoppages or slowdowns.

Available Information

We file annual and quarterly reports and other information with the Securities and Exchange Commission. You may read and copy any document that we file at the Securities and Exchange Commission’s Public Reference Room at 100 F Street, NE, Washington, D.C., 20549. Please call 1-800-SEC-0330 for further information on the operation of the Public Reference Room. Reports and other information regarding issuers, including us, that file electronically with the Securities and Exchange Commission are also available to the public from the Securities and Exchange Commission’s Web site at http://www.sec.gov. You may also refer to the American Casino & Entertainment Properties LLC website, www.acepllc.com.

Item 1A. RISK FACTORS

The future is uncertain and our history may not be an indicator of our future performance. In the future, we may be unable to generate sufficient cash flows to meet our debt obligations and finance all operating expenses, working capital needs and capital expenditures.

Although we generated operating income of $3347.45 million and $3033.04 million for the years ended December 31, ~~2014~~2015 and December 31, ~~2013~~2014, respectively, we may experience reduced operating income or incur operating losses in the future. We may be unable to generate sufficient revenues and cash flows to service our debt obligations as they come due, finance capital expenditures and meet our operational needs. Any one of these failures may preclude us from, among other things:


•	maintaining or enhancing our properties;


•	taking advantage of future opportunities;


•	growing our business; or


•	responding to competitive pressures.

Further, our failure to generate sufficient revenues and cash flows could lead to cash flow and working capital constraints, which may require us to seek additional working capital. We may not be able to obtain such working capital when it is required. Further, even if we were able to obtain additional working capital, it may only be available on unfavorable terms. For example, we may be required to take on additional debt, and servicing the payments on such debt which could adversely affect our results of operations and financial condition. Limited liquidity and working capital may also restrict our ability to maintain and update our casino properties, which could put us at a competitive disadvantage to casinos offering more modern and better maintained facilities.

Our business is particularly sensitive to reductions in discretionary consumer spending as a result of downturns in the economy.

Consumer demand for entertainment and other amenities at casino hotel properties, such as ours, is particularly sensitive to reductions in discretionary spending on leisure activities, including as a result of downturns in the economy. Changes in discretionary consumer spending or consumer preferences brought about by factors such as perceived or actual general economic conditions, effects of a decline in consumer confidence in the economy, unemployment, disruptions in the credit markets, the impact of high energy and food costs, the increased cost of travel, decreased disposable consumer income and wealth, or fears of war or acts of terrorism can reduce customer demand for the amenities that we offer, thus imposing practical limits on pricing and negatively impacting our results of operations and financial condition.

The economic recession that occurred in the United States from 2008 – 2009 significantly affected our business and continues to affect our business and the markets in which we operate. We reduced room rates and engaged in promotional activities to try to attract customers. The combination of fewer customers, less spending by customers, and need for promotional incentives reduced revenue and operating margins. At the same time, we found it difficult to reduce operating costs in line with reductions in visitor numbers or customer spending, further reducing operating margins. Although operating margins have since stabilized, there can be no assurance that these circumstances will not reoccur. As a result of the recession, tourism and the residential and commercial real estate markets in and around Las Vegas experienced a significant decline and construction spending in the Las Vegas area (which has historically been an important driver for the local economy) significantly decreased. The amount of spending by visitors to casinos in Las Vegas has not fully recovered from the 2008-2009 recession. For example, gaming revenue in Clark County, Nevada, where all of our properties are located, was approximately $9.6 billion in ~~2014~~2015, which is 12.1% below the peak of approximately $10.9 billion in 2007. Since our business model relies on consumer expenditures on entertainment, luxury and other discretionary items, continuation or deepening of the economic downturn will further adversely affect our results of operations and financial condition.

Our properties draw a substantial number of customers from the Las Vegas Valley, as well as certain geographic areas, including southern California and Arizona. Adverse economic conditions in any of these regions could result in a decrease in the number of customers traveling from those areas to our properties.

Because all four of our gaming properties are concentrated in a relatively small area in Nevada, we are especially subject to certain risks, including economic and competitive risks, associated with the conditions in that area and in the areas from which we draw customers.

Three of our gaming properties are located in Las Vegas, Nevada, and one of them in Laughlin, Nevada, approximately 90 miles from Las Vegas. Because our operations are concentrated in a relatively small area, we are subject to greater risks from local conditions than a gaming company with operating properties in several different markets. A decrease in revenues from or increase in costs for one of these locations is likely to have a proportionally higher impact on our business and operations than it would for a gaming company with more geographically diverse operating properties. Risks from local conditions include the following:


•	local economic conditions, including the economic downturn in the Las Vegas metropolitan area discussed in “ Our business is particularly sensitive to reductions in discretionary consumer spending, including as a result of downturns in the economy;”


•	local competitive conditions;


•	reduced land and air travel due to increasing fuel costs, reduced flights into Las Vegas, or transportation disruptions;


•	inaccessibility of the area due to inclement weather, road construction or closure of primary access routes; and


•	a decline in the number of visitors to Las Vegas and Laughlin, Nevada.

Local Competitive Risks. InWe ~~addition to the risks described under “If we are unable to compete effectively against our competitors, our business will suffer”, we~~ face significant risks due to local competition in the markets in which we operate and the markets from which we draw our customers. We do not believe that our competition is limited to a particular geographic area, and gaming operations in other states or countries could attract our customers. To the extent that new casinos or hotel room capacity is expanded by others in major destination locations, competition will increase. As a result of the increase in product available to our potential customers and the continuing effects of the recession that occurred in 2008 – 2009, we are competing for a smaller number of potential customers with fewer dollars to spend with a larger number of competitors. Arizona Charlie’s Decatur, Arizona Charlie’s Boulder and the Aquarius largely cater to the local markets and depend on the local markets for customers. Competition for local customers has historically been intense, and is particularly intense in the eastern Las Vegas locals market, where Arizona Charlie’s Boulder is located. Local competitive risks and our failure to attract a sufficient number of guests, gaming customers and other visitors in these locations could adversely affect our business.

Transportation-Related Risks. The majority of our customers at the Stratosphere travel by air or car to Las Vegas. Increasing transportation costs, for example, caused by increased fuel costs, may deter people from traveling to our properties from long distances or decrease the amount of money they have available to spend once there. Further, leisure and business travel, especially travel by air, remain particularly susceptible to global geopolitical events. We cannot control the number or frequency of flights into or out of Las Vegas, but we rely on air traffic for a significant portion of our visitors. Reductions in flights by major airlines can impact the number of visitors to our properties.

Additionally, there is one principal interstate highway between Las Vegas and southern California, where a large number of our customers reside. Capacity constraints of that highway or any other traffic disruptions may also affect the number of customers who visit our properties.

Weather and Public Health Risks. Due to our concentration of properties in Nevada, any man-made or natural disasters in or around Nevada, or the areas from which we draw customers to our properties, could have a significant adverse effect on our business, financial condition and results of operations. The outbreak of public health threats at any of our properties, or in the areas in which they are located, or the perception that such threats exist could also have a significant, adverse effect on our business, financial condition and results of operations.

IfOur wesuccess ~~are~~depends ~~unable~~in topart ~~compete~~on ~~effectively~~our ~~against~~ability ~~our~~to ~~competitors~~acquire, ~~our~~enhance, ~~business~~and/or ~~will~~introduce ~~suffer~~successful gaming concepts and game content.

~~The~~Our ~~gaming~~casinos ~~industry~~are isheavily ~~highly~~dependent ~~competitive~~on ~~and~~revenue ~~our~~generated ~~competitors~~by ~~vary~~the ~~considerably~~games, inparticularly ~~size~~slot machines, ~~quality~~we ofoffer ~~facilities,~~to ~~number~~our ofcustomers. ~~operations~~We source games and game content through third-party suppliers. We believe that creative and appealing game content, ~~brand~~innovative ~~identities~~game concepts, ~~marketing~~and licensed brands produces more revenue for our casinos and ~~growth~~provides ~~strategies~~them with a competitive advantage, ~~financial~~which ~~strength~~in turn enhances our revenue and ~~capabilities,~~our ~~level~~ability ofto ~~amenities,~~attract ~~management~~new ~~talent~~business and ~~geographic~~to ~~diversity~~retain existing business. WeThere ~~also~~can ~~compete~~be ~~with~~no ~~other~~assurance ~~non-gaming~~that ~~resorts~~we will be able to sustain the acceptance of our existing game content or effectively obtain from third parties game content or licensed brands that will be widely accepted by our customers. There can be no assurance that our third party suppliers will be able to produce new creative and ~~vacation~~appealing ~~areas~~game content, innovative game concepts, and ~~with~~licensed ~~various~~brands ~~other~~in ~~entertainment~~the ~~businesses~~future that will be widely accepted by our customers.

Our ~~competitors~~hotels inand ~~each~~casinos ~~market that we participate in~~ may ~~have~~need ~~substantially~~to ~~greater~~increase ~~financial,~~capital ~~selling~~expenditures ~~and marketing, technical and other resources than we do. Many of our competitors have reduced room rates and increased their promotional activities. We cannot assure you that we will be able~~ to compete effectively inbut ~~our~~we ~~markets~~may ornot ~~that~~execute wethose ~~will~~plans bein ~~capable~~a oftimely ~~maintaining~~manner or ~~further~~have ~~increasing~~sufficient ~~our~~funds ~~current market share. Our failure~~ to ~~compete~~do ~~successfully in our markets could adversely affect our business, financial condition, results of operations and cash flow~~so.

InCapital ~~recent years~~expenditures, such as ~~casino~~room ~~operators~~refurbishments, ~~have~~amenity ~~completed~~upgrades and new ~~expansion~~gaming ~~projects~~equipment, ~~supply~~may ~~has~~be ~~typically~~necessary ~~grown~~from attime ato ~~faster~~time ~~pace~~to ~~than~~preserve ~~demand~~the incompetitiveness ~~some~~of ~~markets, including Las Vegas,~~ our ~~largest~~hotels ~~market,~~ and ~~competition has increased significantly~~casinos. The ~~expansion~~gaming ofindustry ~~existing~~market ~~casino~~is ~~entertainment~~very ~~properties,~~competitive ~~the increase in the number of properties~~ and ~~the~~is ~~aggressive~~expected ~~marketing~~to ~~strategies~~continue ofto ~~many~~be ofcompetitive ~~our competitors have increased competition~~ in the ~~markets~~future. inIf ~~which~~cash wefrom ~~operate,~~operations ~~and this intense competition~~ is ~~expected~~insufficient to ~~continue.~~provide Infor ~~addition,~~needed alevels ~~number~~ of ~~operators~~capital ~~have~~expenditures ~~constructed~~and ~~facilities~~we ~~that~~are ~~target~~unable ~~similar~~to ~~customer~~raise ~~bases,~~funds ~~which~~for ~~has~~such ~~particularly~~purposes ~~affected the Arizona Charlie’s properties. In response to this competition~~elsewhere, we ~~engage~~may inbe ~~promotional~~unable ~~activities~~to ~~that~~make ~~reduce~~necessary ~~revenue~~improvements and ~~operating~~our ~~margins~~facilities tomay ~~try~~be toless ~~attract~~attractive ~~customers.~~to ~~This~~our ~~increased~~visitors ~~competition~~than ~~has~~that ~~negatively~~of ~~affected~~ our ~~operations~~competitors, ~~particularly~~causing atus ~~Arizona Charlie’s Boulder, and may continue~~ to ~~negatively~~lose ~~affect~~ our ~~operations~~competitive position.

AnWe ~~increase~~rely inon ~~operating~~information ~~costs~~technology ~~for~~systems ~~our~~and ~~gaming~~any ~~properties~~failures in our systems could ~~have~~disrupt aour ~~negative~~business ~~impact~~and onadversely impact our ~~business~~results.

~~The~~We ~~operating~~rely ~~expenses~~on ~~associated~~information ~~with~~technology systems that are important to the operation of our ~~gaming~~business, ~~properties~~some of which are managed by third parties. These systems are used to process, transmit and store electronic information, to manage and support our business operations and to maintain internal controls over our financial reporting. We could ~~increase~~encounter difficulties in developing new systems, maintaining and upgrading current systems and preventing security breaches. Among other things, our systems are susceptible to outages due to fire, ~~among~~floods, power loss, break-ins, cyber-attacks, network penetration, denial of service attacks, and similar events. While we have and will continue to implement network security measures and data protection safeguards, our servers and other ~~reasons~~computer systems are vulnerable to viruses, ~~the~~malicious ~~following~~software, ~~factors:~~hacking, break-ins or theft, data privacy or security breaches, third-party security breaches, employee error or malfeasance, and similar events. Failures in our systems or services or unauthorized access to or tampering with our systems and databases, could have a material adverse effect on our business, reputation, financial condition, liquidity or results of operations. Any failures in our computer systems or telecommunications services could affect our ability to operate our linked games or otherwise conduct business.

•Portions ~~changes~~of our information technology infrastructure also may experience interruptions, delays or cessations of service or produce errors in ~~the~~connection ~~regulatory~~with ~~environment~~systems integration or migration work that takes place from time to time. We may not be successful in implementing new systems and transitioning data, which ~~impose~~could ~~additional~~be ~~restrictions~~more expensive, time consuming, disruptive and resource-intensive than existing systems or ~~increase~~cause business disruptions. Such disruptions could materially and adversely impact our ~~operating~~ability ~~costs;~~to provide services to customers and interrupt other processes. If our information systems do not allow us to transmit accurate information, even for a short period of time, to key decision makers, the ability to manage our business could be disrupted and the results of operations and financial condition could be materially and adversely affected. Failure to properly or adequately address these issues could impact our ability to perform necessary business operations, which could materially and adversely affect our reputation, competitive position, business, results of operations and financial condition.

•Conditions ~~our~~in ~~properties~~the ~~use~~financial ~~significant~~system ~~amounts~~and ofthe ~~electricity,~~capital ~~natural~~and ~~gas~~credit ~~and~~markets ~~other~~may ~~forms~~negatively ofaffect ~~energy~~our ability to raise capital to fund capital expenditures, ~~and~~pursue ~~energy~~proposed ~~price~~management, ~~increases~~expansion ~~may~~or ~~adversely~~acquisition ~~affect~~opportunities or refinance our ~~cost~~significant ~~structure;~~indebtedness.

•Our businesses are capital intensive. For our casino properties ~~use~~to remain attractive and competitive we must periodically invest significant ~~amounts~~capital to keep the properties well-maintained, modernized and refurbished. Similarly, future construction projects and acquisitions of ~~water~~other gaming operations could require significant additional capital. We rely on earnings and acash ~~water~~flow ~~shortage~~from ~~may~~operations ~~adversely~~to ~~affect~~finance our business, capital expenditures, development, expansion and acquisitions and, to the extent that we cannot fund such expenditures from cash generated by operations;, funds must be borrowed or otherwise obtained.

• an increase in the cost of health care benefits for our employees could have a negative impact on our profitability;

• as of December 31, 2014, approximately 37% of our employees were members of various unions and covered by union-sponsored collective bargaining agreements and we may incur higher costs or work slow-downs or stoppages due to union activities (See the Risk Factor “Work stoppages, labor problems, and unexpected shutdowns…” discussed below);

• our reliance on slot play revenues and the concentration of relatively few slot machine vendors could impose additional costs on us;

• as our properties age, we may need to increase our expenditures for repairs, maintenance, and to replace equipment necessary to operate our business in amounts greater than what we have budgeted; and

• aggressive marketing and promotional campaigns by our competitors for an extended period of time could force us to increase our expenditures for marketing and promotional campaigns in order to maintain our existing customer base and attract new customers.

If our operating expenses increase without any off-setting increase in our revenues, our profitability is likely to suffer.

~~Work~~The ~~stoppages~~financial markets in the United States and internationally have been marked by volatility, ~~labor~~which ~~problems~~has at times reduced the availability and, ~~unexpected~~in ~~shutdowns~~particular, ~~may~~increased ~~limit~~the cost of financing for issuers like us with a rating below investment grade. Although we have refinanced our ~~operational~~debt, ~~flexibility~~lowered our interest rate, and ~~negatively~~extended ~~impact~~the ~~our~~maturity, we cannot predict the availability of financing with any certainty or how we will be impacted in the future. ~~profits~~There can be no assurance that we will be able to secure financing in the future at all or at a cost comparable to or lower than what is available in the current credit markets or on favorable terms.

~~Approximately~~Our ~~1,600 of~~ability ~~our~~to ~~4,300 employees~~effectively ~~are~~operate ~~covered~~and bygrow ~~collective bargaining agreements. Any work stoppage at one or more of~~ our ~~casino~~business ~~properties~~may ~~could~~be ~~require~~constrained usif towe ~~expend~~are ~~significant~~unable ~~funds~~ to ~~hire~~borrow ~~replacement~~additional ~~workers,~~capital ~~and~~or ~~qualified~~refinance ~~replacement~~existing ~~labor~~borrowings ~~may~~on ~~not be available at~~ reasonable ~~costs,~~terms. ifIf atwe ~~all.~~do ~~Strikes~~not ~~and~~have ~~work~~access ~~stoppages~~to ~~could~~credit ~~also~~or ~~result~~capital inmarkets ~~adverse~~at ~~media~~desirable ~~attention~~times or ~~otherwise~~at ~~discourage~~rates ~~customers~~that ~~from~~we ~~visiting~~would ~~our~~consider ~~casino properties. As a result~~acceptable, aand ~~strike~~the orlack ~~other work stoppage at one~~ of ~~our~~such ~~casino~~funding ~~properties~~ could have ana material adverse effect on ~~the~~our business, results of ~~our~~operations ~~casino properties~~ and ~~our~~ financial condition and ~~results~~our ofability ~~operations~~to service our indebtedness.

At Our ~~the~~operations ~~Stratosphere,~~may ~~our~~be ~~collective~~adversely ~~bargaining~~impacted ~~agreement with the Professional, Clerical and Miscellaneous Employees, Teamsters Local Union 986 (995 merged with 986 in 2014 ) expired on March 31, 2013, and was renewed~~ by ~~both~~expanded ~~parties~~Native ~~until March 31~~American, ~~2018. The collective bargaining agreement at the Stratosphere with the Culinary Workers Union~~internet, ~~Local 226 and Bartenders Union~~mobile, ~~Local 165 expired on May 31, 2012~~ and ~~was~~other ~~renewed~~gaming byoperations ~~both~~if ~~parties~~they ~~until~~attract ~~May~~customers ~~31,~~that ~~2018.~~otherwise ~~The~~would ~~contract~~visit ~~with~~our ~~the International Union of Operating Engineers, Local 501, AFL-CIO expired on October 14, 2014, however the agreement is considered extended indefinitely unless we are notified in writing~~properties. ~~We have not been notified in writing.~~

AtThe ~~the~~expansion ~~Aquarius,~~of ~~the~~Native ~~collective~~American ~~bargaining~~and ~~agreement~~other ~~with~~casinos ~~the~~outside ~~International Union~~ of ~~Operating~~the ~~Engineers,~~markets ~~Local~~in ~~501,~~which ~~AFL-CIO~~our ~~expired~~casinos onare ~~March 31~~located, ~~2012~~particularly ~~and~~Native ~~was~~American ~~renewed~~casinos bylocated ~~the~~in ~~parties until March 31~~California, ~~2016. The~~continues ~~agreement~~to athave ~~the~~an ~~Aquarius~~impact ~~with~~on ~~the~~casino ~~International~~revenues ~~Alliance~~in ofNevada. ~~Theatrical~~For ~~Stage~~instance, ~~Employees~~in California, ~~Moving~~some ~~Picture~~Native ~~Technicians,~~American ~~Artist~~casino ~~and~~compacts ~~Allied~~do ~~Crafts~~not oflimit the ~~United~~number ~~States,~~of ~~Its~~slot ~~Territories~~machines ~~and~~at ~~Canada,~~those ~~Local~~casinos ~~720,~~(which ~~Las~~were ~~Vegas,~~limited ~~Nevada~~under ~~expired~~prior oncompacts). ~~November 30~~Additionally, ~~2012~~the federal government and ~~was~~various ~~extended~~states byare ~~the~~currently ~~parties~~considering ~~until~~legislation ~~November~~authorizing ~~30,~~internet ~~2017~~gaming. ~~The~~While ~~collective bargaining agreement at~~ the ~~Aquarius~~effect ~~with~~of ~~the~~increased ~~United~~casino ~~Steelworkers~~gaming ofin ~~America~~California ~~expired~~and onother ~~April 1, 2013,~~states ~~however,~~and the ~~agreement~~potential iswidespread ~~considered~~availability ~~extended~~of ~~indefinitely~~legal ~~unless~~internet wegaming ~~are~~is ~~notified~~difficult into ~~writing. We~~predict, ~~have~~our ~~not~~revenues ~~been~~could ~~notified~~decline inif ~~writing.~~such ~~The~~competing ~~agreement~~gaming ~~with~~operations ~~the~~attract ~~Security,~~customers ~~Police,~~who ~~and~~would ~~Fire~~otherwise ~~Professional~~travel ofto ~~America~~Las ~~expired~~Vegas ~~February~~or ~~28,~~Laughlin ~~2012,~~or ~~was~~otherwise ~~renewed~~use byour ~~both~~facilities, ~~parties~~and ~~until~~such ~~February~~impact ~~28,~~may ~~2017~~be significant.

We dohave ~~not~~significant ~~expect~~working ~~any~~capital ~~work~~needs, ~~stoppages~~and orif ~~slowdowns.~~we ~~Any~~are ~~unexpected~~unable ~~shutdown~~to ofsatisfy ~~one~~those ofneeds ~~our~~from ~~casino~~cash ~~properties~~generated ~~could~~from ~~have an adverse effect on the business of~~ our ~~casino properties and our results of~~ operations. ~~There~~or ~~can~~indebtedness, ~~be no assurance that~~ we ~~will~~may not be ~~adequately~~able ~~prepared~~to ~~for~~meet ~~unexpected~~our ~~events~~obligations, including ~~political~~payroll orand ~~regulatory~~statutory ~~actions,~~tax ~~which~~payment ~~may lead to a temporary or permanent shutdown of any of our casino properties~~requirements.

We require significant amounts of working capital to operate our business. Our primary source of cash is from the operation of our properties. If we experience a significant and sustained drop in operating profits, or if there are unanticipated reductions in cash inflows or increases in cash outlays, we may be subject to cash shortfalls. If such a shortfall were to occur for even a brief period of time, it may have a significant adverse effect on our business and our ability to meet our obligation to make payments on the 2015 Term Loans.

Acts of terrorism and war and natural disasters may negatively impact our business.

Terrorist attacks and other acts of war or hostility have created many economic and political uncertainties. We cannot predict the extent to which terrorism, security alerts or war or hostilities throughout the world will continue to directly or indirectly impact our business and operating results. For example, the terrorist attacks that occurred on September 11, 2001 had a negative impact on travel and leisure expenditures at our properties and on the industry as a whole. As a consequence of the threat of terrorist attacks and other acts of war or hostility in the future, premiums for a variety of insurance products have increased, and some types of insurance are no longer available. Given current conditions in the global insurance markets, we are substantially uninsured for losses and interruptions caused by terrorist acts and acts of war. If any such event were to affect our properties, we would likely be adversely impacted.

Extreme weather conditions or earthquakes may interrupt our operations, damage our properties, and reduce the number of customers who visit our facilities in such areas. Although we maintain both property and business interruption insurance coverage for certain extreme weather conditions or earthquakes, such coverage is subject to deductibles and limits on maximum benefits, including limitation on the coverage period for business interruption, and we cannot assure you that we will be able to fully insure such losses or fully collect, if at all, on claims resulting from such extreme weather conditions or earthquakes. Furthermore, such extreme weather conditions may interrupt or impede access to our affected properties and may cause visits to our affected properties to decrease for an indefinite period.

Changes in tax laws could increase our cost of doing business and negatively affect our business.

The gaming industry represents a significant source of tax revenue, particularly to the State of Nevada and its counties and municipalities. Nevada Gaming companies are currently subject to significant state and local taxes and fees in addition to normal federal and state corporate income taxes, and such taxes and fees are subject to increase at any time. From time to time, various state and federal legislators and officials have proposed changes in tax law, or in the administration of such law, affecting the gaming industry. The Regular Session of the Nevada Legislature (‘‘Nevada Legislature’’) convenes every two years. From time to time, there have been gaming revenue tax increase proposals in Nevada. The Nevada Legislature also approved an increase from 01.6317% to 1.17475% in the Modified Business Tax that is charged against employee wages, which has increased our labor costs. During the 2013 Nevada Legislature session, legislators considered a 2% Gross Margins Tax on businesses operating in Nevada. The initiative was included on the 2014 general election ballot and was defeated. The ~~2014~~2015 Nevada Legislature ispassed ~~proposing~~ a budget plan that includes ~~$1.1 billion in~~ new and extended taxes. This budget includes increasing the business license fee on certain companies based on their revenues. IfGaming ~~passed, gaming~~ companies will be required to pay the business license fee based on non-gaming revenues. The Nevada Constitution prohibits both personal and corporate state income taxes. We cannot assure you that our taxes or fees will not be increased. These taxes could have an adverse impact upon our business, financial condition and results of operations because of increased costs to us or our customers.

The federal government has also previously considered a federal tax on gaming revenues and may consider such a tax in the future. Decreases in tax revenues resulting from the economic downturn may increase pressure on federal, state or local authorities to increase taxes. If there is any material increase in federal, state or local taxes and fees, our business, financial condition and results of operations could be adversely affected because of increased costs to us or our customers.

Our business is subject to extensive governmental gaming regulation, which is costly to comply with, and failure to do so could cause us to incur penalties or force us to cease operations.

We are subject to a variety of regulations in the jurisdictions in which we operate, including the extensive gaming laws and regulations of the State of Nevada. Compliance with these regulations is costly and time-consuming. Regulatory authorities at the federal, state and local levels have broad powers with respect to the regulation and licensing of casino operations and may revoke, suspend, condition or limit our gaming or other licenses, impose substantial fines on us and take other actions, any one of which would have a significant adverse effect on our business, financial condition and results of operations.

If additional gaming regulations are adopted in a jurisdiction in which we operate, such regulations could impose restrictions on us that would prevent us from operating our business as it is currently operated, or the increased costs associated with compliance with such regulations could lower our profitability. From time to time, various proposals are introduced in the legislatures of the jurisdictions in which we have operations that, if enacted, could adversely affect the tax, regulatory, operational or other aspects of the gaming industry and our company. Legislation of this type may be enacted in the future.

Our members, managers, directors, officers and key employees must also be approved by certain state regulatory authorities. If state regulatory authorities were to find a person occupying any such position unsuitable, we would be required to sever our relationship with that person. We may thereby lose key personnel which would have a negative effect on our operations. Certain public and private issuances of securities and certain other transactions by us also require the approval of certain state regulatory authorities. Further, our gaming regulators can require us to disassociate ourselves from suppliers or business partners found unsuitable by the regulators. For a summary of some of the significant gaming regulations that affect our business, see ‘‘Regulation and Licensing.” The regulatory environment in any particular jurisdiction may change in the future and any such change could have a material adverse effect on our results of operations. In addition, we are subject to various gaming taxes, which are subject to increase at any time.

Our business is subject to various federal, state and local laws and regulations in addition to gaming regulations. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages, environmental matters, employees, currency transactions, taxation, zoning and building codes, and marketing and advertising. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. Material changes, new laws or regulations, or material differences in interpretations by courts or governmental authorities could adversely affect our operations.

If we lose one or more licenses used in our business or our operations or are otherwise restrained by law or regulation, we may be unable to continue our operations as they are conducted today, or may be forced to cease operations.

We have significant working capital needs, and if we are unable to satisfy those needs from cash generated from our operations or indebtedness, we may not be able to meet our obligations, including payroll and statutory tax payment requirements.

Our hotels and casinos may need to increase capital expenditures to compete effectively but we may not have sufficient funds to do so.

Capital expenditures, such as room refurbishments, amenity upgrades and new gaming equipment, may be necessary from time to time to preserve the competitiveness of our hotels and casinos. The gaming industry market is very competitive and is expected to continue to be competitive in the future. If cash from operations is insufficient to provide for needed levels of capital expenditures and we are unable to raise funds for such purposes elsewhere, we may be unable to make necessary improvements and our facilities may be less attractive to our visitors than that of our competitors, causing us to lose our competitive position.

~~Conditions~~Any inviolation ~~the~~of ~~financial~~applicable ~~system~~Anti-Money ~~and~~Laundering ~~the~~laws ~~capital~~or ~~and~~regulations ~~credit~~or ~~markets~~the ~~may~~Foreign ~~negatively~~Corrupt ~~affect~~Practices ~~our~~Act ~~ability~~could toadversely ~~raise~~affect ~~capital~~our tobusiness, ~~fund~~performance, ~~capital~~prospects, ~~expenditures~~value, ~~pursue~~financial ~~proposed management~~condition, ~~expansion~~and orresults ~~acquisition~~of ~~opportunities or refinance our significant indebtedness~~operations.

~~Our~~We ~~businesses~~handle ~~are~~significant ~~capital~~amounts ~~intensive.~~of ~~For~~cash in our ~~casino~~operations ~~properties~~and are subject to ~~remain~~various ~~attractive~~reporting and ~~competitive~~anti-money welaundering ~~must~~laws ~~periodically~~and ~~invest~~regulations. ~~significant~~Recently, ~~capital~~U.S. togovernmental ~~keep~~authorities ~~the~~have ~~properties~~evidenced ~~well-maintained,~~an ~~modernized~~increased ~~and~~focus ~~refurbished.~~on ~~Similarly,~~compliance ~~future~~with ~~construction~~anti-money ~~projects~~laundering laws and ~~acquisitions~~regulations ofin ~~other~~the gaming ~~operations~~industry. ~~could~~Any ~~require~~violation ~~significant~~of ~~additional~~anti-money ~~capital.~~laundering Welaws ~~rely~~or onregulations ~~earnings~~could ~~and~~adversely ~~cash~~affect ~~flow~~our ~~from~~business, ~~operations~~results toof ~~finance~~operations ~~our~~and ~~business,~~financial ~~capital~~condition. ~~expenditures,~~We ~~development,~~have ~~expansion~~implemented ~~and~~internal ~~acquisitions~~control ~~and~~policies, toemployee ~~the~~training ~~extent~~and ~~that~~compliance weprograms ~~cannot~~designed ~~fund~~to ~~such~~deter ~~expenditures~~prohibited ~~from~~practices ~~cash~~and ~~generated~~have bynot ~~operations,~~been ~~funds~~subject ~~must~~to beany ~~borrowed~~investigation or ~~otherwise~~notified ~~obtained~~of any violation.

~~The~~Internal ~~financial~~control ~~markets~~policies inand ~~the~~procedures ~~United~~and ~~States~~employee training and ~~internationally~~compliance ~~have~~programs ~~been~~that ~~marked~~we byhave ~~volatility,~~implemented ~~which~~to ~~has~~deter atprohibited ~~times~~practices ~~reduced~~may ~~the~~not ~~availability~~be ~~and,~~effective in ~~particular,~~prohibiting ~~increased~~our ~~the~~employees, ~~cost~~contractors ofor ~~financing~~agents ~~for~~from ~~issuers~~violating ~~like~~or uscircumventing ~~with~~our apolicies ~~rating~~and ~~below~~the ~~investment grade~~law. ~~Although~~If we ~~have~~or ~~refinanced~~ our ~~debt,~~employees ~~lowered~~or ~~our~~agents ~~interest~~fail ~~rate,~~to ~~and~~comply ~~extended~~with ~~the~~applicable ~~maturity,~~laws weor ~~cannot~~Company ~~predict~~policies ~~the~~governing ~~availability~~our ofoperations, ~~financing~~we ~~with~~may ~~any~~face ~~certainty~~investigations, orprosecutions ~~how~~and weother ~~will~~legal beproceedings ~~impacted~~and inactions ~~the~~which ~~future.~~could ~~There~~result ~~can~~in becivil nopenalties, ~~assurance~~administrative ~~that~~remedies weand ~~will~~criminal besanctions. ~~able~~Any tosuch ~~secure~~government ~~financing~~investigations, inprosecutions ~~the future at all~~ or atother alegal ~~cost~~proceedings ~~comparable to~~ or ~~lower~~actions ~~than~~could ~~what~~adversely isaffect ~~available~~our inbusiness, ~~the~~results ~~current~~of ~~credit~~operations ~~markets~~and orfinancial ~~on favorable terms~~condition.

Our ability to effectively operate and grow our business may be constrained if we are unable to borrow additional capital or refinance existing borrowings on reasonable terms. If we do not have access to credit or capital markets at desirable times or at rates that we would consider acceptable, and the lack of such funding could have a material adverse effect on our business, results of operations and financial condition and our ability to service our indebtedness.

We will regularly pursue new gaming acquisition and management opportunities and may not be able to recover our investment or successfully expand to additional locations.

We will regularly evaluate and pursue new gaming acquisition and management opportunities in existing and emerging jurisdictions. These opportunities may take the form of joint ventures.

To the extent that we decide to pursue any new gaming acquisition or management opportunities, our ability to benefit from such investments will depend upon a number of factors including:

• our ability to identify and acquire attractive acquisition opportunities and management sites;

• our ability to secure required federal, state and local licenses, permits and approvals, which in some jurisdictions are limited in number;

• certain political factors, such as local support or opposition to development of new gaming facilities or legalizing casino gaming in designated areas;

• the availability of adequate financing on acceptable terms (including waivers of restrictions in existing credit arrangements); and

• our ability to identify and develop satisfactory relationships with joint venture partners.

Most of these factors are beyond our control. Therefore, we cannot be sure that we will be able to recover our investment in any new gaming management opportunities or acquired facilities, or successfully expand to additional locations.

Increasing prices or shortages of energy and water may increase our cost of operations or force us to temporarily or permanently cease operations.

Our properties use significant amounts of water, electricity, natural gas and other forms of energy. Our properties are located in a desert where water is scarce and the hot temperatures require heavy use of air conditioning. While we have not experienced any shortages of energy or water in the past, we cannot guarantee you that we will not in the future. Other states have suffered from electricity shortages. For example, California and Texas have experienced rolling blackouts due to excessive air conditioner use because of unexpectedly high temperatures in the past. We expect that potable water will become an increasingly scarce commodity in the areas in which we operate at an increasing price.

Further, the increasing cost of energy and water will increase our costs of operations, thereby likely lowering our net cash flows. In addition, energy price increases in the regions that provide a significant source of customers for our properties could result in a decline of disposable income of potential customers and a corresponding decrease in visitation and spending at our properties, which could negatively impact revenues.

Work stoppages, labor problems and unexpected shutdowns may limit our operational flexibility and negatively impact our future profits.

Approximately 1,600 of our 4,300 employees are covered by collective bargaining agreements. Any work stoppage at one or more of our casino properties could require us to expend significant funds to hire replacement workers, and qualified replacement labor may not be available at reasonable costs, if at all. Strikes and work stoppages could also result in adverse media attention or otherwise discourage customers from visiting our casino properties. As a result, a strike or other work stoppage at one of our casino properties could have an adverse effect on the business of our casino properties and our financial condition and results of operations.

At the Stratosphere, our collective bargaining agreement with the Professional, Clerical and Miscellaneous Employees, Teamsters Local Union 986 (995 merged with 986 in 2014 ) expires on March 31, 2018. The collective bargaining agreement at the Stratosphere with the Culinary Workers Union, Local 226 and Bartenders Union, Local 165 expires on May 31, 2018. The contract with the International Union of Operating Engineers, Local 501, AFL-CIO was canceled by the union effective December 1, 2015, however negotiations continue.

~~Our~~We ~~operations~~do ~~may~~not beexpect ~~adversely~~any ~~impacted~~work bystoppages ~~expanded~~or ~~Native~~slowdowns. ~~American,~~Any ~~internet~~unexpected shutdown of one of our casino properties could have an adverse effect on the business of our casino properties and ~~other~~our ~~gaming~~results of operations. ifThere ~~they~~can ~~attract~~be ~~customers~~no assurance that ~~otherwise~~we ~~would~~will ~~visit~~be adequately prepared for unexpected events, including political or regulatory actions, which may lead to a temporary or permanent shutdown of any of our casino properties.

~~The~~From ~~expansion~~time ofto ~~Native~~time, ~~American~~we ~~and other casinos outside of the markets in which our casinos~~ are ~~located,~~a ~~particularly~~defendant ~~Native American casinos located~~ in ~~California,~~a ~~continues~~variety toof ~~have~~litigation anand ~~impact~~other onadversarial ~~casino revenues in Nevada. For instance~~proceedings, ~~in California, some Native American casino compacts do not limit the number of slot machines at those casinos (~~which ~~were~~are ~~limited~~costly ~~under~~to ~~prior compacts). Additionally~~defend, ~~the~~divert ~~federal~~management’s ~~government~~attention ~~and~~from ~~various~~our ~~states~~operations ~~are currently considering legislation authorizing internet gaming. While the effect of increased casino gaming in California~~ and ~~other~~may ~~states~~cause ~~and~~us ~~the potential widespread availability of legal internet gaming is difficult~~ to ~~predict,~~pay ~~our~~damages ~~revenues could decline~~ if ~~such~~we ~~competing~~are ~~gaming~~unsuccessful ~~operations~~in ~~attract~~defending ~~customers~~against ~~who~~the ~~would~~actions ~~otherwise~~or ~~travel~~unable to ~~Las~~cover ~~Vegas~~damages orwith ~~Laughlin~~insurance ~~or otherwise use our facilities, and such impact may be significant~~proceeds.

~~Our~~We ~~information~~are ~~technology~~involved, from time to time, in a variety of litigation arising out of our business. We carry insurance to cover most business risks, but there can be no assurance that the insurance coverage we have will cover all claims that may be asserted against us. Should any ultimate judgments or settlements not be covered by insurance or exceed our insurance coverage, such uncovered losses could increase our costs and ~~other~~thereby ~~systems~~lower ~~are~~our ~~subject~~profitability. There can also be no assurance that we will be able to ~~cyber~~obtain ~~security~~appropriate ~~risk~~and ~~including~~sufficient ~~misappropriation~~types or levels of ~~customer~~insurance ~~information~~in the future or ~~other~~that ~~breaches~~those ofadequate ~~information~~replacement ~~security~~policies will be available on acceptable terms, if at all.

We rely on information technology and other systems to maintain and transmit customer financial information, credit card settlements, credit card funds transmissions, mailing lists and reservations information. The systems and processes we have implemented to protect customers, employees and company information, including maintaining compliance with payment card industry standards and other security measures, are subject to risks of compromised security. These risks include cyber and physical security breaches, system failure, computer viruses, and negligent or intentional misuse by customers, company employees, or employees of third party vendors. The steps we take to deter and mitigate these risks may not be successful and our insurance coverage for protecting against cyber security risks may not be sufficient. Any disruption, compromise or loss of data or systems that results from a cyber security attack or breach could materially adversely impact our operations or regulatory compliance and could result in remedial expenses, fines, litigation, and loss of reputation, potentially impacting our financial results.

Acts of terrorism and war and natural disasters may negatively impact our business.

We are subject to a wide variety of environmental laws and potential exposure to environmental liabilities.

We are subject to various federal, state and local laws, ordinances and regulations that govern activities or operations that may have adverse environmental effects, such as discharges to air and water or may impose liability for the costs of cleaning up and certain damages resulting from sites of spills, disposals or other releases of hazardous or toxic substances or wastes. These laws and regulations are complex, and subject to change, and violations can lead to significant fines and penalties. Under certain of these laws and regulations, a current or previous owner or operator of property may be liable for the costs of remediating contamination on its property, without regard to whether the owner or operator knew of, or caused, the presence of the contaminants, and regardless of whether the practices that resulted in the contamination were legal at the time that they occurred. We endeavor to maintain compliance with environmental laws, but from time to time, current or historical operations on or adjacent to, our property may have resulted or may result in noncompliance with environmental laws or liability for cleanup pursuant to environmental laws. In that regard, we may incur costs for cleaning up contamination relating to historical uses of certain of our properties.

From time to time, we are a defendant in a variety of litigation and other adversary proceedings, which are costly to defend, divert management’s attention from our operations and may cause us to pay damages if we are unsuccessful in defending against the actions or unable to cover damages with insurance proceeds.

We are involved, from time to time, in a variety of litigation arising out of our business. We carry insurance to cover most business risks, but there can be no assurance that the insurance coverage we have will cover all claims that may be asserted against us. Should any ultimate judgments or settlements not be covered by insurance or exceed our insurance coverage, such uncovered losses could increase our costs and thereby lower our profitability. There can also be no assurance that we will be able to obtain appropriate and sufficient types or levels of insurance in the future or that those adequate replacement policies will be available on acceptable terms, if at all.

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

Although we maintain insurance that our management believes is customary and appropriate for our business, we cannot assure you that insurance will be available or adequate to cover all loss and damage to which our business or our assets might be subjected. The lack of adequate insurance for certain types or levels of risk could expose us to significant losses in the event that a catastrophe occurred for which we are underinsured. Any losses we incur that are not adequately covered by insurance may decrease our future operating income, require us to find replacements or repairs for destroyed property and reduce the funds available for payments of our obligations, including the notes.

Claims that we infringe upon third parties’ intellectual property rights could be costly to defend or settle, and thus could reduce our income or increase our net loss.

We may from time to time encounter disputes over rights and obligations concerning intellectual property. Third parties may bring claims of infringement against us. Such claims may be with or without merit. Any litigation to defend against claims of infringement or invalidity could result in substantial costs and diversion of resources. Furthermore, a party making such a claim could secure a judgment that requires us to pay substantial damages. A judgment could also include an injunction or other court order that could prevent us from operating our websites. Our business, operating results and financial condition could be harmed should we face challenges to our intellectual property.

Our revenues may be negatively impacted by volatility in our hold percentage.

Casino revenue is recorded as the difference between gaming wins and losses or net win from gaming activities. Net win is impacted by variations in the hold percentage (the ratio of net win to total amount wagered), or actual outcome, on our slot machines, table games, race and sports betting, and all other games we provide to our customers. We use the hold percentage as an indicator of a game’s performance against its expected outcome. Although each game generally performs within a defined statistical range of outcomes, actual outcomes may vary for any given period. The hold percentage and actual outcome on our games can be impacted by the level of a customer’s skill in a given game, errors made by our employees, the number of games played, faults within the computer programs that operate our slot machines and the random nature of slot machine payouts. If our games perform below their expected range of outcomes, our cash flow may suffer.

We face the risk of fraud or cheating.

Gaming customers may attempt or commit fraud or otherwise cheat in order to increase their winnings. Acts of fraud or cheating could involve the use of counterfeit chips or other tactics and could include collusion with our employees. Internal acts of cheating could also be conducted by employees through collusion with dealers, surveillance staff, floor managers or other casino or gaming area staff. Failure to discover such acts or schemes in a timely manner could result in losses in our gaming operations. In addition, negative publicity related to such schemes could have an adverse effect on our reputation, thereby adversely affecting our business, financial condition, plan of operations and cash flows.

The loss of management and other key personnel could significantly harm our business, and the quality of individuals hired for positions in the hotel and gaming operations will be critical to the success of our business.

Our ability to maintain our competitive position depends to a large degree on the efforts and skills of our senior management team. It may also be difficult to attract, retain and train qualified employees due to the competition for employees with other gaming companies and their facilities in Nevada. We may not be successful in retaining our current personnel or in hiring or retaining qualified personnel in the future. If we lose the services of any members of our management team, or fail to attract or retain qualified management and personnel at all levels, our business may be significantly disrupted and impaired.

We are dependent upon technology services and electrical power to operate our business, and if we experience damage or service interruptions, we may have to cease some or all of our operations, resulting in a decrease in revenues.

Our gaming operations rely heavily on technology services and an uninterrupted supply of electrical power. Our security system and all of our slot machines are controlled by computers and reliant on electrical power to operate. Without electrical power or a failure of the technology services needed to run the computers, we may be unable to run all or parts of gaming operations. Any unscheduled interruption in our technology services or interruption in the supply of electrical power is likely to result in an immediate, and possibly substantial, loss of revenues due to a shutdown of our gaming operations. Although our systems have been designed around industry-standard architectures to reduce downtime in the event of outages or catastrophic occurrences, they remain vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunication failures, terrorist attacks, computer viruses, computer denial-of-service attacks and similar events.

We may incur impairments to intangible assets or long-lived assets, which would reduce our net income.

We account for indefinite-lived intangible assets in accordance with applicable guidance; accordingly, we test our indefinite-lived intangible assets for impairment annually or if a triggering event occurs. We perform the annual impairment testing for indefinite-lived intangible assets in the fourth quarter of each fiscal year. In addition, we test long-lived assets for impairment if a triggering event occurs.

Significant negative industry or economic trends, including reduced estimates of future revenues and cash flows, disruptions to our business, slower growth rates or lack of growth in our business, resulted in significant write-downs and impairment charges in 2011 and 2010, and, if such events occur in the future, may indicate that additional impairment charges in future periods are required. If we are required to record additional impairment charges, this could have a material adverse effect on our results of operations.

A smoking ban in the jurisdictions in which we operate could have a negative impact on our business and operations.

From time to time, individual jurisdictions have considered legislation or referendums, such as bans on smoking in casinos and other entertainment and dining facilities. Such bans have been implemented in jurisdictions in which gaming facilities are located (such as in California and Atlantic City) and such bans have had a negative impact on business and operations. If such bans were implemented in the markets in which we operate, such a ban could adversely impact our business and operations.

~~Any~~We ~~violation~~will ofregularly ~~applicable~~pursue ~~Anti-Money~~new ~~Laundering~~gaming ~~laws~~acquisition orand ~~regulations~~management oropportunities ~~the~~and ~~Foreign~~may ~~Corrupt~~not ~~Practices~~be ~~Act~~able ~~could~~to ~~adversely~~recover ~~affect~~ our ~~business,~~investment ~~performance,~~or ~~prospects,~~successfully ~~value,~~expand ~~financial~~to ~~condition,~~additional ~~and results of operations~~locations.

We ~~handle~~will ~~significant~~regularly ~~amounts~~evaluate ~~of cash in our operations~~ and ~~are~~pursue ~~subject~~new togaming ~~various~~acquisition ~~reporting~~ and ~~anti-money~~management ~~laundering~~opportunities ~~laws and regulations. Recently, U.S. governmental authorities have evidenced an increased focus on compliance with anti-money laundering laws and regulations~~ in ~~the~~existing ~~gaming industry. Any violation of anti-money laundering laws or regulations could adversely affect our business, results of operations~~ and ~~financial~~emerging ~~condition~~jurisdictions. WeThese ~~have~~opportunities ~~implemented~~may ~~internal~~take ~~control~~the ~~policies,~~form ~~employee training and compliance programs designed to deter prohibited practices and have not been subject to any investigation or notified~~ of ~~any~~joint ~~violation~~ventures.

~~Internal~~To ~~control~~the ~~policies~~extent ~~and procedures and employee training and compliance programs~~ that we ~~have~~decide ~~implemented~~ to ~~deter~~pursue ~~prohibited~~any ~~practices~~new ~~may~~gaming ~~not~~acquisition beor ~~effective~~management ~~in prohibiting our employees~~opportunities, ~~contractors or agents from violating or circumventing~~ our ~~policies~~ability ~~and the law. If we or our employees or agents fail~~ to ~~comply~~benefit ~~with~~from applicable laws or Company policies governing our operations, we may face investigations, prosecutions and other legal proceedings and actions which could result in civil penalties, administrative remedies and criminal sanctions. Any such ~~government~~investments ~~investigations,~~will ~~prosecutions~~depend orupon ~~other~~a ~~legal~~number ~~proceedings or actions could adversely affect our business, results~~ of ~~operations~~factors ~~and financial condition.~~including:


•	our ability to identify and acquire attractive acquisition opportunities and management sites;


•	our ability to secure required federal, state and local licenses, permits and approvals, which in some jurisdictions are limited in number;


•	certain political factors, such as local support or opposition to development of new gaming facilities or legalizing casino gaming in designated areas;


•	the availability of adequate financing on acceptable terms (including waivers of restrictions in existing credit arrangements); and


•	our ability to identify and develop satisfactory relationships with joint venture partners.

We are controlled by officers of Goldman Sachs and the general partners of Whitehall, and the interests of Goldman Sachs, Whitehall and their affiliates may not be aligned with ours.

All of the Class A voting membership interests of ACEP are held by Voteco, the members of which are comprised of current managing directors of Goldman Sachs. As such, the members of Voteco have the power to control our affairs and policies and to control the election of our board of directors, the appointment of management, the entering into of mergers, sales of substantially all of our assets and other extraordinary transactions.

Goldman Sachs, Whitehall and their affiliates are in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us, as well as businesses that represent major customers of our businesses. Goldman Sachs, Whitehall and their affiliates may also pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. Goldman Sachs has agreed with the Nevada gaming authorities not to take any action to influence the members of Voteco in the exercise of their management or voting rights in respect of our gaming operations, and that the exercise of any such rights shall be made by the members of Voteco independently and without consultation with Goldman Sachs. However, since the members of Voteco are also officers of Goldman Sachs and the general partners of Whitehall, it should be expected that the members of Voteco will act in what they independently perceive to be the best interests of Goldman Sachs, Whitehall and their affiliates and that the interests of Goldman Sachs, Whitehall and their affiliates will dictate or strongly influence their decision making.

Item 1B. UNRESOLVED STAFF COMMENTS

There are no unresolved written comments that were received from the Securities and Exchange Commission staff 180 days or more before the end of our last fiscal year relating to our periodic or current reports under the Securities Exchange Act of 1934, or the Exchange Act.

ITEM 2. PROPERTIES

Please also see the discussion of our properties contained in this annual report on Form 10-K under the caption “Item 1. Business — Our Gaming and Entertainment Properties.”

Stratosphere

The Stratosphere is located at 2000 Las Vegas Boulevard South, ~~on the~~ Las Vegas, ~~Strip~~Nevada on approximately 34 acres owned by us.

Arizona Charlie’s Decatur

Arizona Charlie’s Decatur is located at 740 South Decatur Boulevard, Las Vegas, Nevada on approximately 17 acres owned by us. In addition, Arizona Charlie’s Decatur leases office, storage and laundry space located in an adjacent shopping center.

Arizona Charlie’s Boulder

Arizona Charlie’s Boulder is located at 4575 Boulder Highway, Las Vegas, Nevada on approximately 24 acres owned by us.

Aquarius Casino Resort

Aquarius Casino Resort is located at 1900 South Casino Drive, Laughlin, Nevada on approximately 18 acres owned by us.

ITEM 3. LEGAL PROCEEDINGS

We are, from time to time, parties to various legal proceedings arising out of our businesses. We believe, however, that there are no proceedings pending or threatened against us, which, if determined adversely, would have a material, adverse effect upon our business, financial condition, results of operations, or liquidity.

ITEM 4. RESERVED

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Price of and Dividends on the Registrant’s Common Equity and Related Member Matters

As of December 31, ~~2014~~2015, there was no public market for our common equity.

No established public trading market exists for our equity securities. There are no plans, proposals, arrangements or understandings with any person with regard to the development of a trading market in any of our equity securities.

There are no ~~outstanding options or~~ warrants to purchase, or securities convertible into, our common equity. All of our membership interests are subject to sale pursuant to Rule 144 under the Securities Act, subject to the limitations set forth therein. We have not agreed with any security holder to register any of our common equity for sale by any security holder. None of our common equity is being, or has been publicly proposed to be, publicly offered by us.

We have one holder of record of our Class A Interests and one holder of record of our Class B Interests.

We do not pay, and do not anticipate paying, any dividends or making any distributions on our common equity. ~~Our~~The ~~First~~2015 ~~Lien~~ Credit Agreement ~~and Second Lien Credit Agreement~~ restricts us from the payment of dividends and distributions. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 7 in the “Notes to Consolidated Financial Statements.”

On March 26, 2014 our Board of Directors approved the W2007/ACEP Holdings, LLC 2013 Management Incentive Plan that allows for the issuance of securities to our employees.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth the total shares of our Class B Interests authorized and issued (or to be issued) under our equity compensation plans as of December 31, 2015:



	As of December 31, 2015
	Authorized	Issued (or to be issued)	Number of Securities remaining available for future issuance under equity compensation plans	Equity Type

2013 W2007/ACEP Holdings Management Incentive Plan	19,000,000	15,535,000	3,465,000	Stock Option Awards Restricted Stock Units

Description of Registrant’s Securities to be Registered

General

Reference is made to information set forth in “Item - 1 Business - General”, which information is incorporated herein by reference.

~~Simultaneously~~We ~~with the closing of the Acquisition, we~~ executed the Amended Operating Agreement, which created two classes of membership interests, the Class A Interests and the Class B Interests. At the closing of the Acquisition, Class A Interests and Class B Interests were outstanding. We issued Class A Interests to Voteco and Class B Interests to Holdings on a pro rata basis in proportion to the equity contributions made by each entity. The Class A Interests are the only class of our equity securities registered pursuant to a registration statement.

Class A Interests and Class B Interests

Pursuant to the Amended Operating Agreement, holders of Class A Interests are entitled to one vote per interest on all matters to be voted on by the members of our company and are not entitled to cumulative voting for the election of directors. Except as otherwise expressly required by law, holders of Class B Interests have no right to vote on any matters to be voted on by our members. Holders of Class A Interests and Class B Interests have no preemptive rights, no other rights to subscribe for additional interests of our company, no conversion rights and no redemption rights, do not benefit from any sinking fund and do not have any preferential rights upon a liquidation. Holders of Class A Interests and Class B Interests are entitled to share ratably in cash dividends or other distributions when, as and if distributed by us, as provided in our Amended Operating Agreement.

No securities issued by us and no interest, claim or charge therein or thereto may be transferred, except in accordance with the provisions of the Nevada Gaming Control Act and the regulations promulgated thereunder. Any transfer in violation thereof is void until we cease to be subject to the jurisdiction of the Nevada Gaming Commission or the Nevada Gaming Commission approves the transfer.

2829

ITEM 6. SELECTED FINANCIAL DATA

The following table summarizes certain of our selected historical consolidated financial data (see Note 1 “Notes To Consolidated Financial Statements”), which you should read in conjunction with the consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere in this annual report on Form 10-K.

The selected historical consolidated financial data as of December 31, 2015, 2014, 2013, 2012, ~~2011~~ and ~~2010~~2011, and the years ended December 31, 2015, 2014, 2013, 2012, ~~2011~~ and ~~2010~~2011; each has been derived from our audited consolidated financial statements at those dates and for those periods.

Years ended December 31,

2014

2013

2012

2011

2010

2015

2014

2013

2012

2011

(in thousands)

Income Statement Data:

Revenues:

Casino

~~199~~205,~~279~~033

~~198~~199,~~945~~279

~~200~~198,~~676~~945

~~202~~200,~~219~~676

~~204~~202,~~958~~219

Hotel

7183,~~897~~070

6471,~~040~~897

64,~~099~~040

6364,~~983~~099

5563,~~900~~983

Food and beverage

7378,~~548~~606

6873,~~327~~548

6668,~~906~~327

6866,~~362~~906

6768,~~181~~362

Tower, retail, entertainment and other

3334,~~464~~378

3233,~~287~~464

3332,~~161~~287

3233,~~658~~161

3332,~~371~~658

Gross revenues

~~378~~401,~~188~~087

~~363~~378,~~599~~188

~~364~~363,~~842~~599

~~367~~364,~~222~~842

~~361~~367,~~410~~222

Less promotional allowances

2728,~~057~~020

2627,~~164~~057

2526,~~113~~164

2425,~~655~~113

24,~~322~~655

Net revenues

~~351~~373,~~131~~067

~~337~~351,~~435~~131

~~339~~337,~~729~~435

~~342~~339,~~567~~729

~~337~~342,~~088~~567

Costs and expenses:

Casino

64,~~141~~386

64,~~067~~141

6564,~~085~~067

6665,~~082~~085

66,~~318~~082

Hotel

3437,~~823~~152

3234,~~484~~823

3432,~~072~~484

34,~~305~~072

3334,~~343~~305

Food and beverage

5558,~~490~~129

5255,~~572~~490

5152,~~645~~572

51,~~314~~645

5051,~~478~~314

Other operating expenses

1110,~~526~~833

11,~~275~~526

11,~~496~~275

1211,~~001~~496

1312,~~123~~001

Selling, general and administrative

~~122~~123,~~569~~993

~~114~~122,~~807~~569

~~115~~114,~~039~~807

~~112~~115,~~243~~039

~~110~~112,~~499~~243

Depreciation and amortization

29,~~257~~086

3129,~~678~~257

3331,~~311~~678

3933,~~056~~311

4639,~~382~~056

Pre-opening costs

—

~~119~~—

72119

—72

~~307~~—

(Gain) loss on disposal of assets

~~(26~~1,974

)

(6126

)

(7061

)

(7470

)

~~4,308~~(74

)

Management fee - related party

—

~~500~~—

~~1,000~~500

1,~~070~~000

1,~~500~~070

Impairment of assets

—

~~290~~—

~~2,000~~290

Total costs and expenses

~~317~~325,~~780~~553

~~307~~317,~~441~~780

~~311~~307,~~650~~441

~~316~~311,~~287~~650

~~328~~316,~~258~~287

Income from operations

3347,~~351~~514

2933,~~994~~351

2829,~~079~~994

2628,~~280~~079

826,~~830~~280

Other income (expense):

Loss on debt redemption

—(14,679

)

~~(7,866~~—

)

(17,~~112~~866

)

(1,~~378~~112

)

—(1,378

)

Interest income

—

2—

152

Interest expense

(2519,~~773~~862

)

(3425,~~605~~773

)

(4234,~~765~~605

)

(4542,~~168~~765

)

(45,~~592~~168

)

Interest expense - related party

(~~598~~911

)

(~~2,658~~598

)

—(2,658

)

—

Total other expense, net

(2635,~~371~~452

)

(4526,~~129~~371

)

(4345,~~877~~129

)

(4643,~~544~~877

)

(4546,~~577~~544

)

Net income (loss)(1)

612,~~980~~062

~~(15~~6,~~135~~980

)

(15,~~798~~135

)

(2015,~~264~~798

)

(3620,~~747~~264

)

OTHER FINANCIAL DATA:

Capital expenditures

1420,~~461~~853

1314,~~913~~461

1713,~~406~~913

1517,~~511~~406

3615,~~110~~511

(1) ~~Since the Acquisition on February 20, 2008,~~ ACEP is a disregarded entity for federal and state tax purposes and all the tax on its income is borne by its members. ~~As a result,~~ ACEP nodoes ~~longer~~not ~~records~~record a provision for taxes on its consolidated statements of operations.

2930

Consolidated Balance Sheet ($ in thousands)

As of December 31,

2014

2013

2012

2011

2010

2015

2014

2013

2012

2011

Cash

7671,~~953~~763

5576,~~151~~953

6355,~~169~~151

7463,~~201~~169

8574,~~311~~201

Total Assets

1,~~184~~159,~~584~~626

1,~~175~~174,~~267~~983

1,~~193~~167,~~539~~152

1,~~222~~192,~~029~~307

1,~~256~~219,~~403~~974

Total Debt (1)

~~328~~285,~~047~~302

~~329~~318,~~840~~446

~~330~~321,~~824~~725

~~344~~329,~~272~~592

~~357~~342,~~813~~217

Total Liabilities

~~359~~321,~~361~~128

~~361~~349,~~046~~760

~~364~~352,~~183~~931

~~376~~362,~~875~~951

~~390~~374,~~985~~820

Total Members’ Equity

~~825~~838,~~223~~498

~~814~~825,~~221~~223

~~829~~814,~~356~~221

~~845~~829,~~154~~356

~~865~~845,~~418~~154

(1) Total debt, including current portion, consists of the current and long-term portions of capital lease obligations and notes payable less unamortized discount and debt issuance costs.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

With the exception of historical facts, the matters discussed in this annual report on Form 10-K are forward looking statements. Forward-looking statements may relate to, among other things, future actions, future performance generally, business development activities, future capital expenditures, strategies, the outcome of contingencies such as legal proceedings, future financial results, financing sources and availability and the effects of regulation and competition. Also, please see Risk Factors in Item 1A of this annual report on Form 10-K. When we use the words “believe,” “intend,” “expect,” “may,” “will,” “should,” “anticipate,” “could,” “estimate,” “plan,” “predict,” “project,” or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe strategy that involves risks or uncertainties, we are making forward-looking statements.

These forward-looking statements are based on the current plans and expectations of our management and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. These factors include, but are not limited to: the size of our indebtedness, our indebtedness' effect on our business, the adverse effect of government regulation and other matters affecting the gaming industry, increased operating costs of our properties, increased competition in the gaming industry, adverse effects of economic downturns and terrorism, our failure to make necessary capital expenditures, increased costs associated with our growth strategy, the loss of key personnel, risks associated with geographical market concentration, our failure to satisfy our working capital needs from operations or our indebtedness, our inability to raise additional money, our dependence on water, energy and technology services, adverse effects of increasing energy costs, and the availability of and costs associated with potential sources of financing.

You should also read, among other things, the risks and uncertainties described in the section entitled Risk Factors in Item 1A of this annual report on Form 10-K.

We warn you that forward-looking statements are only predictions. Actual events or results may differ as a result of risks that we face. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to update them.

The following discussion contains management’s discussion and analysis of financial condition and results of operations. Management’s discussion and analysis should be read in conjunction with, and is qualified in its entirety by reference to, our audited financial statements and related notes.

3032

Overview

We own and operate four gaming and entertainment properties in Clark County, Nevada. The four properties are:

• the Stratosphere, Casino Hotel & Tower, which is located on the Las Vegas Strip and caters to visitors to Las Vegas;


•	two off-Strip casinos, Arizona Charlie’s Decatur and Arizona Charlie’s Boulder, which cater primarily to residents of Las Vegas and the surrounding communities; and


•	the Aquarius Casino Resort in Laughlin, Nevada, which caters to visitors to and residents of Laughlin and Northwest Arizona.

We believe that the Stratosphere is one of the most recognizable landmarks in Las Vegas, our two Arizona Charlie’s properties are well-known casinos in their respective marketplaces and the Aquarius is the largest hotel by number of rooms in Laughlin.

We currently offer gaming, hotel, dining, entertainment, retail and other amenities at our properties. We use certain key measurements to evaluate operating revenues. Casino revenue measurements include “table games drop” and “slot coin in”, which are measures of the total amounts wagered by customers. Win or hold percentage represents the percentage of table games drop or slot coin in that is won by the casino and recorded as casino revenues. Hotel revenue measurements include hotel occupancy rate, which is the average percentage of available hotel rooms occupied during a period, and average daily room rate or ADR, which is ~~the~~total ~~average~~hotel ~~price~~revenue ofdivided by occupied rooms ~~per day~~. Food and beverage revenue measurements include number of covers, which is the number of guests served, and the average check amount per guest.

Our operating results greatly depend on the volume of customers at our properties, which in turn affects our gaming revenues and the price we can charge for our non-gaming amenities. A substantial portion of our revenue is generated from our gaming operations; especially slot play (including video poker). Approximately 5251.71% of our gross revenue in ~~2014~~2015 was generated from our gaming operations. Hotel and food and beverage sales generated similar percentages of our gross revenue during fiscal year ~~2014~~2015, with hotel sales representing 1920.07% and food and beverage sales representing 19.46%. The majority of our revenue is cash-based through customers wagering with cash or paying for non-gaming amenities with cash or credit card.

Our expenses also depend on the volume of customers at our properties. The volume of customers that visit our properties directly affects our labor expenses, which represented approximately 5251.4% of our expenses during fiscal year ~~2014~~2015, and the amount we spend on marketing, which represented approximately 3.25% of our expenses during fiscal year ~~2014~~2015. However, we incur a significant amount of costs that do not vary directly with changes in the volume of customers. As a result, it is difficult to reduce costs to match reductions in demand, which can result in reduced operating margins. Because our business is capital intensive, we rely heavily on the ability of our properties to generate operating cash flow to repay debt financing, fund maintenance and capital expenditures and provide excess cash for future development.

The Las Vegas and Laughlin Markets

All of our properties are located in the Las Vegas and Laughlin, Nevada markets. Accordingly, our results of operations are driven by economic conditions in these markets.

Las Vegas is one of the largest entertainment markets in the country. We believe that Las Vegas hotel occupancy rates are among the highest of any major market in the United States. We believe that the Las Vegas gaming market has two distinct sub-segments: the ~~tourist~~destination market, which tends to be concentrated on the Las Vegas Strip and Downtown Las Vegas, and the local market, which includes the surrounding Las Vegas area.

According to the Las Vegas Convention and Visitors Authority, or LVCVA, the number of visitors traveling to Las Vegas has increased over the last ten years from 3738.46 million visitors in ~~2004~~2005 to 4142.13 million visitors in ~~2014~~2015. The number of hotel and motel rooms in Las Vegas has increased from ~~131~~133,~~503~~186 at the end of ~~2004~~2005 to ~~150~~149,~~544~~213 at the end of ~~2014~~2015, giving Las Vegas the most hotel and motel rooms of any metropolitan area in the world. Despite this significant increase in the supply of rooms, the Las Vegas hotel average monthly occupancy rate exceeded 80% for each of the years from ~~2004~~2005 through ~~2014~~2015. Hotel occupancy increased 2.0.7 percentage points to 89.18% for ~~2014~~2015 compared to 8789.1% in ~~2013~~2014, which is below the peak of 94.0% in 2007. Las Vegas tourism increased according to the LVCVA as visitor volume increased 32.79% in ~~2014~~2015 compared to ~~2013~~2014. The hotel ADR increased by 5.2.7% in ~~2014~~2015 compared to ~~2013~~2014.

Las Vegas Strip gaming revenues have grown as Las Vegas visitations and hotel room counts have grown. Between ~~2004~~2005 and ~~2014~~2015, gaming revenues on the Las Vegas Strip experienced a compound annual growth of 10.85%; however gaming revenues for

3133

~~2014~~2015 totaled approximately $6.43 billion, a 20.14% decrease from ~~2013~~2014. A decline in baccarat play, which is favored by high-end international guests, was a significant contributor to the decline in gaming revenue on Las Vegas Strip in ~~2014~~2015. Our properties do not target the baccarat player.

The Laughlin area economy is primarily dependent on the gaming and tourism industry. Visitor volume and occupancy rates have declined on an annual basis over the past several years while the number of hotel rooms has remained fairly constant. The new Laughlin Events Center has hosted several headline concerts that have created successful events in the market. According to the LVCVA ~~in 2014~~, visitation declined 1.5.1% in 2015 compared to ~~2013~~2014. From 2007 to 2012, annual decreases in visitors averaged 7.5%. In ~~2013~~2014 and ~~2014~~2013, the decreases averaged 1.4%. ~~Although~~Laughlin ~~there~~gaming ~~were~~revenues ~~fewer visitors in 2014, visitors extended their stays and total room nights occupied~~ increased 21.37%, ~~which~~in ~~helped~~2015 ~~increase~~compared ~~hotel occupancy. Laughlin gaming revenues were relatively flat from 2012~~ to 2014 ~~including~~versus a 1.0% increase in 2014 compared to 2013. ~~This increase marks the first year-over-year increase in Laughlin since 2007.~~

Outstanding Debt

OnThe ~~July~~2015 3,Term ~~2013,~~Loans ~~the~~bear ~~Company~~interest ~~and~~either ~~the~~at ~~Guarantors~~a ~~entered~~base ~~into~~rate aplus ~~Second~~2.75% ~~Lien~~per ~~Credit~~annum ~~and~~or ~~Guaranty~~at ~~Agreement,~~the orreserve-adjusted ~~Second~~eurodollar ~~Lien~~rate ~~Credit~~plus ~~Agreement~~3.75% ~~Pursuant~~per toannum. In the ~~terms~~case of ~~the~~eurodollar ~~Second~~rate ~~Lien~~loans, ~~Credit~~interest ~~Agreement,~~is computed on the ~~Second~~basis ~~Lien~~of ~~Lenders~~a ~~provided~~360-day year and the ~~Company~~actual ~~with~~number ~~secured~~of ~~second~~days ~~lien~~between ~~term~~interest ~~loans~~periods, inwith interest payable on the ~~aggregate~~last ~~principal~~day ~~amount~~of each interest period of ~~$120~~one ~~million~~month, two months, or three months, or, in the ~~Second~~case ~~Lien~~of interest periods longer than three months, every three months. The 2015 Term Loans are subject to scheduled principal payments on the last day of each calendar quarter in an amount equal to 0.25% of the original principal balance.

On February 24, 2014 we entered into an amendment of the First Lien Credit Agreement. Among other changes, the Amendment reduced the interest rates on the Term Loans by 125 basis points per annum. Interest now accrues, at our election, (i) at the adjusted eurodollar rate plus 3.50% per annum or (ii) at the Base Rate plus 2.50% per annum. Additionally, the minimum adjusted eurodollar rate was reduced by 25 basis points from 1.25% per annum to 1.00% per annum. 34

Results of Operations

The following table sets forth the results of our operations for the periods indicated.

	Year ended December 31,
	2014		2013			2012
	2015		2014			2013
	(in millions)
Income Statement Data:
Revenues:
Casino	$	~~199~~205.30	$	199.03		$	~~200~~199.70
Hotel	7183.91		6471.09			64.10
Food and beverage	7378.56		6873.35			6668.93
Tower, retail and other	3334.54		3233.35			3332.23
Gross revenues	~~378~~401.21		~~363~~378.62			~~364~~363.96
Less promotional allowances	2728.10		2627.21			2526.12
Net revenues	~~351~~373.1		~~337~~351.41			~~339~~337.84
Costs and expenses:
Casino	64.14		64.1			6564.1
Hotel	3437.82		3234.58			3432.15
Food and beverage	5558.51		5255.65			5152.6
Other operating expenses	1110.58		11.35			11.53
Selling, general and administrative	~~122~~126.60		~~115~~122.16			~~116~~115.01
Pre-opening costs	—		~~0.1~~—			0.1
Depreciation and amortization	29.31		3129.73			3331.37
Total costs and expenses	~~317~~325.86		~~307~~317.48			~~311~~307.74
Income from operations	$	3347.35	$	3033.03		$	2830.10
EBITDA Reconciliation:
Net income (loss)	$	712.01	$	~~(15~~7.10	)	$	(15.81	)
Interest expense	2620.38		3726.3			4237.83
Depreciation and amortization	29.31		3129.73			3331.37
EBITDA	$	62.60	$	5362.96		$	6053.39

Regulation G, “Conditions for Use of Non-GAAP Financial Measures,” prescribes the conditions for use of non-GAAP financial information in public disclosures. We believe that our presentation of EBITDA is an important supplemental measure of our operating performance to investors. EBITDA is a commonly used measure of performance in our industry which we believe, when considered with measures calculated in accordance with United States Generally Accepted Accounting Principles (GAAP), gives investors a more complete understanding of operating results before the impact of investing and financing transactions and income taxes and facilitates comparisons between us and our competitors. We believe this measure will be used by investors in their assessment of our operating performance and the valuation of our Company.

3335

Year Ended December 31, 2015 Compared to Year Ended December 31, 2014

Las Vegas has shown positive economic signs. Total gaming revenue in Clark County increased 0.9% in 2015 compared to 2014. After deducting Baccarat, a game preferred by mostly wealthy international visitors, Clark County gaming revenue increased approximately 3.5% in 2015 compared to 2014. Although economic indicators are increasingly favorable in the United States and Clark County, accelerated growth has not occurred. According to the Las Vegas Convention and Visitors Authority, or LVCVA, the number of visitors to Las Vegas increased 2.9% to 42.3 million visitors in 2015 compared to 2014. Employment in Las Vegas is increasing and the unemployment rate is decreasing. Las Vegas housing prices have increased and as a percentage of overall housing sales, short sales and bank owned property sales continue to decline. The number of visitors to Laughlin decreased 5.1% in 2015, a decline of approximately 101,000 visitors. Gaming revenue increased 1.7% in 2015, and occupancy also increased. Operators in all of our markets continue to use aggressive promotions and discounted prices to attract customers and increase occupancies at their properties. Competition for customers is intense. All of these factors have impacted our results.

Our consolidated gross revenues increased 6.1% to $401.1 million for the year ended December 31, 2015 from $378.2 million for the year ended December 31, 2014. Consolidated income from operations and EBITDA increased 42.6% and decreased 1.0% to $47.5 million and $62.0 million for the year ended December 31, 2015 compared to $33.3 million and $62.6 million for the year ended December 31, 2014. The increases in our gross revenues and income from operations are due primarily to increases in hotel, casino and food and beverage revenues.

Certain items had a negative impact on income from operations and EBITDA for the years ended December 31, 2015 and December 31, 2014. For the year ended December 31, 2015 the Company recognized a loss on asset disposal of approximately $2.0 million compared to a gain of approximately $26,000 for the year ended December 31, 2014. The loss on asset disposal for the year ended December 31, 2015 was due a $2.1 million write off of pool improvements, due to demolition for pool renovations, at the Stratosphere. For the year ended December 31, 2015 labor cost included approximately $1.2 million in non-cash share-based compensation expense compared to $4.0 million for the year ended December 31, 2014. EBITDA for the year ended December 31, 2015 was negatively impacted by losses on debt redemption of approximately $14.7 million related to our $30.0 million principal payment on the First Lien Term Loans on March 31, 2015 and the redemption of the First Lien Term Loans and Second Lien Term Loans on July 7, 2015, of which approximately $8.9 million was non-cash.

Casino

Casino revenues consist of revenues from slot machines, table games, poker, race and sports book, bingo and keno. Casino revenues increased 2.9% to $205.0 million for the year ended December 31, 2015, compared to $199.3 million for the year ended December 31, 2014. Slot revenues increased 2.9% and table revenues increased 4.8% for the year ended December 31, 2015, compared to the year ended December 31, 2014. For the year ended December 31, 2015, our slot hold increased 0.1 percentage point and coin-in increased 0.5% while table drop increased 1.9% and hold increased by 0.6 percentage points compared to the year ended December 31, 2014. For the year ended December 31, 2015, slot machine revenues were 85.3% of casino revenues and table game revenues were 11.6% of casino revenues, compared to 85.2% and 11.4% of casino revenues, respectively, for the year ended December 31, 2014. Other casino revenues, consisting of race and sports book, poker, bingo and keno, decreased 4.5% for the year ended December 31, 2015 compared to the year ended December 31, 2014. Race and sports book revenues decreased 3.3% for the year ended December 31, 2015 compared to the year ended December 31, 2014 due to a 0.5 percentage point decrease in hold partially offset by a 0.6% increase in handle. Bingo revenues increased 1.8% for the year ended December 31, 2015 compared to the year ended December 31, 2014 due primarily to a 0.1 percentage point increase in hold. Keno and poker revenues decreased 5.5% and 15.5% respectively for the year ended December 31, 2015 compared to the year ended December 31, 2014. Casino operating expenses increased 0.5% to $64.4 million, or 31.4% of casino revenues, for the year ended December 31, 2015, compared to $64.1 million or 32.2% for the year ended December 31, 2014. The increase in expenses was due to increased revenue taxes. Our casino operating margin was 68.6% for the year ended December 31, 2015, compared to 67.8% for the year ended December 31, 2014.

Hotel

Hotel revenues increased 15.6% to $83.1 million for the year ended December 31, 2015 from $71.9 million for the year ended December 31, 2014. Occupancy was unchanged for the Aquarius and increased for all other properties and average daily room rates increased for all properties. Overall occupancy increased to 72.6% for the year ended December 31, 2015 compared to 68.5% for the year ended December 31, 2014. Our overall ADR increased 9.0% for the year ended December 31, 2015 compared to the year ended December 31, 2014. Our hotel expenses increased 6.9% to $37.2 million for the year ended December 31, 2015, compared to $34.8 million for the Year ended December 31, 2014. The increase in hotel expenses was due primarily to increased labor costs, commissions and broker fees and supplies expenses. Our hotel operating margin increased to 55.2% for the year ended December 31, 2015 as compared to 51.6% for the year ended December 31, 2014.

Food and Beverage

Food and beverage revenues increased 6.9% to $78.6 million for the year ended December 31, 2015 compared to $73.5 million for the year ended December 31, 2014. Revenues increased for all properties. Overall, average revenue per cover for the year ended December 31, 2015 increased 3.5% compared to the year ended December 31, 2014, while food covers and beverage covers increased 3.2% and decreased 1.8%, respectively. Our food and beverage expenses increased 4.7% to $58.1 million for the year ended December 31, 2015 compared to $55.5 million for the year ended December 31, 2014 due primarily to increased food and beverage cost of goods and labor costs. Our food and beverage operating margin increased to 26.1% for the year ended December 31, 2015 as compared to 24.5% for the year ended December 31, 2014.

Tower, Retail, Entertainment and Other

Tower, retail and other revenues increased 2.7% to $34.4 million for the year ended December 31, 2015 from $33.5 million for the year ended December 31, 2014. Tower revenues decreased 3.4% for the year ended December 31, 2015, compared to the year ended December 31, 2014. Tower guests declined 2.0% and SkyJump guests fell 13.3% for year ended December 31, 2015 compared to the year ended December 31, 2014. SkyJump was impacted by increased competition from newly launched attractions in the Las Vegas market. Entertainment revenue increased 16.2% for the year ended December 31, 2015, compared to the year ended December 31, 2014. The increase in entertainment revenue was due primarily to higher average ticket prices for the PIN-UP show at the Stratosphere. Retail revenue increased 13.9% for the year ended December 31, 2015, compared to the year ended December 31, 2014. Other operating income increased 12.0% for the year ended December 31, 2015, compared to the year ended December 31, 2014. The increase was primarily due to higher ATM commissions and project development revenues. Other operating expenses decreased 6.1% to $10.8 million for the year ended December 31, 2015, compared to $11.5 million for the year ended December 31, 2014. This decrease was primarily due to lower entertainer fees and labor costs.

Promotional Allowances

Promotional allowances are comprised of the retail value of goods and services provided to casino customers under various marketing programs. As a percentage of casino revenues, promotional allowances increased to 13.7% for the year ended December 31, 2015 compared to 13.6% for the year ended December 31, 2014. The increase was due primarily to increased food promotions.

Selling, General and Administrative

Selling, general and administrative expenses are primarily comprised of payroll, marketing, advertising, utilities and other administrative expenses. These expenses increased 2.8% to $126.0 million, or 31.4% of gross revenues, for the year ended December 31, 2015, compared to $122.6 million, or 32.4% of gross revenues, for the year ended December 31, 2014. The increase in expenses was due primarily to a $2.0 million loss on asset disposal, a $984,000 increase in advertising and related expenses, a $505,000 increase in guest loss and damage expenses and a $362,000 increase in credit card fees partially offset by a $1.4 million decrease in labor costs. For the year ended December 31, 2015 the Company recognized a loss on asset disposal of approximately $2.0 million compared to a gain of approximately $26,000 for the year ended December 31, 2014. The loss for the year ended December 31, 2015 was due a $2.1 million write off of pool improvements at the Stratosphere. For the year ended December 31, 2015, labor cost included approximately $1.2 million in non-cash share-based compensation expense compared to $4.0 million for the year ended December 31, 2014.

Interest Expense

Interest expense decreased 20.9% to $20.8 million for the year ended December 31, 2015, compared to $26.3 million for the year ended December 31, 2014. The decrease was due primarily to the repricing of the First Lien Facilities effective February 24, 2014, a $30.0 million principal payment on the First Lien Term Loans on March 31, 2015 and the issuance of the 2015 Term Loans to prepay in full the Company's existing debt under the 2013 Credit Agreements on July 7, 2015.

Year Ended December 31, 2014 Compared to Year Ended December 31, 2013

During 2014, the United States continued its slow recovery from the long economic recession that ended in 2009. According to a preliminary estimate released by the U.S. Bureau of Economic Analysis, or BEA, real GDP grew at an annualized rate of 2.6% in the fourth quarter of 2014. This compares to 5.0% real GDP growth in the third quarter of 2014. As the United States economy continues to recover, Las Vegas has shown positive economic signs. Total gaming revenue in Clark County declined 1.2% in 2014 after increases each year from 2010 through 2013. After deducting Baccarat, a game preferred by mostly wealthy international visitors, Clark County gaming revenue decreased approximately 0.2% in 2014 compared to 2013. Although economic indicators are increasingly favorable in the United States and Clark County, accelerated growth has not occurred. According to the ~~Las Vegas Convention and Visitors Authority, or~~ LVCVA, the number of visitors to Las Vegas increased 3.7% to 41.11million ~~million~~ visitors in 2014 compared to 2013. Employment in Las Vegas is increasing and the unemployment rate is decreasing. Las Vegas housing prices have increased and as a percentage of overall housing sales, short sales and bank owned property sales continue to decline. The number of visitors to Laughlin decreased 2.7% in 2014, a decline of approximately 56,000 visitors. Gaming revenue increased 1.0% in 2014 however, and the number of room nights and occupancy also increased. Operators in all of our markets continue to use aggressive promotions and discounted prices to attract customers and increase occupancies at their properties. Competition for customers is intense. All of these factors have impacted our results.

Our consolidated gross revenues increased 4.0% to $378.2 million for the year ended December 31, 2014 from $363.6 million for the year ended December 31, 2013. Consolidated income from operations and EBITDA increased 11.0% and 16.1% to $33.3 million and $62.6 million for the year ended December 31, 2014 compared to $30.0 million and $53.9 million for the year ended December 31, 2013. The increases in our gross revenues, income from operations, and EBITDA are due primarily to increases in hotel and food and beverage revenues.

Income from operations and EBITDA for the year ended December 31, 2014 were negatively impacted by a 6.5% increase in selling, general and administrative expenses. The increase in selling, general and administrative expenses was due primarily to a $4.0 million non-cash expense for share-based compensation as well as a $717,000 increase in utilities, a $657,000 increase in sales tax expenses, a $452,000 increase in maintenance contract expenses, and a $248,000 increase in supplies expenses partially offset by a $741,000 decrease in repair and maintenance expenses. Income from operations and EBITDA for the year ended December 31, 2013 were positively impacted by a credit to sales tax expense of approximately $1.1 million to reverse previously accrued taxes on complimentary meals provided to customers and employees. The company began accruing for sales taxes on complimentary meals provided to customers and employees in February 2012 based on a decision by the Nevada Tax Commission which was subsequently rescinded in July 2013. EBITDA for the year ended December 31, 2013 was negatively impacted by a $7.9 million charge for the early redemption of debt related to the redemption of debt remaining aggregate principal amount of our 11% Senior Secured Notes, of which approximately $6.3 million was non-cash. Finally, ACEP Interactive, our licensed internet gaming subsidiary, spent approximately $507,000 during the year ended December 31, 2014 to operate acePLAYPoker.com, which became operational in February 2013, compared to approximately $835,000 in the year ended December 31, 2013. As a result, our consolidated net operating margin increased to 9.5% for the year ended December 31, 2014 compared to 8.9% for the year ended December 31, 2013.

Casino

Casino revenues consist of revenues from slot machines, table games, poker, race and sports book, bingo and keno. Casino revenues increased 0.2% to $199.3 million for the year ended December 31, 2014, compared to $199.0 million for the year ended December 31, 2013. Slot revenues increased 0.1% while table revenues were unchanged for the year ended December 31, 2014 compared to the year ended December 31, 2013. For the year ended December 31, 2014, our slot hold increased 0.1 percentage point and coin-in decreased 1.7% while table drop declined 1.2% and hold increased by 0.3 percentage points compared to the year ended December 31, 2013. For the year ended December 31, 2014, slot machine revenues were 85.2% of casino revenues and table game revenues were 11.4% of casino revenues, compared to 85.3% and 11.4% of casino revenues, respectively, for the year ended December 31, 2013. Other casino revenues, consisting of race and sports book, poker, bingo and keno, increased 3.1% for the year ended December 31, 2014 compared to the year ended December 31, 2013. Race and sports book revenues increased 12.2% for the year ended December 31, 2014 compared to the year ended December 31, 2013 due to a 1.4 percentage point increase in hold partially offset by a 0.4% decline in handle. Bingo revenues decreased 3.1% for the year ended December 31, 2014 compared to the year ended December 31, 2013 due primarily to a 0.2 percentage point increase in hold and 2.3% decrease in patrons. Keno and poker revenues increased 7.6% and decreased 10.3% respectively for the year ended December 31, 2014 compared to the year ended December 31, 2013. Casino operating expenses of $64.1 million, or 32.2% of casino revenues, for the year ended December 31, 2014, were unchanged from the year ended December 31, 2013. Our casino operating margin was 67.8% for both the years ended December 31, 2014 and December 31, 2013.

3438

the year ended December 31, 2014 compared to the year ended December 31, 2013 due primarily to a 0.2 percentage point increase in hold and 2.3% decrease in patrons. Keno and poker revenues increased 7.6% and decreased 10.3% respectively for the year ended December 31, 2014 compared to the year ended December 31, 2013. Casino operating expenses of $64.1 million, or 32.2% of casino revenues, for the year ended December 31, 2014, were unchanged from the year ended December 31, 2013. Our casino operating margin was 67.8% for both the years ended December 31, 2014 and December 31, 2013.

Hotel

Hotel revenues increased 12.3% to $71.9 million for the year ended December 31, 2014 from $64.0 million for the year ended December 31, 2013. Occupancy and average daily room rates increased for all properties. In addition, a 53.1% increase in resort fee revenue at the Stratosphere contributed to the increase in revenue. The resort fee at the Stratosphere was increased in April 2013 and again in May 2014. Overall occupancy increased to 68.5% for the year ended December 31, 2014 compared to 64.9% for the year ended December 31, 2013. Occupancy for the year ended December 31, 2013 was negatively impacted by the loss of a tour operator contract at the Stratosphere. Our overall ADR increased 26.24% for the year ended December 31, 2014 compared to the year ended December 31, 2013. Our hotel expenses increased 7.1% to $34.8 million for the year ended December 31, 2014, compared to $32.5 million for the Year ended December 31, 2013. The increase in hotel expenses was due primarily to increased labor costs, cable and internet expenses, supplies expenses and commissions and broker fees. Our hotel operating margin increased to 51.6% for the year ended December 31, 2014 as compared to 49.2% for the year ended December 31, 2013.

Food and Beverage

Food and beverage revenues increased 7.6% to $73.5 million for the year ended December 31, 2014 compared to $68.3 million for the year ended December 31, 2013. Revenues increased for all properties. Overall, average revenue per cover for the year ended December 31, 2014 increased 1.7% compared to the year ended December 31, 2013, while food covers and beverage covers increased 5.9% and decreased 1.5%, respectively. Our food and beverage expenses increased 5.5% to $55.5 million for the year ended December 31, 2014 compared to $52.6 million for the year ended December 31, 2013 due primarily to increased labor and food and beverage cost of goods. Our food and beverage operating margin increased to 24.5% for the year ended December 31, 2014 as compared to 23.0% for the year ended December 31, 2013.

Tower, Retail, Entertainment and Other

Tower, retail and other revenues increased 3.7% to $33.5 million for the year ended December 31, 2014 from $32.3 million for the year ended December 31, 2013. Tower revenues increased 6.2% for the year ended December 31, 2014, compared to the year ended December 31, 2013. The primary reason for the increase in tower revenues for year ended December 31, 2014 compared to the year ended December 31, 2013 was a 5.0% increase in guest admissions. Entertainment revenue declined 17.9% for the year ended December 31, 2014, compared to the year ended December 31, 2013. The decrease in entertainment revenue was due primarily to fewer performances at the Aquarius and a 24.9% decrease in patrons at the Stratosphere. Retail revenue increased 6.4% for the year ended December 31, 2014, compared to the year ended December 31, 2013.

Other operating income decreased 3.5% for the year ended December 31, 2014, compared to the year ended December 31, 2013. The decrease was primarily due to lower project development revenues. Other operating expenses increased 1.8% to $11.5 million for the year ended December 31, 2014, compared to $11.3 million for the year ended December 31, 2013. This increase was primarily due to higher labor costs, cost of goods and entertainer fees.

Promotional Allowances

Promotional allowances are comprised of the retail value of goods and services provided to casino customers under various marketing programs. As a percentage of casino revenues, promotional allowances increased to 13.6% for the year ended December 31, 2014 compared to 13.2% for the year ended December 31, 2013. The increase was due primarily to increased food and beverage promotions.

Pre-opening Expense

We incurred no pre-opening costs for the year ended December 31, 2014 compared to $119,000 for the year ended December 31, 2013. Pre-opening costs for the year ended December 31, 2013 were primarily comprised of equipment, labor costs and supplies for PIN UP, a burlesque show at the Stratosphere and equipment and supplies for the Duet Coffee and Wine venue at the Aquarius. PIN UP opened to the public on March 2, 2013 and Duet Coffee and Wine opened on August 16, 2013. Pre-opening expenses associated with PIN UP and Duet Coffee and Wine were approximately $114,000 and $5,000 respectively.

Selling, General and Administrative

Selling, general and administrative expenses are primarily comprised of payroll, marketing, advertising, utilities and other administrative expenses. These expenses increased 6.5% to $122.6 million, or 32.4% of gross revenues, for the year ended December 31, 2014, compared to $115.1 million, or 31.7% of gross revenues, for the year ended December 31, 2013. The increase in expenses was due primarily to increased labor costs, a $717,000 increase in utilities, a $657,000 increase in sales tax expenses, a $452,000 increase in maintenance contract expense, and a $248,000 increase in supplies expenses partially offset by a $741,000 decrease in repair and maintenance expenses. For the year ended December 31, 2014 labor cost included approximately $4.0 million in non-cash share-based compensation expense compared to none for the year ended December 31, 2013. For the year ended December 31, 2013 repair and maintenance expenses included approximately $1.0 million for projects at the Aquarius and sales tax expenses include a credit of approximately $1.1 million for the reversal of prior accruals for taxes on complimentary and employee meals. The company began accruing for sales taxes on complimentary meals provided to customers and employees in February 2012 based on a decision by the Nevada Tax Commission which was subsequently rescinded in July 2013. In addition, we expensed approximately $507,000 related to our interactive gaming initiative during the year ended December 31, 2014 compared to approximately $835,000 during the year ended December 31, 2013.

increase in expenses was due primarily to increased labor costs, a $717,000 increase in utilities, a $657,000 increase in sales tax expenses, a $452,000 increase in maintenance contract expense, and a $248,000 increase in supplies expenses partially offset by a $741,000 decrease in repair and maintenance expenses. For the year ended December 31, 2014 labor cost included approximately $4.0 million in non-cash share-based compensation expense compared to none for the year ended December 31, 2013. For the year ended December 31, 2013 repair and maintenance expenses included approximately $1.0 million for projects at the Aquarius and sales tax expenses include a credit of approximately $1.1 million for the reversal of prior accruals for taxes on complimentary and employee meals. The company began accruing for sales taxes on complimentary meals provided to customers and employees in February 2012 based on a decision by the Nevada Tax Commission which was subsequently rescinded in July 2013. In addition, we expensed approximately $507,000 related to our interactive gaming initiative during the year ended December 31, 2014 compared to approximately $835,000 during the year ended December 31, 2013.

Interest Expense

Interest expense decreased 29.5% to $26.3 million for the year ended December 31, 2014, compared to $37.3 million for the year ended December 31, 2013. The decrease was due primarily to the redemption of the 11% Senior Secured Notes, issuance of the First Lien Facilities and Second Lien Credit Agreement in July 2013 and repricing of the First Lien Facilities effective February 24, 2014.

~~Year Ended December 31, 2013 Compared to Year Ended December 31, 2012~~40

During 2013, the United States continued its slow recovery from the long economic recession that ended in 2009. According to the Lee Business School Center for Business and Economic Research at the University of Nevada Las Vegas, or CBER, at the trough in 2009, U.S. per capita GDP was 5.3% below its peak. As of the third quarter of 2013, U.S. per capita GDP had regained 98% of its recessionary loss. CBER also reported strong increases in consumer confidence during most of 2013. As the United States economy continues to recover, Las Vegas has shown positive economic signs. According to the Las Vegas Convention and Visitors Authority, or LVCVA, the number of visitors to Las Vegas grew each year from 2010 to 2012 and was down only 0.1% in 2013. Despite the slight decrease, the 39.7 million visitors in 2013 exceeded the prerecession peak of 39.2 million visitors in 2007. Employment in Las Vegas is increasing and unemployment is decreasing. Las Vegas housing prices have increased and mortgage defaults have slowed. The number of visitors to Laughlin decreased 1.3% in 2013, a decline of approximately 27,000 visitors. The number of room nights and occupancy, however, increased. Total gaming revenue in Clark County has increased each year beginning in 2010 and increased 2.9% in 2013. After deducting Baccarat, a game preferred by mostly wealthy international visitors, Clark County gaming revenue increased approximately 0.7% in 2013 compared to 2012. Although economic indicators are favorable in the United States and Clark County, accelerated growth has not occurred. Operators in all of our markets continue to use aggressive promotions and discounted prices to attract customers and increase occupancies at their properties. Competition for customers is intense. All of these factors have impacted our results.

Our consolidated gross revenues decreased 0.4% to $363.6 million for the year ended December 31, 2013 from $364.9 million for the year ended December 31, 2012. Consolidated income from operations and EBITDA increased 6.8% and decreased 10.6% to $30.0 million and $53.9 million for the year ended December 31, 2013 compared to $28.1 million and $60.3 million for the year ended December 31, 2012. The decreases in our gross revenues and EBITDA are due primarily to decreases in gaming, tower and entertainment revenues.

Income from operations and EBITDA for the year ended December 31, 2013 was positively impacted by a 0.8% decrease in selling, general and administrative expenses. The decrease in selling, general and administrative expenses for the year ended December 31, 2013 was due largely to a credit to sales tax expense of approximately $1.1 million to reverse previously accrued taxes on complimentary meals provided to customers and employees. During the year ended December 31, 2012, we accrued approximately $677,000 in expenses for sales taxes on complimentary meals provided to customers and employees based on a decision by the Nevada Tax Commission. In addition, income from operations and EBITDA for the year ended December 31, 2012 were negatively impacted by approximately $840,000 in expenses related to a terminated refinancing of the 11% Senior Secured Notes. EBITDA for the year ended December 31, 2013 was negatively impacted by a $7.9 million charge for the early redemption of debt related to the redemption of the remaining aggregate principal amount of our 11% Senior Secured Notes, of which approximately $6.3 million was non-cash. EBITDA for the year ended December 31, 2012 was also negatively impacted by a $1.1 million charge for the early redemption of debt related to the voluntary redemption of 5% of the aggregate principal amount of our 11% Senior Secured Notes, of which approximately $737,000 was non-cash. We also expensed approximately $500,000 for management fees for the year ended December 31, 2013, compared to $1.0 million for the year ended December 31, 2012. Finally, ACEP Interactive, our licensed internet gaming subsidiary, spent approximately $835,000 during the year ended December 31, 2013 to operate acePLAYPoker.com, which became operational in February 2013, compared to

approximately $135,000 in the year ended December 31, 2012. As a result, our consolidated net operating margin increased to 8.9% for the year ended December 31, 2013 compared to 8.3% for the year ended December 31, 2012.

Casino

Casino revenues consist of revenues from slot machines, table games, poker, race and sports book, bingo and keno. Casino revenues decreased 0.8% to $199.0 million for the year ended December 31, 2013, compared to $200.7 million for the year ended December 31, 2012. Decreased revenues at the Stratosphere and Arizona Charlie’s Decatur were partially offset by higher revenues at the Aquarius and Arizona Charlie’s Boulder. For the year ended December 31, 2013, our slot coin-in increased 0.2% while table drop declined 3.9% compared to the year ended December 31, 2012. For the year ended December 31, 2013, slot machine revenues were 85.3% of casino revenues and table game revenues were 11.4% of casino revenues, compared to 85.1% and 11.8% of casino revenues, respectively, for the year ended December 31, 2012. Other casino revenues, consisting of race and sports book, poker, bingo and keno, increased 3.2% for the year ended December 31, 2013 compared to the year ended December 31, 2012. Race and sports book revenues increased 0.4% for the year ended December 31, 2013 compared to the year ended December 31, 2012 due to a 0.6 percentage point increase in hold partially offset by a 5.3% decline in handle. Bingo revenues increased 43.3% for the year ended December 31, 2013 compared to the year ended December 31, 2012 due primarily to a 1.8 percentage point increase in hold. Keno and poker revenues declined 49.1% and 2.4% respectively for the year ended December 31, 2013 compared to the year ended December 31, 2012. Keno revenues declined as our Keno offering at Aquarius was discontinued in January 2013. Casino operating expenses decreased 1.5% to $64.1 million, or 32.2% of casino revenues, for the year ended December 31, 2013, from $65.1 million or 32.4% of casino revenues, for the year ended December 31, 2012. This decrease was primarily due to decreased participation expenses, revenue taxes and labor costs. Participation expenses consist of fees paid to game owners for use of their games. Despite the decline in revenues, our casino operating margin increased slightly to 67.8% for the year ended December 31, 2013 compared to 67.6% for the year ended December 31, 2012.

Hotel

Hotel revenues decreased 0.2% to $64.0 million for the year ended December 31, 2013 from $64.1 million for the year ended December 31, 2012. Increased revenues at the Aquarius and the Arizona Charlie’s properties were offset by decreased revenues at the Stratosphere for the year ended December 31, 2013 compared to the year ended December 31, 2012. Overall occupancy decreased to 64.9% for the year ended December 31, 2013 compared to 67.4% for the year ended December 31, 2012. The decline in overall room occupancy was due largely to declines at the Stratosphere, which fell to 79.1% for the year ended December 31, 2013, compared to 84.6% for the year ended December 31, 2012. The loss of a tour operator contract was responsible for the decline in occupancy at the Stratosphere as rooms sold in the tour and travel segment declined 56.7% compared to the year ended December 31, 2012. Stratosphere revenue for the year ended December 31, 2013 was positively impacted by a 71.6% increase in resort fee income. Our overall ADR decreased 0.5% for the year ended December 31, 2013 compared to the year ended December 31, 2012. Our hotel expenses decreased 4.7% to $32.5 million for the year ended December 31, 2013, compared to $34.1 million for the Year ended December 31, 2012. The decrease in hotel expenses was due primarily to decreased labor costs, supplies expenses and commissions and broker fees. Our hotel operating margin increased to 49.2% for the year ended December 31, 2013 as compared to 46.8% for the year ended December 31, 2012.

Food and Beverage

Food and beverage revenues increased 2.1% to $68.3 million for the year ended December 31, 2013 compared to $66.9 million for the year ended December 31, 2012. Revenues increased for all properties except the Aquarius. The decline in revenues at the Aquarius was primarily due to changes to our coffee venue. Our Starbucks franchise agreement ended on February 28, 2013 and was replaced with a temporary coffee venue with limited service. A permanent replacement, Duet Coffee and Wine, opened on August 16, 2013. Overall, average revenue per cover for the year ended December 31, 2013 increased 3.5% compared to the year ended December 31, 2012, while food covers and beverage covers decreased 1.3% and 1.0%, respectively. Our food and beverage expenses increased 1.9% to $52.6 million for the year ended December 31, 2013 compared to $51.6 million for the year ended December 31, 2012 due primarily to increased labor and food and beverage cost of goods. Our food and beverage operating margin increased slightly to 23.0% for the year ended December 31, 2013 as compared to 22.9% for the year ended December 31, 2012.

Tower, Retail, Entertainment and Other

Tower, retail and other revenues decreased 2.7% to $32.3 million for the year ended December 31, 2013 from $33.2 million for the year ended December 31, 2012. Tower revenues decreased 1.2% for the year ended December 31, 2013, compared to the year ended December 31, 2012. The primary reason for the decrease in Tower revenues for year ended December 31, 2013

compared to the year ended December 31, 2012 was a 6.1% increase in average revenue per guest admission offset by a 6.9% decrease in admissions. Entertainment revenue declined 35.2% for the year ended December 31, 2013, compared to the year ended December 31, 2012. The decrease in entertainment revenue was due primarily to fewer performances and lower average ticket prices. The Bite show at the Stratosphere closed on October 31, 2012 and its replacement, PIN UP, debuted on March 2, 2013. Retail revenue increased 1.0% for the year ended December 31, 2013, compared to the year ended December 31, 2012. Other operating income decreased 0.5% for the year ended December 31, 2013, compared to the year ended December 31, 2012. The decrease was primarily due to lower management fee and project development revenues. Other operating expenses decreased 1.7% to $11.3 million for the year ended December 31, 2013, compared to $11.5 million for the year ended December 31, 2012. This decrease was primarily due to lower entertainer fees and equipment rental expenses.

Promotional Allowances

Promotional allowances are comprised of the retail value of goods and services provided to casino customers under various marketing programs. As a percentage of casino revenues, promotional allowances increased to 13.2% for the year ended December 31, 2013 compared to 12.5% for the year ended December 31, 2012. The increase was due primarily to increased food and beverage promotions.

Pre-opening Expense

We incurred $119,000 in pre-opening costs for the year ended December 31, 2013 compared to $72,000 for the year ended December 31, 2012. Pre-opening costs for the year ended December 31, 2013 were primarily comprised of equipment, labor costs and supplies for PIN UP, a burlesque show at the Stratosphere and equipment and supplies for the Duet Coffee and Wine venue at the Aquarius. PIN UP opened to the public on March 2, 2013 and Duet Coffee and Wine opened on August 16, 2013. Pre-opening expenses associated with PIN UP and Duet Coffee and Wine were approximately $114,000 and $5,000 respectively. Pre-opening costs for the year ended December 31, 2012 consisted primarily of equipment, labor costs and supplies for the McCall’s Heartland Grill restaurant venue and PIN UP, a burlesque show at the Stratosphere. Pre-opening expenses associated with McCall’s Heartland Grill and PIN UP were approximately $55,000 and $17,000 respectively. McCall’s Heartland Grill opened to the public on October 25, 2012.

Selling, General and Administrative

Selling, general and administrative expenses are primarily comprised of payroll, marketing, advertising, utilities and other administrative expenses. These expenses decreased 0.8% to $115.1 million, or 31.7% of gross revenues, for the year ended December 31, 2013, compared to $116.0 million, or 31.8% of gross revenues, for the year ended December 31, 2012. The decline in expenses was due primarily to reduced sales tax expenses, legal fees, and management fees partially offset by increased marketing related expenses. For the year ended December 31, 2013 sales tax expenses include a credit of approximately $1.1 million for the reversal of prior accruals for taxes on complimentary and employee meals. In May 2013, the Nevada Tax Commission ratified a settlement agreement with a group of casinos stipulating that the Nevada Department of Taxation would not collect taxes on future complimentary and employee meals in exchange for the casinos dropping claims against the Nevada Department of Taxation for taxes that have already been paid. The settlement was contingent on legislative action by the Nevada Legislature. In June 2013, the Nevada Legislature approved and the Governor of Nevada subsequently signed A.B. 506, which exempts complimentary meals provided to customers and employees from taxation. Conversely, sales tax expenses for the year ended December 31, 2012 includes approximately $248,000 for an audit assessment related to a Nevada Department of Taxation audit and $677,000 in accrued sales tax expenses for complimentary and employee meals. During 2013, our management agreement with a related party expired, resulting in $500,000 in savings. During the year ended December 31, 2012 we incurred approximately $840,000 in expenses related to a terminated refinancing of the 11% Senior Secured Notes. In addition, we expensed approximately $835,000 related to our interactive gaming initiative during the year ended December 31, 2013 compared to approximately $135,000 during the year ended December 31, 2012.

Interest Expense

Interest expense decreased 12.9% to $37.3 million for the year ended December 31, 2013, compared to $42.8 million for the year ended December 31, 2012. The decrease was due primarily to the redemption of the 11% Senior Secured Notes and issuance of the First Lien Facilities and Second Lien Credit Agreement.

Financial Condition

Liquidity and Capital Resources

The following liquidity and capital resources discussion contains certain forward-looking statements with respect to our business, financial condition, results of operations, dispositions, acquisitions, renovation projects and our subsidiaries, which involve risks and uncertainties that cannot be predicted or quantified, and consequently, actual results may differ materially from those expressed or implied herein. Such risks and uncertainties include, but are not limited to, financial market risks, the ability to maintain existing management, competition within the gaming industry, the cyclical nature of the hotel business and gaming business, economic conditions, regulatory matters and litigation and other risks described in our filings with the Securities and Exchange Commission. In addition, renovation projects entail significant risks, including shortages of materials or skilled labor, unforeseen regulatory problems, work stoppages, weather interference, floods, unanticipated cost increases, and disruption to business. The anticipated costs and construction periods are based on budgets, conceptual design documents and construction schedule estimates. There can be no assurance that the budgeted costs or construction period will be met. All forward-looking statements are based on our current expectations and projections about future events.

During the year ended December 31, ~~2014~~2015, our Net Cash Provided by Operating Activities was approximately $4063.79 million, compared to $2440.37 million for the year ended December 31, ~~2013~~2014. Cash flows used in investing activities were $1319.34 million for the year ended December 31, ~~2014~~2015, and consisted primarily of $1420.59 million of capital expenditures (including approximately $1.13 million in non-cash items), of which approximately $3.68 million was spent on slot machine replacements and conversions, $410.50 million for renovations to our hotel rooms, public areas and food and beverage venues, $1.79 million on information technology and $45.72 million on our facilities and operations. During the year ended December 31, ~~2013~~2014, ~~our~~cash ~~total~~flows ~~capital~~used ~~expenditures~~in investing activities were $13.93 million and consisted primarily of $14.5 million of capital expenditures (including approximately $1.31 million in non-cash items), of which approximately $23.06 million was spent on slot machine replacements and conversions, $24.05 million ~~on upgrading and replacing the building controls at the Stratosphere and Aquarius, $3.7 million~~ for renovations to our hotel rooms, public areas and food and beverage venues, $1.17 million on information technology and $3.4.7 million on our facilities and operations. Cash flows used in financing activities were $549.7 million for the year ended December 31, ~~2014~~2015 compared to $195.97 million for the year ended December 31, ~~2013~~2014. ~~During~~On March 31, 2015, in respect of the ~~year~~First ~~ended~~Lien ~~December 31,~~Term ~~2013~~Loans, ~~proceeds~~we ~~from~~made an "excess cash flow" principal payment for the ~~issuance~~2014 fiscal year of approximately $9.4 million and a voluntary principal payment of $20.6 million. On July 7, 2015, the ~~First~~proceeds ~~Lien~~from ~~Facilities~~the ~~and~~issuance ~~Second~~of ~~Lien~~the 2015 Term Loans of $~~329~~293.35 million were used together with cash on hand to ~~redeem~~repay in full the ~~remaining~~Company's ~~aggregate~~existing ~~principal~~debt ~~amount~~under the ~~11%~~2013 ~~Senior~~Credit ~~Secured Notes~~Agreements.

Our primary cash requirements for ~~2015~~2016 are expected to include (i) expenses associated with ongoing day-to-day operations, (ii) interest and principal payments on indebtedness, (iii) payments for design and development costs of future projects, and (iv) regular maintenance and other capital expenditures which will be evaluated throughout the year.

~~During~~Our ~~2015,~~2016 wecapital ~~will~~expenditure ~~make~~budget anof approximately $931.48 million ~~"excess~~includes ~~cash~~approximately ~~flow"~~$5.3 ~~principal~~million ~~payment~~for onslot ~~our~~machine ~~First~~replacements ~~Lien~~and ~~Facilities~~conversions inand ~~addition~~approximately ~~to the standard debt amortization payment~~$6.6 ~~This~~million ~~payment~~on ispool ~~due~~renovations ~~within~~at ~~120~~Stratosphere ~~days~~and ofthe ~~December 31, 2014~~Aquarius. OnIn ~~March 31, 2015, in~~ addition ~~to our previously discussed payments~~, we ~~will~~are ~~make~~evaluating aadditional ~~voluntary~~improvements ~~prepayment~~to on our ~~First~~properties ~~Lien~~that ~~Term~~we ~~Loan~~believe inwill enhance the ~~amount~~overall ofguest ~~$20~~experience.~~6 million.~~

~~Our~~The 2015 ~~capital~~Term ~~expenditure~~Loans ~~budget~~bear interest either at a base rate plus 2.75% per annum or at the reserve-adjusted eurodollar rate plus 3.75% per annum. In the case of ~~approximately~~eurodollar ~~$32~~loans, interest is computed on the basis of a 360-day year and the actual number of days between interest periods with interest payable on the last day of each interest period of one month, two months, or three months, or, in the case of interest periods longer than three months, every three months. The 2015 Term Loans are subject to scheduled principal payments on the last day of each calendar quarter ending on and after December 31, 2015 in an amount equal to 0.25% ~~million~~of ~~includes~~the ~~approximately~~original $4principal balance.6 ~~million~~The 2015 Term Loans are also subject to annual principal payments based on excess cash flow. For the fiscal year ending December 31, 2015, the Company will be required to make a principal payment equal to 50% of excess cash flow for ~~slot~~the ~~machine~~period ~~replacements~~of August 1, 2015 through December 31, 2015, and ~~conversions~~for all fiscal years ending on and after December 31, 2016 through the maturity date of the 2015 Term Loans, the percentage of excess cash flow required to be prepaid will vary based on the ratio of total indebtedness (net of unrestricted cash) to trailing four quarter adjusted EBITDA. In addition, we are ~~evaluating~~entitled ~~additional~~to ~~improvements~~at any time make voluntary principal prepayments to ~~our~~the ~~properties~~2015 ~~that~~Term weLoans ~~believe~~in ~~will~~amounts ~~enhance~~of ~~the~~$1 ~~overall~~million ~~guest~~or ~~experience~~greater.

OnDuring ~~February 24~~April, ~~2014~~2016, we ~~entered~~will ~~into~~not anbe ~~amendment~~required ofto ~~the~~make ~~First~~an ~~Lien~~"excess ~~Credit~~cash ~~Agreement.~~flow" ~~Among~~principal ~~other~~payment ~~changes,~~as ~~the~~defined ~~Amendment~~in ~~reduced~~ the ~~interest~~Credit ~~rates~~and onGuaranty ~~the~~agreement ~~Term~~for ~~Loans by 125 basis points per annum. Interest now accrues, at our election, (i) at~~ the ~~adjusted~~2015 ~~eurodollar~~Term ~~rate plus 3~~Loans.~~50% per annum or (ii) at the Base Rate plus 2.50% per annum. Additionally, the minimum adjusted eurodollar rate was reduced by 25 basis points from 1.25% per annum to 1.00% per annum.~~

At December 31, ~~2014~~2015, we had unrestricted cash and cash equivalents of $7771.08 million. We believe our cash flow from operations and our cash balances will be sufficient to fund our operations, interest payments and capital expenditures for the next 12 months. However, our ability to fund our operations, make payments on our debt and fund planned capital expenditures will depend on our ability to generate cash in the future. This is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control as well as the factors described in the section entitled Risk Factors in Item 1A. As a result, we expect our primary source of cash to come from the operation of our properties.

3941

next 12 months. However, our ability to fund our operations, make payments on our debt and fund planned capital expenditures will depend on our ability to generate cash in the future. This is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control as well as the factors described in the section entitled Risk Factors in Item 1A. As a result, we expect our primary source of cash to come from the operation of our properties.

We believe that our cash flows from operations, restricted cash, and existing cash balances will be adequate to satisfy our anticipated uses of capital during the next twelve months. However, our forecasts of operations and estimates of our reasonably anticipated liquidity needs may change and further deterioration in the Las Vegas, Laughlin and U.S. economies, or other unforeseen events could occur, resulting in the need to raise additional funds from outside sources. Additional financing, if needed, may not be available to us, or if available, the financing may not be on terms favorable to us.

The table below sets forth our contractual obligations as of December 31, ~~2014~~2015.

			Payments due by Period
Contractual Obligations	Total		Less than 1 Year		12-3 Years		4-5 Years		More than 5 Years
	(in thousands)
Debt1	$	~~331~~293,~~775~~525	$	112,~~501~~950	$	45,~~300~~900	$	~~195~~5,~~974~~900	$	~~120~~278,~~000~~775
Interest on debt	~~109~~89,~~552~~526		2314,~~083~~178		4527,~~654~~852		4027,~~740~~293		7520,203
Capital leases, including interest2	6,~~985~~900		85		170		170		6,~~560~~475
Operating leases	~~113~~76		3728		5243		245		—
Other Contractual Obligations	1,220		1,220		—		—		—
Other Contractual Obligations3	7,838		7,838		—		—		—
Total	$	~~449~~397,~~645~~865	$	3525,~~926~~079	$	5033,~~176~~965	$	~~236~~33,~~908~~368	$	~~126~~305,~~635~~453

(1) Does not reflect unamortized discount and deferred issuance costs of $49.72 million.

(2) Contractual obligations for capital leases include amounts due under a 99-year lease for storage space located at the Arizona Charlie’s Decatur property. We are currently making monthly payments for the storage space of approximately $8,000 ~~thousand~~ per month.


(3)	Consists of contracts for pool renovation projects and executive compensation.

Off-Balance Sheet Liabilities

We do not have any off-balance sheet arrangements as defined in Item 303(a) (4) (ii) of SEC Regulation S-K.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. As such, we are required to make estimates and assumptions about the effects of matters that are inherently uncertain. Those estimates and assumptions are derived and continually evaluated based on historical experiences, current facts and circumstances, and changes in the business environment. However, actual results may sometimes differ materially from estimates under different conditions. We have summarized our significant accounting policies in Note 1 to our consolidated financial statements. Of the accounting policies, we believe the following may involve a higher degree of judgment and complexity.

Revenue Recognition

Casino revenue is recorded as the net win from gaming activities (the difference between gaming wins and losses). Casino revenues are net of accruals for anticipated payouts of progressive and certain other slot machine jackpots. Contingent rental income is recognized when the right to receive such rental income is established according to the lease agreements. All other revenues are recognized as the services are provided. Gross revenues include the retail value of rooms, food and beverage and other items that are provided to customers on a complimentary basis. Such amounts are then deducted as promotional allowances. Promotional allowances also include incentives for goods and services earned in our slot club and other gaming programs.

The Company collects taxes from customers at the point of sale on transactions subject to sales and other taxes. Revenues are recorded net of any taxes collected.

We also reward customers, through the use of loyalty programs, with Free Play and points based on amounts wagered, that can be redeemed for a specified period of time for cash or non-cash awards. We deduct the cash incentive amounts from casino revenue.

Slot Club Liability

We offer a program, named ace|PLAY, whereby participants can accumulate points for casino wagering that can currently be redeemed for cash, free play, lodging, food and beverages, and merchandise. Participant points expire after thirteen months of no activity. A liability is recorded for the estimate of unredeemed points based upon redemption history at our casinos. Changes in the program, increases in membership and changes in the redemption patterns of the participants can impact this liability. Slot club liability is included in accrued expenses on the consolidated balance sheet.

Self-Insurance

We retain the obligation for certain losses related to customers’ claims of personal injuries incurred while on our properties, for the first $100,000 per claim. Effective February 20, 2014, we retain the obligation for losses related to Worker’s Compensation claims for the first $350,000 per incident. We accrue for outstanding reported claims, claims that have been incurred but not reported and projected claims based upon management’s estimates of the aggregate liability for uninsured claims using historical experience, and adjusting company’s estimates and the estimated trends in claim values. Although management believes it has the ability to adequately project and record estimated claim payments, it is possible that actual results could differ significantly from the recorded liabilities.

Intangible Assets and Long-Lived Assets

Our finite-lived intangible assets consist of a non-compete agreement and player loyalty plan, and our indefinite-lived intangible assets consist of trade names. Acquired assets are recorded at fair value on the date of acquisition. Finite-lived intangible assets are amortized over the estimated period to be benefited. Indefinite-lived intangible assets are not amortized, but are reviewed annually for impairment, during the fourth quarter or when a triggering event occurs.

We account for indefinite-lived intangible assets in accordance with applicable guidance. For indefinite-lived intangible assets, we perform an annual impairment test of these assets in the fourth quarter of each year and between annual dates in certain circumstances. For assets to be disposed of we recognize the asset at the lower of carrying value or fair market value, less costs of disposal, as estimated based on comparable asset sales, solicited offers, or a discounted cash flow model. For long-lived assets to be held and used, we review for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. We then compare the estimated undiscounted future cash flows of the asset to the carrying value of the asset. The asset is not impaired if the undiscounted future cash flows exceed its carrying value. If the carrying value exceeds the undiscounted future cash flows, then an impairment charge is recorded, typically measured using a discounted cash flow model, which is based on the estimated future results of the relevant reporting property discounted using our weighted-average cost of capital and market indicators of terminal year free cash flow multiples. If an asset is under development, future cash flows include remaining construction costs. All recognized impairment charges are recorded as operating expenses.

Management must make various assumptions and estimates in performing its impairment testing. For instance, management must first determine the usage of the asset. To the extent management decides that an asset will be sold or abandoned, it is more likely that impairment may be recognized. Assets must be tested at the lowest level for which identifiable cash flows exist, which means that some assets must be grouped, and management has some discretion in the grouping of assets. Future cash flow estimates are, by their nature, subjective and actual results may differ materially from our estimates. If our ongoing estimates of future cash flows are not met, we may have to record additional impairment charges in future accounting periods. Our estimates of cash flows are based on the current regulatory, social and economic climates, recent operating information and budgets of the various properties where we conduct operations. These estimates could be negatively impacted by changes in federal, state or local regulations, economic downturns, or other events affecting various forms of travel and access to our properties.

Stock-Based Compensation

Share-based compensation expense is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense, net of estimated forfeitures, over the employee's requisite service period. Compensation costs related to stock option awards are calculated based on the fair value of each major option grant on the date of the grant using the Black-Scholes-Merton option pricing model, which requires the following assumptions: expected stock price volatility, risk-free interest rates, expected option lives and dividend yields. We formed our assumptions using historical experience and observable market conditions.

Commitments and Contingencies

On an ongoing basis, we assess the potential liabilities related to any lawsuits or claims brought against us. While it is typically very difficult to determine the timing and ultimate outcome of such actions, the Company uses its best judgment to determine if it is probable that it will incur an expense related to the settlement or final adjudication of such matters and whether a reasonable estimation of such probable loss, if any, can be made. We accrue a liability when we believe a loss is probable and the amount of loss can be reasonably estimated. Due to the inherent uncertainties related to the eventual outcome of litigation, it is possible that certain matters may be resolved for amounts materially different from any provisions or disclosures that we previously made.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)No. 2014-09, Revenue from Contracts with Customers, which is effective for fiscal years, and interim periods within those years, beginning on or after December 15, ~~2016~~2017. ASU 2014-09 outlines a new, 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. This new revenue recognition model provides a five-step analysis in determining when and how revenue arising from contracts with customers is recognized. Additionally, the new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. The Company is currently assessing the impact that adoption of this new accounting guidance will have on its consolidated financial statements and footnote disclosures.

In June 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This update amends current guidance to require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition and that existing guidance for performance conditions should be used to account for such awards. The amendments in this update will be effective for annual periods beginning after December 15, 2015, with early adoption permitted. This standard is not expected to have an impact on our consolidated financial statements.

In January 2015, FASB issued ASU No. 2015-01, Income Statement - Extraordinary and Unusual Items. This update eliminates the concept of extraordinary items from current guidance but will require an entity to present material transactions or events that are either unusual or infrequently occurring (or both) to be reported as a separate component of income from continuing operations, or alternatively disclosed in notes to financial statements. The amendments in the update will be effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2015. This standard is not expected to have an impact on our consolidated financial statements.

In April 2015, FASB issued ASU No. 2015-03, Interest-Imputation of Interest. This update amends current guidance by requiring debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The amendments in this update will be effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. Early adoption will be permitted for financial statements that have not been previously issued. The Company adopted this new accounting guidance during the third quarter of 2015.

In July 2015, FASB issued ASU No. 2015-11, Inventory. This amendment requires that inventory be measured at the lower of cost or net realizable value. This amendment applies to inventory measured using first-in, first-out or average cost methods but does not apply to inventory measured using last-in, first-out or the retail inventory method. The amendments in the update will be effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016. Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company is currently assessing the impact the adoption of this new accounting guidance will have on its consolidated financial statements.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our primary risk exposure relates to interest rate risk. The fair value of our debt is estimated based on the quoted market prices for the same or similar issues. The estimated fair value of the ~~First~~2015 ~~Lien~~ Term Loans ~~and Second Lien Term Loans~~ was approximately $~~209~~292.1 million ~~and $123.6 million, respectively,~~ as of December 31, ~~2014~~2015. For the year ended December 31, ~~2014~~2015, we incurred approximately $2620.48 million in interest expense. Interest on the ~~First~~2015 ~~Lien and Second Lien~~ Term Loans is variable LIBOR plus a margin, ~~and effective February 24, 2014~~ with a floor LIBOR rate of 1.00% ~~for the First Lien and a floor LIBOR of 1~~.~~25%.~~ If LIBOR increased by 1.00% above the floor rate, our annual interest costs would increase by approximately $3.40 million.

4245

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	4447
Consolidated Balance Sheets as of December 31, 2014 and 2013	45
Consolidated Balance Sheets as of December 31, 2015 and 2014	48
Consolidated Statements of Operations for the years ended December 31, 2014, 2013 and 2012	46
Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013	49
Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012	47
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013	50
Consolidated Statements of Members’ Equity for the years ended December 31, 2014, 2013 and 2012	48
Consolidated Statements of Members’ Equity for the years ended December 31, 2015, 2014 and 2013	51
Notes to Consolidated Financial Statements	4952

4346

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Members

American Casino & Entertainment Properties LLC

We have audited the accompanying consolidated balance sheets of American Casino & Entertainment Properties LLC and subsidiaries (collectively, the “Company”) as of December 31, ~~2014~~2015 and ~~2013~~2014, and the related consolidated statements of operations, members’ equity, and cash flows for each of the three years in the period ended December 31, ~~2014~~2015. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of American Casino & Entertainment Properties LLC and subsidiaries as of December 31, ~~2014~~2015 and ~~2013~~2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, ~~2014~~2015 in conformity with accounting principles generally accepted in the United States of America.

/s/ GRANT THORNTON LLP

Reno, Nevada

March 2623, ~~2015~~2016

4447

AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC

CONSOLIDATED BALANCE SHEETS

	As of December 31, 2014		As of December 31, 2013
	As of December 31, 2015		As of December 31, 2014
	(In thousands)
Assets
Current Assets:
Cash and cash equivalents	$	7671,~~953~~763	$	5576,~~151~~953
Investments-restricted	~~211~~189		211
Accounts receivable, net	45,~~427~~205		34,~~953~~427
Accounts receivable, net - related party	—		8
Other current assets	13,022		12,578
Other current assets	12,578		12,133
Total Current Assets	90,179		94,169
Total Current Assets	94,169		71,456
Property and equipment, net	1,053,810		1,065,250
Property and equipment, net	1,065,250		1,080,069
Intangible and other assets	15,637		15,564
Debt issuance costs, net	9,601		8,115
Total Assets	$	1,159,626	$	1,174,983
Intangible and other assets	15,564		15,627
Total Assets	$	1,184,584	$	1,175,267
Liabilities and Members' Equity
Current Liabilities:
Accounts payable	$	5,~~270~~933	$	65,~~034~~270
Accrued expenses	1416,~~036~~556		1314,~~758~~036
Accounts payable and accrued expenses - related party	18		1
Accrued payroll and related expenses	1213,~~007~~329		1112,~~413~~007
Current portion of long-term debt	112,~~501~~950		211,~~150~~501
Current portion of capital lease obligations	—		~~376~~—
Total Current Liabilities	4238,~~815~~776		3342,~~732~~815
Long-Term Liabilities:
Long-term debt, net of unamortized discount	313,252		320,784
Long-term debt, net of unamortized discount and debt issuance costs	280,887		303,651
Long-term debt - related party	~~2,346~~517		52,~~582~~346
Capital lease obligations, less current portion	948		948
Total Long-Term Liabilities	~~316~~282,~~546~~352		~~327~~306,~~314~~945
Total Liabilities	~~359~~321,~~361~~128		~~361~~349,~~046~~760
Commitments and Contingencies
Members' Equity:
Members' Equity	~~825~~838,~~223~~498		~~814~~825,~~221~~223
Total Members' Equity	~~825~~838,~~223~~498		~~814~~825,~~221~~223
Total Liabilities and Members' Equity	$	1,~~184~~159,~~584~~626	$	1,~~175~~174,~~267~~983

See notes to consolidated financial statements.

4548

AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC

CONSOLIDATED STATEMENTS OF OPERATIONS

	Years ended December 31,
	2014			2013			2012
	2015			2014			2013
	(in thousands)
Revenues:
Casino	$	~~199~~205,~~279~~033		$	~~198~~199,~~945~~279		$	~~200~~198,~~676~~945
Hotel	7183,~~897~~070			6471,~~040~~897			64,~~099~~040
Food and beverage	7378,~~548~~606			6873,~~327~~548			6668,~~906~~327
Tower, retail, entertainment and other	3334,~~464~~378			3233,~~287~~464			3332,~~161~~287
Gross revenues	~~378~~401,~~188~~087			~~363~~378,~~599~~188			~~364~~363,~~842~~599
Less promotional allowances	2728,~~057~~020			2627,~~164~~057			2526,~~113~~164
Net revenues	~~351~~373,~~131~~067			~~337~~351,~~435~~131			~~339~~337,~~729~~435
Costs And Expenses:
Casino	64,~~141~~386			64,~~067~~141			6564,~~085~~067
Hotel	3437,~~823~~152			3234,~~484~~823			3432,~~072~~484
Food and beverage	5558,~~490~~129			5255,~~572~~490			5152,~~645~~572
Other operating expenses	1110,~~526~~833			11,~~275~~526			11,~~496~~275
Selling, general and administrative	~~122~~123,~~569~~993			~~114~~122,~~807~~569			~~115~~114,~~039~~807
Depreciation and amortization	29,~~257~~086			3129,~~678~~257			3331,~~311~~678
Pre-opening costs	—			~~119~~—			72119
Gain on disposal of assets	(26		)	(61		)	(70		)
(Gain) loss on disposal of assets	1,974			(26		)	(61		)
Management fee - related party	—			~~500~~—			~~1,000~~500
Total costs and expenses	~~317~~325,~~780~~553			~~307~~317,~~441~~780			~~311~~307,~~650~~441
Income From Operations	3347,~~351~~514			2933,~~994~~351			2829,~~079~~994
Other Income (Expense):
Other Expense:
Loss on debt redemption	—(14,679		)	~~(7,866~~—		)	(17,~~112~~866		)
Interest expense	(2519,~~773~~862		)	(3425,~~605~~773		)	(4234,~~765~~605		)
Interest expense - related party	(~~598~~911		)	(~~2,658~~598		)	—(2,658		)
Total other expense, net	(26,371		)	(45,129		)	(43,877		)
Total other expense	(35,452		)	(26,371		)	(45,129		)
Net Income (Loss)	$	612,~~980~~062		$	~~(15~~6,~~135~~980	)	$	(15,~~798~~135	)

See notes to consolidated financial statements.

4649

AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years ended December 31,
	2014			2013			2012
	2015			2014			2013
	(in thousands)
Cash Flows from Operating Activities:
Net income (loss)	$	612,~~980~~062		$	~~(15~~6,~~135~~980	)	$	(15,~~798~~135	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	29,~~257~~086			3129,~~678~~257			3331,~~311~~678
Amortization of debt issuance and debt discount costs	21,~~371~~899			42,~~153~~371			54,~~679~~153
Loss on debt redemption	—14,679			~~7,866~~—			17,~~112~~866
Gain on disposal of assets	(26		)	(61		)	(70		)
(Gain) loss on disposal of assets	1,974			(26		)	(61		)
Share-based compensation expense	41,~~022~~213			—4,022			—
Changes in operating assets and liabilities:
Accounts receivable, net	(~~474~~778		)	(~~434~~474		)	~~761~~(434		)
Other assets	(~~382~~517		)	(~~396~~382		)	(~~189~~396		)
Accounts payable and accrued expenses	(14,~~017~~301		)	(31,~~473~~017		)	(~~113~~3,473		)
Related party activity, net	87			898			8789
Net Cash Provided By Operating Activities	4063,~~739~~926			2440,~~287~~739			24,~~780~~287
Cash Flows from Investing Activities:
Acquisition of property and equipment	(13,336		)	(12,588		)	(16,530		)
Decrease in investments-restricted	22			—			—
Proceeds from sale of property and equipment	49			169			134
Acquisition of property and equipment	(19,524		)	(13,336		)	(12,588		)
Net Cash Used In Investing Activities	(13,287		)	(12,419		)	(16,396		)
Proceeds from sale of property and equipment	108			49			169
Net Cash Used In Investing Activities	(19,394		)	(13,287		)	(12,419		)
Cash Flows from Financing Activities:
Deferred financing costs	(3,124		)	(8,693		)	—
Prepayment and debt financing costs	(9,998		)	(3,124		)	(10,257		)
Payments of debt redemption costs	—			(1,564		)	(375		)
Payments on notes payable	(333,249		)	(2,150		)	(338,575		)
Payments on notes payable	(2,150		)	(338,575		)	(18,750		)
Proceeds from issuance of long-term debt	293,525			—			329,250
Proceeds from issuance of long-term debt	—			329,250			—
Payments on capital lease obligation	—			(376		)	(304		)
Payments on capital lease obligation	(376		)	(304		)	(291		)
Net Cash Used In Financing Activities	(49,722		)	(5,650		)	(19,886		)
Net Cash Used In Financing Activities	(5,650		)	(19,886		)	(19,416		)
Net increase (decrease) in cash and cash equivalents	(5,190		)	21,802			(8,018		)
Net increase (decrease) in cash and cash equivalents	21,802			(8,018		)	(11,032		)
Cash and cash equivalents - beginning of period	76,953			55,151			63,169
Cash and cash equivalents - beginning of period	55,151			63,169			74,201
Cash and Cash Equivalents - end of period	$	71,763		$	76,953		$	55,151
Cash and Cash Equivalents - end of period	$	76,953		$	55,151		$	63,169
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest, net of amounts capitalized	$	2318,~~998~~901		$	3423,~~581~~998		$	3734,~~165~~581
Supplemental Disclosures of Non-Cash Items:
Accrued capital expenditures	$	1,~~125~~329		$	1,~~325~~125		$	~~876~~1,325

See notes to consolidated financial statements.

4750

AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC

CONSOLIDATED STATEMENTS OF MEMBERS’ EQUITY

(in thousands)

	Class AEquity		Class BEquity			Total Equity
Balance at December 31, 2011	—		845,154			845,154
Net Loss	—		(15,798		)	(15,798		)
Balance at December 31, 2012	—		829,356			829,356
Net Loss	—		(15,135		)	(15,135		)
Balance at December 31, 2013	—		814,221			814,221
Net Income	—		6,980			6,980
Share-based compensation expense	—		4,022			4,022
Balance at December 31, 2014	$—	—	$825,223	~~825,223~~		$825,223	~~825,223~~
Net Income	—		12,062			12,062
Share-based compensation expense	—		1,213			1,213
Balance at December 31, 2015	$	—	$	838,498		$	838,498

See notes to consolidated financial statements.

4851

AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

THE YEARS ENDED DECEMBER 31, ~~2014~~2015, ~~2013~~2014 AND ~~2012~~2013


Note 1.	Description of Business and Summary of Significant Accounting Policies

The Company

On February 20, 2008, ACEP, Voteco and Holdings entered into an Amended and Restated Limited Liability Company Agreement of ACEP, or the Amended Operating Agreement.

On February 20, 2008, each member of Voteco, Holdings and Voteco entered into a Transfer Restriction Agreement. The Transfer Restriction Agreements provides, among other things, that:

•


•	A specific purchase price, as determined in accordance with the Transfer Restriction Agreement, will be paid to acquire the Class A Interests from Voteco, and


•	Voteco will not transfer ownership of Class A Interests owned by it except pursuant to such option of Holdings.

On ~~February~~July 207, ~~2008~~2015, ~~Voteco acquired control of~~ ACEP ~~from our previous direct parent~~, ~~which~~or ~~sold all~~ the ~~issued~~Company, and ~~outstanding~~certain ~~membership interests~~ of ~~ACEP~~its tosubsidiaries, ~~Voteco~~or ~~pursuant to~~ the ~~membership~~Guarantors, ~~interest~~entered ~~purchase~~into ~~agreement.~~a ~~The~~Credit ~~membership~~and ~~interests~~Guaranty ofAgreement, ~~ACEP~~or ~~acquired~~the byCredit ~~Voteco~~Agreement. ~~were~~Pursuant ~~redeemed and canceled pursuant~~ to the terms of the ~~Amended~~Credit ~~Operating~~ Agreement, ~~entered~~the ~~into~~Lenders byprovided ~~ACEP,~~the ~~Voteco~~Company ~~and~~with ~~Holdings~~senior onsecured ~~February~~loan ~~20,~~facilities ~~2008.~~in ~~Voteco~~an ~~acquired~~aggregate ~~100%~~principal amount of ~~our~~$310 ~~voting~~million, ~~securities~~consisting byof ~~purchasing~~$295 ~~100%~~million of ~~our~~senior ~~newly~~secured ~~issued~~term ~~Class A~~loans, ~~Interests~~or inthe ~~exchange~~2015 ~~for~~Term ~~consideration~~Loans, inand ~~the~~a ~~amount of~~ $~~30.~~15 ~~The~~million ~~source~~revolving ofcredit ~~funds~~facility, ~~used~~or ~~by Voteco to purchase~~ the ~~Class A~~New ~~Interests~~Revolving ~~were~~Facility. ~~contributions~~The ofproceeds ~~capital~~from ~~made~~the to2015 ~~Voteco~~Term byLoans ~~each~~were ofused ~~its~~to ~~three~~redeem ~~members. Each~~the ofFirst ~~the~~Lien ~~members~~Term ofLoans ~~Voteco~~and isSecond ~~party~~Lien toTerm ~~the~~Loans. ~~Transfer~~(See ~~Restriction~~note ~~Agreement.~~7)

On July 3, 2013, ACEP and certain of its subsidiaries, or Guarantors, entered into a First Lien Credit and Guaranty Agreement, or First Lien Credit Agreement. Pursuant to the terms of the First Lien Credit Agreement, the First Lien Lenders provided the Company with senior secured loan facilities in an aggregate principal amount of $230 million, consisting of $215 million of

4952

senior secured term loans, or First Lien Term Loans, and $15 million of senior secured revolving credit facility, or Revolving Facility (the Revolving Facility together with the First Lien Term Loans, the “First Lien Facilities”).

On July 3, 2013, ACEP and the Guarantors entered into a Second Lien Credit and Guaranty Agreement, or Second Lien Credit Agreement. Pursuant to the terms of the Second Lien Credit Agreement, the Second Lien Lenders provided the Company with secured second lien term loans in the aggregate principal amount of $120 million, or the Second Lien Term Loans. The proceeds from the First Lien Term Loans and Second Lien Term Loans were used to purchase the outstanding 11% Senior Secured Notes that were tendered in connection with the Issuer’s previously announced tender offer and to redeem the remaining outstanding 11% Senior Secured Notes.

On February 24, 2014, we entered into an amendment of the First Lien Credit Agreement. Among other changes, the Amendment reduces the interest rates on the Term Loans by 125 basis points per annum. Interest will now accrue, at our election, (i) at the adjusted eurodollar rate plus 3.50% per annum or (ii) at the Base Rate plus 2.50% per annum. Additionally, the minimum adjusted eurodollar rate was reduced by 25 basis points from 1.25% per annum to 1.00% per annum.

Principles of Consolidation

The consolidated financial statements include the accounts of ACEP and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. All statements are presented on a consolidated basis.

Revenue Recognition and Promotional Allowances

Casino revenue is recorded as the net win from gaming activities (the difference between gaming wins and losses). Casino revenues are net of accruals for anticipated payouts of progressive and certain other slot machine jackpots. Contingent rental income is recognized when the right to receive such rental income is established according to the lease agreements. All other revenues are recognized as the goods or services are provided. Gross revenues include the retail value of rooms, food and beverage and other items that are provided to customers on a complimentary basis. Such amounts are then deducted as promotional allowances. Promotional allowances also include incentives for goods and services earned in our slot club and other gaming programs.

The Company collects taxes from customers at the point of sale on transactions subject to sales and other taxes. Revenues are recorded net of any taxes collected.

We also reward customers, through the use of loyalty programs, with Free Play and points based on amounts wagered, that can be redeemed for a specified period of time for cash. We deduct the Free Play and cash incentive amounts from casino revenue.

In accordance with industry practice, the retail value of rooms, food and beverage, and other services furnished to the Company's guests without charge is included in gross revenue and then deducted as promotional allowances. The estimated retail value of such promotional allowances is included in operating revenues as follows:



	Years ended December 31,
	2015		2014		2013
	(in thousands)
Food and Beverage	$	20,167	$	19,113	$	18,191
Rooms	6,201		6,323		6,449
Other	1,652		1,621		1,524
Total	$	28,020	$	27,057	$	26,164

The estimated costs of providing complimentaries, included as casino expenses, are as follows:

	Years ended December 31,
	2014		2013		2012
	2015		2014		2013
	(in thousands)
Food and Beverage	$	7,~~667~~973	$	7,~~676~~667	$	7,~~507~~676
Rooms	2120		2221		3022
Other	2332		1623		2016
Total	$	78,~~711~~025	$	7,~~714~~711	$	7,~~557~~714

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and in banks, interest-bearing deposits, money market funds and debt instruments purchased with an original maturity of 90 days or less.

Inventories

Inventories, which consist primarily of food, beverage and operating supplies, are stated at the lower of cost or market value. Costs are determined using the first-in, first-out and the weighted average methods.

Accounts Receivable

Receivables consist primarily of gaming, hotel and other receivables, net of allowance for doubtful accounts. Receivables are non-interest bearing and are initially recorded at cost. Accounts are written off when management deems the account to be uncollectible. An estimated allowance is maintained to reduce the Company’s receivables to their expected net realizable value. The allowance is estimated based on specific reviews of customer accounts as well as historical collection experience and current economic and business conditions. Recoveries of accounts previously written off are recorded when received.

Investments Restricted

Investments-restricted consist primarily of funds pledged for Nevada sales and use tax and workers’ compensation benefits. These investments are certificates of deposit and approximate their fair value.

Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and cash equivalents. Cash equivalents consist of interest-bearing deposits, money market funds and debt instruments in financial institutions. Cash and cash equivalents are in excess of Federal Deposit Insurance Corporation insurance limits. The Company has not experienced any losses in such accounts.

Property and Equipment

Property and equipment purchased are stated at cost. Assets held under capital leases are stated at the lower of the present value of the future minimum lease payments or fair value at the inception of the lease. Expenditures for additions, renewals and improvements are capitalized and depreciated over their useful lives. Costs of repairs and maintenance are expensed when incurred. Leasehold acquisition costs are amortized over the shorter of their estimated useful lives or the term of the respective leases once the assets are placed in service.

Depreciation and amortization of property and equipment are computed using the straight-line method over the following useful lives:



Buildings and improvements	36-39 years
Furniture, fixtures and equipment	3-15 years
Land improvements	15 years

The Company capitalizes interest incurred on debt during the course of qualifying construction projects. Such costs are added to the asset base and amortized over the related assets’ estimated useful lives. For the years ended December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013, we capitalized interest of $6145,000, $~~176~~61,000 and $~~860~~176,000, respectively.

Unamortized Debt Issue Costs

Debt issuance and debt discount costs incurred in connection with the issuance of debt are capitalized and amortized to interest expense using the effective interest method. For the years ended December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013, amortization of debt issue costs and debt discount totaled $21.49 million, $4.2.4 million and $54.72 million, respectively, and are included in interest expense on the accompanying consolidated statements of operations.

Slot Club Liability

Sales, Advertising and Promotion

Sales, advertising and promotion costs are expensed as incurred and were approximately $1011.3 million, $910.63 million and $9.86 million for the years ended December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013, respectively, and are included in selling, general and administrative expenses in the accompanying consolidated statements of operations.

Income Taxes

Our taxable income or loss is included in Holdings’ partnership tax return (Holdings is a limited liability company and treated as a partnership for tax purposes). As a limited liability company, Holdings’ taxable income or loss is allocated to members in accordance with their respective percentage ownership. Therefore, we are not a taxable entity for federal or state income tax purposes and the tax on our income is borne by our members. Hence, no provision or liability for income taxes has been included in the financial statements. Earnings and losses are included in the income tax returns of the members of Holdings and taxed depending on their tax strategies. The Company had no uncertain tax positions at December 31, ~~2014~~2015 and ~~2013~~2014.

Holdings’ members are responsible for income taxes on their allocated share of taxable income which may differ from income for financial statement purposes due to differences in the tax basis and financial reporting basis of assets and liabilities. The net tax basis of Holdings’ assets and liabilities exceeded the reported amounts by $5258.35 million, $4752.53 million and $4447.35 million at December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013, respectively. Holdings files tax returns in the United States and is subject to income tax examinations for the years beginning with ~~2011~~2012.

Intangible Assets and Long-Lived Assets

Our finite-lived intangible assets consist of a non-compete agreement and a player loyalty plan, and both were fully amortized in 2013. Our indefinite-lived intangible assets consist of trade names. Acquired assets are recorded at fair value on the date of acquisition. Finite-lived intangible assets are amortized over the estimated period to be benefited. Indefinite-lived intangible assets are not amortized, but are reviewed annually for impairment, during the fourth quarter.

Management must make various assumptions and estimates in performing its impairment testing. For instance, management must first determine the usage of the asset. To the extent management decides that an asset will be sold or abandoned, it is more likely that impairment may be recognized. Assets must be tested at the lowest level for which identifiable cash flows exist, which means that some assets must be grouped, and management has some discretion in the grouping of assets. Future cash flow estimates are, by their nature, subjective and actual results may differ materially from our estimates. If our ongoing estimates of future revenue and cash flows are not met, we may have to record additional impairment charges in future accounting periods. Our estimates of revenue and cash flows are based on the current regulatory, social and economic climates, recent operating information and budgets of the various properties where we conduct operations. These estimates could be negatively impacted by changes in federal, state or local regulations, economic downturns, or other events affecting various forms of travel and access to our properties.

which means that some assets must be grouped, and management has some discretion in the grouping of assets. Future cash flow estimates are, by their nature, subjective and actual results may differ materially from our estimates. If our ongoing estimates of future revenue and cash flows are not met, we may have to record additional impairment charges in future accounting periods. Our estimates of revenue and cash flows are based on the current regulatory, social and economic climates, recent operating information and budgets of the various properties where we conduct operations. These estimates could be negatively impacted by changes in federal, state or local regulations, economic downturns, or other events affecting various forms of travel and access to our properties.

Self-Insurance

believes it has the ability to adequately project and record estimated claim payments, it is possible that actual results could differ significantly from the recorded liabilities.

Fair Value of Financial Instruments

The Company determines fair value based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting Standards Topic 820, Fair Value Measurement, provides three levels within the fair value hierarchy that may be used to report fair value: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities: Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly: and Level 3: Unobservable inputs that are developed using the best available information about the assumptions that market participants would use. The carrying value of our cash and cash equivalents, receivables and accounts payable approximates fair value primarily because of the short maturities of these instruments. We use Level 2 inputs for the disclosures of valuation of our long-term debt.

Segment Information

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company’s chief operating decision-maker is its chief executive officer (“CEO”), who is supported by the Company’s executive management team and board of directors. The Company’s CEO has the primary decision-making responsibilities over all of the Company’s operating and strategic decisions. The Company owns and operates four casino properties in one market. The Company views each property as an operating segment and all such operating segments have been aggregated into one reporting segment.

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates and assumptions based upon historical experience and various other factors and circumstances. Management believes its estimates and assumptions are reasonable under the circumstances; however, actual results may differ from these estimates.

Reclassifications

Certain reclassifications have been made to the consolidated balance sheet as of December 31, 2014 to conform with the current fiscal period presentation. The Company reclassified debt issuance costs from Debt issuance costs, net to Long-term debt, net of unamortized discount and debt issuance costs. This reclassification had no effect on net income.

Recently Issued Accounting Pronouncements

In June 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This update amends current guidance to require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition and that existing guidance for performance conditions should be used to account for such awards. The amendments in this update will be effective for annual periods beginning after December 15, 2015~~, with early adoption permitted~~. This standard is not expected to have an impact on our consolidated financial statements.

In January 2015, FASB issued ASU No. 2015-01, Income Statement - Extraordinary and Unusual Items. This update eliminates the concept of extraordinary items from current guidance but will require an entity to present material transactions or events that are either unusual or infrequently occurring (or both) to be reported as a separate component of income from continuing operations, or alternatively disclosed in notes to financial statements. The amendments in the update will be effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2015, with early adoption permitted. This standard is not expected to have an impact on our consolidated financial statements.


Note 2.	Accounts Receivable

Accounts receivable consists of the following:



	December 31,
	2015			2014
	(in thousands)
Hotel and related	$	2,540		$	2,159
Gaming	594			611
Other	2,179			1,754
	5,313			4,524
Less allowance for doubtful accounts	(108		)	(97		)
	$	5,205		$	4,427

	December 31,
	2014			2013
	(in thousands)
Hotel and related	$	2,159		$	1,788
Gaming	611			642
Other	1,754			1,664
	4,524			4,094
Less allowance for doubtful accounts	(97		)	(141		)
	$	4,427		$	3,953

The Company recorded bad debt expense and allowance for doubtful accounts for the years ended December 31, 2015, 2014 and 2013 as follows:

The Company recorded bad debt expense and allowance for doubtful accounts for the years ended December 31, 2014, 2013 and 2012 as follows:



	Years ended December 31,
	2015			2014			2013
	(in thousands)
Balance at beginning of period	$	97		$	141		$	84
Bad debt expense	116			41			112
Deductions and write-offs	(105		)	(85		)	(55		)
Balance at end of period	$	108		$	97		$	141

	Years ended December 31,
	2014			2013			2012
	(in thousands)
Balance at beginning of period	$	141		$	84		$	138
Bad debt expense	41			112			52
Deductions and write-offs	(85		)	(55		)	(106		)
Balance at end of period	$	97		$	141		$	84


Note 3.	Other Current Assets

Other current assets consist of the following:

	December 31,
	2014		2013
	2015		2014
	(in thousands)
Inventories	$	23,~~832~~114	$	2,~~983~~832
Prepaid expenses	9,~~330~~066		89,~~857~~330
Other	~~416~~842		~~293~~416
	$	1213,~~578~~022	$	12,~~133~~578

5459


Note 4.	Property and Equipment, Net

Property and equipment consist of the following:

	December 31,
	2014			2013
	2015			2014
	(in thousands)
Land and improvements	$	724,~~167~~376		$	724,~~091~~167
Buildings and improvements	~~425~~430,~~196~~091			~~419~~425,~~116~~196
Furniture, fixtures and equipment	~~137~~143,~~345~~412			~~130~~137,~~766~~345
Construction in progress	37,~~716~~338			3,~~310~~716
	1,290,424			1,277,283
	1,305,217			1,290,424
Less accumulated depreciation and amortization	(~~225~~251,~~174~~407		)	(~~197~~225,~~214~~174		)
	$	1,~~065~~053,~~250~~810		$	1,~~080~~065,~~069~~250

Assets recorded under capital leases were approximately $3.0 million at both December 31, ~~2014~~2015 and ~~2013~~2014. Such assets include buildings of approximately $~~541~~600,000 and equipment of approximately $2.4 million at both December 31, ~~2014~~2015 and December 31, ~~2013~~2014. Accumulated depreciation and amortization at December 31, ~~2014~~2015 and ~~2013~~2014 includes amounts recorded for capital leases of $2.6 million ~~and $2~~.~~4 million respectively.~~


Note 5.	Accrued Expenses

Accrued expenses consist of the following:

	December 31,
	2014		2013
	2015		2014
	(in thousands)
Accrued liabilities	$	56,~~807~~437	$	5,~~943~~807
Accrued taxes	2,~~336~~605		2,~~128~~336
Accrued gaming liabilities	2,~~541~~740		2,~~497~~541
Other	34,~~352~~774		3,~~190~~352
	$	1416,~~036~~556	$	1314,~~758~~036

5560


Note 6.	Leases

For the years ended December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013, we recorded rental revenue of $5.39 million, $45.93 million and $54.29 million, respectively.

The future minimum lease payments to be received under non-cancelable operating leases for years subsequent to December 31, ~~2014~~2015 are as follows:

Years ending December 31,	(in thousands)
2015	$	3,416
2016	$	2,913
2016	2,257
2017	1,597
2017	1,239
2018	206
2018	66
2019	209
2019	66
2020	143
Thereafter	~~165~~99
Total	$	75,~~209~~167

The above minimum rental income does not include contingent rental income or common area maintenance costs contained within certain retail operating leases.

The Company, as a lessee, had operating lease expenses for the years ended December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013 of $4741,000, $4647,000 and $6046,000, respectively.

Future minimum rental payments with respect to non-cancelable operating leases with terms in excess of one year consist of the following at December 31, ~~2014~~2015:

Years ending December 31,	(in thousands)
2015	$	37
2016	$	28
2016	28
2017	24
2018	19
2019	5
Total	$	~~113~~76

Future minimum lease payments under capital leases with initial or remaining terms of one year or more consist of the following at December 31, ~~2014~~2015:

Years ending December 31,	(in thousands)
2015	$	85
2016	$	85
2016	85
2017	85
2018	85
2019	85
Thereafter	6,560
2020	85
Total minimum lease payments	6,985
Thereafter	6,475
Less: amount representing interest of 10%	(6,037		)
Total minimum lease payments	6,900
Less: amount representing interest of 10%	(5,952		)
Present value of net minimum lease payments	948
Less: current portion	—
Long-term capital lease obligation	$	948

5661


Note 7.	Debt

Long-term debt and capital lease obligations consist of the following:

	As of December 31,
	2014			2013
	2015			2014
	(In thousands)
First Lien Term Loans due July 3, 2019, interest at a 3.50% margin above LIBOR, with a 1.00% LIBOR floor	$	211,775		213,925
2015 Term Loans due July 7, 2022, interest at a 3.75% margin above reserve-adjusted eurodollar rate, with a 1.00% floor	$	293,525		$	—
Second Lien Term Loans due January 3, 2020, interest at a 10.00% margin above LIBOR, with a 1.25% LIBOR floor	120,000			120,000
2015 Revolving Facility due July 7, 2020	—			—
First Lien Revolving Credit Facility due July 3, 2018	—			—
First Lien Term Loans due July 3, 2019	—			211,775
Unamortized discount	(4,676		)	(5,409		)
Second Lien Term Loans due January 3, 2020	—			120,000
Capital lease obligations	948			1,324
First Lien Revolving Credit Facility	—			—
Total long-term debt and capital lease obligations	328,047			329,840
Unamortized discount and debt issuance costs	(9,171		)	(14,277		)
Current portion of long-term debt and capital lease obligations	(11,501		)	(2,526		)
Capital lease obligations	948			948
Total long-term debt and capital lease obligations, net	$	316,546		$	327,314
Total long-term debt and capital lease obligations	285,302			318,446
Current portion of long-term debt and capital lease obligations	(2,950		)	(11,501		)
Total long-term debt and capital lease obligations, net	$	282,352		$	306,945

On2015 ~~July 3, 2013, we called the 11% Senior Secured Notes and issued First Lien Facilities in an aggregate principal amount of $230 million and Second Lien~~ Term Loans ~~in an aggregate principal amount of $120 million. The First Lien Facilities consist of an aggregate amount of $215 million First Lien Term Loans~~ and ~~a $15 million~~ Revolving ~~Credit~~ Facility. A portion of the proceeds of the First Lien Term Loans and Second Lien Term Loans were used together with cash on hand to purchase the outstanding 11% Senior Secured Notes that were tendered prior to July 3, 2013. The remaining proceeds were used to redeem the remaining outstanding 11% Senior Secured Notes on August 2, 2013 pursuant to the call.

On July 7, 2015, the Company and certain of its subsidiaries, or the Guarantors, entered into the 2015 Credit Agreement, with the Lenders party thereto from time to time, DBNY, as administrative agent and collateral agent, Goldman Sachs LP, and DBSI, as joint lead arrangers, joint bookrunners and co-syndication agents, and DBSI as documentation agent. The Guarantors pledged as collateral all of the real, personal and mixed property, including equity interests, in which liens are purported to be granted pursuant to the collateral documents for the First Lien Facilities. Pursuant to the terms of the 2015 Credit Agreement, the Lenders provided the Company with senior secured loan facilities in an aggregate principal amount of $310 million, consisting of the $295 million of 2015 Term Loans, and the $15 million 2015 Revolving Facility. The maturity date of the 2015 Term Loans is the earlier to occur of (i) July 7, 2022 and (ii) the acceleration of the Term Loans, and the maturity date of the 2015 Revolving Facility is the earlier to occur of (i) July 7, 2020 and (ii) the acceleration of the 2015 Revolving Facility. The proceeds of the 2015 Term Loans were used, together with cash on hand, to repay in full the Company’s existing debt under the 2013 Credit Agreements. The Company also recognized a $14.7 million loss on debt redemption which consisted of an $11.1 million write off of unamortized debt issuance costs and discounts, and a $3.6 million prepayment penalty.

The 2015 Term Loans bear interest either at a base rate plus 2.75% per annum or at the reserve-adjusted eurodollar rate plus 3.75% per annum. In the case of eurodollar rate loans, interest is computed on the basis of a 360-day year and the actual number of days between interest periods, with interest payable on the last day of each interest period of one month, two months, or three months, or, in the case of interest periods longer than three months, every three months. As of December 31, 2015, all outstanding 2015 Term Loans are eurodollar loans. The 2015 Term Loans are subject to scheduled principal payments on the last day of each calendar quarter ending on and after December 31, 2015 in an amount equal to 0.25% of the original principal balance. The 2015 Term Loans are also subject to annual principal payments based on excess cash flow. For the fiscal year ending December 31, 2015, the Company may be required to make a principal payment equal to 50% of excess cash flow for the period of August 1, 2015 through December 31, 2015, and for all fiscal years ending on and after December 31, 2016 through the maturity date of the 2015 Term Loans, the percentage of excess cash flow required to be prepaid will vary based on the ratio of total indebtedness (net of unrestricted cash) to trailing four quarter adjusted EBITDA. In addition, we are entitled to, at any time, make voluntary principal prepayments to the 2015 Term Loans in amounts of $1 million or greater.

The 2015 Revolving Facilities bear interest at a base rate plus an applicable margin that is1.25%, 1.75% or 2.25% per annum (depending on the Company’s First Lien Leverage Ratio) or the reserve-adjusted Eurodollar rate plus an applicable margin that is 2.25%, 2.75% or 3.25% per annum (depending on the Company’s First Lien Net Leverage Ratio). In the case of eurodollar rate revolving facilities, interest is computed on the basis of a 360-day year and the actual number of days between interest

periods, with interest payable on the last day of each interest period of one month, two months, or three months, or, in the case of interest periods longer than three months, every three months. We will also pay a commitment fee equal to the applicable revolving commitment fee percentage times the average daily difference between the revolving commitments and the aggregate principal amount of any outstanding revolving loans. The applicable revolving commitment fee percentage is either 0.250% or 0.375% per annum (depending on the Company’s First Lien Net Leverage Ratio). We may at the expiration of any interest period convert all or a portion of the Revolving Facility to base rate loans or Eurodollar loans. We may at any time request voluntary commitment reductions to the Revolving Facility in amounts of $1 million or greater.

As of December 31, 2015 there were no borrowings outstanding under the 2015 Revolving Facility.

The Credit Agreement includes a number of covenants that place restrictions on how we may operate our business, including, among others (i) restrictions on incurring other indebtedness and liens; (ii) a springing financial maintenance covenant; and (iii) restrictions on distributions, investments, acquisitions, significant asset disposals or making fundamental changes to our business. As of December 31, 2015 we were in compliance with the covenants of the Credit Agreement.

First Lien Facilities

On July 3, 2013, the Company and certain of its subsidiaries, or the Guarantors, entered into athe First Lien Credit ~~and Guaranty~~ Agreement, ~~or First Lien Credit Agreement,~~ with the ~~First~~lenders ~~Lien~~party ~~Lenders,~~thereto ~~Deutsche~~from ~~Bank~~time AGto ~~New York Branch~~time, or DBNY, as administrative agent, collateral agent and documentation agent, and Goldman Sachs ~~Lending Partners LLC~~, ~~or Goldman Sachs,~~ and ~~Deutsche Bank Securities Inc., or~~ DBSI, as joint lead arrangers, joint bookrunners and co-syndication agents. The Guarantors ~~provided~~pledged as collateral of all of the real, personal and mixed property, including equity interests, in which liens are purported to be granted pursuant to the collateral documents ~~as security~~ for the ~~obligations~~First Lien Facilities. Pursuant to the terms of the First Lien Credit Agreement, the ~~First~~lenders ~~Lien~~party ~~Lenders~~thereto provided the Company with senior secured loan facilities in an aggregate principal amount of $230 million, consisting of $215 million of First Lien Term Loans, and a $15 million ~~senior secured or~~ Revolving Facility.

The maturity date of the First Lien Term Loans iswas the earliest to occur of (i) July 3, 2019 and (ii) the acceleration of the First Lien Term Loans. The First Lien Term Loans ~~bear~~bore interest either at a base rate plus 3.75% per annum or at the reserve-adjusted Eurodollar rate plus 4.75% per annum. Interest iswas computed on the basis of a 360-day year and the actual number of days between interest periods with interest payable in one month, two month or three month periods or any other period acceptable to the administrative agent. AsWe ofwere ~~December 31,~~entitled ~~2014,~~to ~~all outstanding First Lien Term Loans are Eurodollar loans. We may~~ at the expiration of any interest period convert all or a portion of the First Lien Term Loans to base rate loans. The First Lien Term Loans ~~are~~were subject to scheduled principal payments on the last day of each calendar quarter on and after September 30, 2013 in an amount equal to 0.25% of the original principal balance. The First Lien Term Loans ~~are~~were also subject to annual principal payments equal to a percentage of excess cash flow earned during a calendar year. For the fiscal year ended December 31, 2013, the company was required to make a principal payment equal to 75% of excess cash flow for the period of August 1, 2013 through December 31, 2013, and for all fiscal years ending on and after December 31, 2014 through the maturity date of the First Lien Term Loans, the percentage of excess cash flow ~~will~~varied ~~vary~~ based on the ratio of total indebtedness to trailing four quarter adjusted EBITDA. For the fiscal year ended December 31, 2014 we ~~are~~were required to make a principal payment equal to 50% of excess cash flow. The amount due related to excess cash flow iswas approximately $9.4 million and iswas ~~to be~~ paid ~~within~~on ~~120~~March ~~days after December~~ 31, ~~2014~~2015. In addition, we ~~may~~were entitled to at any time make voluntary principal prepayments to the First Lien Term Loans in amounts of $1 million or greater.

57On February 24, 2014, we entered into an amendment of the First Lien Credit Agreement. Among other changes, the Amendment reduced the interest rates on the Term Loans by 125 basis points per annum. Interest accrued, at our election, (i) at the adjusted eurodollar rate plus 3.50% per annum or (ii) at the Base Rate plus 2.50% per annum. Additionally, the minimum adjusted eurodollar rate was reduced by 25 basis points from 1.25% per annum to 1.00% per annum.

OnThe ~~February~~maturity ~~24,~~date ~~2014,~~of wethe ~~entered~~Revolving ~~into~~Facility anwas ~~amendment~~the ofearliest ~~the~~to ~~First~~occur ~~Lien~~of ~~Credit~~(i) ~~Agreement.~~July 3, ~~Among~~2018 ~~other~~and ~~changes,~~(ii) the ~~Amendment~~acceleration ~~reduced~~of the Revolving Facilities. The Revolving Facilities bore interest ~~rates~~at ona ~~the~~base ~~Term~~rate ~~Loans~~plus byan ~~125~~applicable ~~basis~~margin ~~points~~that is 2.75%, 3.25% or 3.75% per annum. ~~Interest~~(depending ~~now~~on ~~accrues,~~the atCompany’s ~~our~~First ~~election,~~Lien (iLeverage Ratio) ator the reserve-adjusted ~~eurodollar~~Eurodollar rate plus an applicable margin that is 3.5075%, 4.25% or 4.75% per annum or (iidepending on the Company’s First Lien Leverage Ratio). atWe also paid a commitment fee equal to the ~~Base~~applicable ~~Rate~~revolving ~~plus~~commitment 2fee percentage times the average daily difference between the revolving commitments and the aggregate principal amount of any outstanding revolving loans.50 The applicable revolving commitment fee percentage was either 0.375% or 0.500% per annum (depending on the Company’s First Lien Leverage Ratio). ~~Additionally~~ Interest and commitment fees were computed on the basis of a 360-day year and the actual number of days between interest periods with interest and commitment fees payable in one month, two month or three month periods or any other period acceptable to the ~~minimum~~administrative ~~adjusted~~agent. ~~eurodollar~~We ~~rate~~were ~~was~~entitled ~~reduced~~to, byat 25the ~~basis~~expiration ~~points~~of ~~from~~any 1interest period convert all or a portion of the Revolving Facility to base rate loans or Eurodollar loans.~~25%~~ ~~per~~We ~~annum~~were entitled to at any time request voluntary commitment reductions to the Revolving Facility in amounts of $1~~.00%~~ ~~per~~million ~~annum~~or greater.

The maturity date of the Revolving Facility is the earliest to occur of (i) July 3, 2018 and (ii) the acceleration of the Revolving Facilities. The Revolving Facilities bear interest at a base rate plus an applicable margin that is 2.75%, 3.25% or 3.75% per annum (depending on the Company’s First Lien Leverage Ratio) or the reserve-adjusted Eurodollar rate plus an applicable margin that is 3.75%, 4.25% or 4.75% per annum (depending on the Company’s First Lien Leverage Ratio). We will also pay a commitment fee equal to the applicable revolving commitment fee percentage times the average daily difference between the revolving commitments and the aggregate principal amount of any outstanding revolving loans. The applicable revolving commitment fee percentage is either 0.375% or 0.500% per annum (depending on the Company’s First Lien Leverage Ratio). Interest and commitment fees are computed on the basis of a 360-day year and the actual number of days between interest periods with interest and commitment fees payable in one month, two month or three month periods or any other period acceptable to the administrative agent. We may at the expiration of any interest period convert all or a portion of the Revolving Facility to base rate loans or Eurodollar loans. We may at any time request voluntary commitment reductions to the Revolving Facility in amounts of $1 million or greater. 63

As of December 31, 2014 and 2013, there are no borrowings outstanding under the Revolving Facility.

Second Lien Term Loans

On July 3, 2013, the Company and the Guarantors entered into the Second Lien Credit and Guaranty Agreement, or Second Lien Credit Agreement, together with the ~~Second~~First Lien ~~Lenders~~Credit Agreement, the 2013 Credit Agreements, with the lenders party thereto from time to time, DBNY, as administrative agent, collateral agent and documentation agent, and Goldman Sachs and DBSI, as joint lead arrangers, joint bookrunners and co-syndication agents. The Guarantors provided collateral of all of the real personal and mixed property, including equity interests, in which liens are purported to be granted pursuant to the collateral documents as security for the obligations. Pursuant to the terms of the Second Lien Credit Agreement, the ~~Second~~lenders ~~Lien~~party ~~Lenders~~thereto provided the Company with secured second lien term loans in the aggregate principal amount of $120 million, the Second Lien Term Loans. The maturity date of the Second Lien Term Loans iswas the earliest to occur of (i) January 3, 2020 and (ii) the acceleration of the Second Lien Term Loans. The Second Lien Term Loans ~~bear~~bore interest either at a base rate plus 9.00% per annum or at the reserve-adjusted Eurodollar rate plus 10.00% per annum. Interest iswas computed on the basis of a 360-day year and the actual number of days between interest periods with interest payable in either one month, two month or three month periods or any other period acceptable to the administrative agent. As of December 31, 2014, all Second Lien Term Loans ~~are~~were Eurodollar rate loans. We ~~may~~were entitled to, at the expiration of any interest period convert all or a portion of the Second Lien Term Loans to base rate loans.

~~The~~Both of the 2013 Credit Agreements ~~include~~included a number of covenants that place restrictions on how we may operate our business, including, among others (i) restrictions on incurring other indebtedness and liens; (ii) leverage and financial maintenance covenants; and (iii) restrictions on capital expenditures, distributions, investments, acquisitions, significant asset disposals or making fundamental changes to our business.

Maturities for the ~~First~~2015 ~~Lien Facilities and Second Lien~~ Term Loans outstanding as of December 31, ~~2014~~2015 are as follows:

Years ending December 31,	(in thousands)
2015	$	11,501
2016	$	2,950
2016	2,150
2017	2,950
2017	2,150
2018	2,950
2018	2,150
2019	2,950
2019	193,824
2020	2,950
Thereafter	~~120~~278,~~000~~775
Total	$	~~331~~293,~~775~~525

The estimated fair value of the ~~First~~2015 ~~Lien~~ Term ~~Loans~~Loan ~~and Second Lien Term Loans~~ was approximately $~~209~~292.1 million ~~and $123.6 million, respectively,~~ as of December 31, ~~2014~~2015.

5864


Note 8.	Related Party Transactions

On July 3, 2013 and August 2, 2013 we redeemed the outstanding aggregate principal amount of the 11% Senior Secured Notes with proceeds from the incurrence of the First Lien Facilities and Second Lien Term Loans. For the year ended December 31, ~~2014~~2015, we paid Goldman Sachs approximately $~~674,000~~2.5 million in ~~fees~~underwriting ~~associated~~and ~~with~~related ~~the~~fees ~~repricing~~on ofour ~~the~~debt ~~First~~compared ~~Lien~~to ~~Facilities and paid Goldman Sachs approximately~~ $~~598~~674,000 ~~in interest on the First Lien Term Loans~~ and ~~Second Lien Term Loans~~$3.4 ~~For~~million for the ~~year~~years ended December 31, 2014 and 2013, werespectively. We also paid Goldman Sachs approximately $~~3.4 million~~ 911,000 in ~~fees~~interest ~~associated~~for ~~with~~ the ~~redemption~~year ofended ~~the~~December 31, ~~11%~~2015 ~~Senior~~compared ~~Secured~~to ~~Notes and the incurrence of the First Lien Facilities and Second Lien Term Loans and paid Goldman Sachs approximately~~ $~~1.1~~598,000 ~~million~~ and $12.56 million infor ~~interest on~~ the ~~First~~years ~~Lien~~ended ~~Term~~December 31, ~~Loans~~2014 and ~~Second Lien Term Loans~~2013, respectively. As of December 31, ~~2014~~2015, Goldman Sachs owned approximately $~~0 of the First Lien Term Loans~~517, ~~$2.3 million~~ 000 of the ~~Second~~2015 ~~Lien~~ Term Loans and committed to provide up to $7.5 million of the 2015 Revolving ~~Credit~~ Facility. As of December 31, ~~2013~~2014, Goldman Sachs owned approximately $~~1.9~~0 ~~million~~ of the First Lien Term Loans, $32.73 million of the Second Lien Term Loans and committed to provide up to $5 million of the Revolving Credit Facility. As of December 31, ~~2014~~2015 and December 31, ~~2013~~2014, there ~~were~~was no ~~amounts~~accrued interest due to Goldman Sachs.

OnThe ~~February~~Realty ~~20,~~Management ~~2008~~Division weof ~~entered~~Goldman ~~into a consulting agreement with Highgate Hotels~~Sachs, ~~L.P.,~~ or ~~Highgate,~~Goldman ~~pursuant~~Sachs toRMD, ~~which Highgate~~ provides ~~asset~~various ~~management consulting~~ services to us. ~~The~~such ~~agreement~~as ~~was~~environmental ~~amended~~services ~~to reduce fees payable thereunder on June 25, 2009~~ and ~~Highgate~~insurance ~~converted amounts due them from ACEP to contributed capital in Holdings~~brokerage. ~~Highgate~~We ~~owns~~expensed afees ~~less~~of ~~than~~approximately 5%$412,000 ~~membership~~for ~~interest~~the inyear ~~Holdings.~~ended ~~The consulting agreement expired on June~~December 2031, ~~2013.~~2015 ~~Highgate~~compared ~~is entitled~~ to ~~receive~~$394,000 aand $~~1.5~~401,000 ~~million per year base consulting fee~~ for the ~~periods~~years ~~through~~ended ~~February~~December 2031, ~~2011~~2014 and a2013, $1respectively.0 ~~million~~In ~~per year base consulting fee for the periods after February 20~~addition, ~~2011,~~we ~~along~~provided ~~with~~construction ~~additional~~management ~~consulting~~services ~~fees up~~ to ~~$500,000~~Goldman ~~per~~Sachs ~~year~~RMD for ~~periods~~hotels ~~after~~managed ~~February 20,~~by ~~2011 based on EBITDA results at the properties and development fees at 4% of the aggregate costs of any agreed upon development projects~~them. We ~~incurred~~recorded ~~Highgate~~revenues ~~fees~~ of ~~approximately~~ $0 for the year ended December 31, ~~2014~~2015 compared to $~~500,000~~0 and $~~1.0~~330,000 ~~million~~ for the years ended December 31, ~~2013~~2014 and ~~2012~~2013, respectively. As of December 31, ~~2014~~2015 and December 31, ~~2013~~2014, ~~there~~we ~~were~~owed noGoldman ~~amounts~~Sachs ~~due~~RMD to$0. orAs ~~from~~of ~~Highgate~~December 31, 2015 and December 31, 2014, Goldman Sachs RMD owed us approximately $0.

On ~~June~~February 1620, 2008, we entered into ana consulting agreement with ~~Travel~~Highgate ~~Tripper~~Hotels, ~~LLC~~L.P., or ~~TTL~~Highgate, pursuant to ~~utilize~~which ~~their~~Highgate ~~technology~~provides ~~for~~asset ~~online~~management ~~hotel~~consulting ~~reservations~~services to us. ~~TTL~~The isagreement ~~owned~~was byamended anto ~~affiliate~~reduce offees ~~Goldman~~payable ~~Sachs~~thereunder ~~(9)%~~on June 25, an2009 ~~affiliate~~and of Highgate ~~(9)%~~converted ~~and~~amounts andue ~~employee~~them offrom ACEP to contributed capital in Holdings. Highgate ~~(40)~~owns a less than 5% membership interest in Holdings. ~~TTL~~The ~~was~~consulting ~~paid~~agreement 4%expired ofon ~~room~~June 20, ~~revenues~~2013. ~~booked~~Highgate ~~utilizing~~was ~~its~~entitled ~~system~~to receive a $1.5 Asmillion ofper ~~August~~year base consulting fee for the periods through February 20, 2011 and a $1.0 million per year base consulting fee for the periods after February 20, ~~2010~~2011, ~~the~~along ~~fee~~with ~~paid~~additional consulting fees up to ~~TTL~~$500,000 ~~was~~per ~~reduced~~year tofor ~~2%.~~periods Asafter ofFebruary 20, ~~December~~2011 based on EBITDA results at the properties and development fees at 4,% ~~2012,~~of wethe noaggregate ~~longer~~costs ~~use~~of ~~Travel~~any ~~Tripper~~agreed ~~LLC’s~~upon ~~services.~~development projects. We ~~expensed~~incurred Highgate fees of ~~approximately~~ $0 for the year ended December 31, ~~2014~~2015 compared to $~~8,000~~0 and $~~174~~500,000 for the years ended December 31, ~~2013~~2014 and ~~2012~~2013, respectively. As of December 31, ~~2014~~2015 and December 31, ~~2013~~2014, wethere ~~owed~~were ~~TTL~~no ~~approximately~~amounts $0due to or from Highgate.

~~The~~On ~~Realty~~February ~~Management Division of Goldman Sachs~~24, ~~formerly Archon Group~~2015, ~~LP,~~we ~~provides~~entered ~~various~~into ~~services~~an toagreement uswith ~~such~~Travel asTripper ~~environmental~~LLC, ~~services~~or ~~and~~TTL, ~~insurance~~to ~~brokerage.~~utilize Wetheir ~~expensed~~technology ~~fees~~for ofonline ~~approximately~~hotel ~~$394,000~~reservations. ~~for~~TTL ~~the~~is ~~year~~owned ~~ended~~by ~~December 31,~~an ~~2014~~affiliate ~~compared~~of toHighgate ~~$401,000~~(23)% and ~~$413,000~~an ~~for~~employee ~~the~~of ~~years~~Highgate ~~ended~~(40)%. From December 31 4, ~~2013 and~~ 2012, ~~respectively.~~through InFebruary ~~addition~~24, 2015 we ~~provided~~did ~~construction~~not ~~management~~use ~~services~~Travel toTripper ~~Archon~~LLC’s ~~for hotels managed by them~~services. We ~~recorded~~expensed ~~revenues~~fees of approximately $030,000 for the year ended December 31, ~~2014~~2015 compared to ~~approximately~~ $~~333,000~~0 and $~~620~~8,000 for the years ended December 31, ~~2013~~2014 and ~~2012~~2013, respectively. As of December 31, ~~2014~~2015 and December 31, ~~2013~~2014, we owed ~~Archon~~TTL ~~$0. As of December 31, 2014 and December 31, 2013, Archon owed us~~ approximately $01,000 and $80,~~000,~~ respectively.

On October 3, 2008, we entered into a participation agreement with Nor1, Inc., or Nor1, to utilize their technology to help sell perishable suite and room inventories. Nor1 gives the guest who books on-line the opportunity to book a non-guaranteed suite or upgraded rooms at a discounted rate if such is available at check-in. If the suite or upgraded room is awarded, Nor1 is paid 25% of the upgrade fee. Goldman Sachs owns less than 5% of Nor1. We expensed fees of approximately $2115,000 for the year ended December 31, ~~2014~~2015 compared to $2421,000 and $4124,000 for the years ended December 31, ~~2013~~2014 and ~~2012~~2013, respectively. As of December 31, ~~2014~~2015 and December 31, ~~2013~~2014, we owed Nor1 approximately $7,000 and $1,000, respectively.

WeIf ~~follow~~ a ~~related~~proposed ~~party~~ transaction ~~approval~~appears ~~policy~~to ~~for~~or ~~reviewing~~does involve a related person, ~~transactions.~~the ~~These~~transaction ~~procedures~~is ~~are~~presented ~~intended~~ to ~~ensure~~our ~~that~~management ~~transactions~~for ~~with~~review. ~~related~~If ~~persons~~management ~~are~~is ~~fair~~unable to usdetermine ~~and~~if ~~in our best interests. If~~ a ~~proposed~~ transaction ~~appears~~is towith ~~or does involve~~ a related ~~person,~~party ~~the~~it ~~transaction~~will isbe presented to our audit committee for review. The audit committee is authorized to retain and pay such independent advisors as it deems necessary to properly evaluate the proposed transaction, including, without limitation, outside legal counsel and financial advisors to determine the fair value of the transaction.

5965


Note 9.	Intangible Assets

Pursuant to authoritative guidance, indefinite-lived intangible assets are subject to an annual assessment for impairment during the fourth quarter, or more frequently if there are indications of possible impairment, by applying a fair-value-based test.

Our indefinite-lived acquired intangible assets include trade names. Our finite-lived acquired intangible assets ~~include~~included our player loyalty plan and a non-compete agreement and were fully amortized as of December 2015 and 2014. Acquired indefinite-lived intangible assets are recorded at fair value on the date of acquisition and finite-lived assets are recorded at cost and amortized over the estimated period to be benefited.

As of December 31, ~~2014~~2015 and ~~2013~~2014, we had the following intangible assets.

		(in thousands)
		December 31, 2014									December 31, 2013
		December 31, 2015						December 31, 2014
	Asset Life	Gross Carrying Amount			Accumulated Amortization				NetCarryingAmount		Gross Carrying Amount		Accumulated Amortization			NetCarryingAmount
Trade Names				15,507						15,507
Amortizing intangible assets:
Player Loyalty Plan	5 years	$	7,450		$	(7,450	)		$	—	$	7,450	$	(7,450	)	$	—
Non-Compete Agreement	38 months	1,045			(1,045		)		—		1,045		(1,045		)	—
		$	8,495		$	(8,495	)		$	—	$	8,495	$	(8,495	)	$	—
Non-amortizing intangible assets:
Trade Names									$	15,507						$	15,507
									$	15,507						$	15,507

We perform an annual impairment test of indefinite-lived intangible assets in the fourth quarter of each year and whenever a triggering event occurs which causes us to perform an impairment test. We completed our ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013 annual impairment test of indefinite-lived intangible assets. None of our indefinite-lived intangible assets were determined to be impaired based on these analyses. The fair value of the trade names was determined using the relief-from-royalty method.

Amortization expense relating to finite-lived intangible assets was $0, $~~300,000~~0 and $~~1.8 million~~300,000, respectively, for the years ended December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013.


Note 10.	Employee Benefit Plans

As of December 31, ~~2014~~2015 approximately 37% of the Company’s employees are members of various unions and covered by union-sponsored, collectively bargained, multi-employer health and welfare and defined benefit pension plans. The Company recorded expenses for such plans of $9.89 million, $89.8 million and $8.8 million for the years ended December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013, respectively. The Company has no obligation for funding the plans beyond payments made based upon hours worked. The risks of participating in multiemployer pension plans are different from single-employer plans in the following aspects:

a) Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers;

b) If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers;

c) If an entity chooses to stop participating in some of its multiemployer plans, the entity may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

6066

The Company considers the following multiemployer pension plans to be significant:

				FIR/RP		Expiration Date
		Pension Protection		Status		of Collective-
		Zone Status1		Pending/	Surcharge	Bargaining
Multiemployer Pension Plans	EIN/Plan Number	~~2013~~2014	~~2012~~2013	Implemented1	Imposed	Agreement
Central Pension Fund of the IUOE and Participating Employers	36-6052390-001	Green	Green	No	No	10/14/2014 and 3/31/2016
Southern Nevada Culinary and Bartenders Pension Plan	88-6016617-001	Green	Green	No	No	5/31/2018


1)	The Pension Protection Act of 2006 requires plans that are certified as endangered (yellow) or critical (red) to develop and implement a funding improvement plan.

For the years ended December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013, our contributions to multiemployer pension and benefit plans were as follows:

	Years ended December 31,
	2014		2013		2012
	2015		2014		2013
	(in thousands)
Multiemployer Pension Plans
Central Pension Fund of the IUOE and Participating Employers	$	~~769~~723	$	~~719~~769	$	~~599~~719
Southern Nevada Culinary and Bartenders Pension Plan	1,~~521~~677		1,~~493~~521		1,~~471~~493
All Other Pension Plans	~~179~~176		~~168~~179		~~153~~168
	$	2,~~469~~576	$	2,~~380~~469	$	2,~~223~~380
Multiemployer Benefit Plans Other Than Pensions
HEREIU Welfare Fund	$	7,~~356~~313	$	67,~~401~~356	$	6,~~599~~401
All other benefit plans other than pensions	26		32		53
	$	7,~~358~~319	$	67,~~404~~358	$	6,~~604~~404

For the ~~2013~~2014 plan year, the latest period for which plan data is available, contributions by the Company were less than 5% of total contributions for all multiemployer pension and benefit plans to which the Company contributes to.

6167


Note 11.	Share-Based Compensation

The company accounts for share-based compensation under ASC 718, Compensation-Stock Compensation. We recognized share-based compensation expense for the years ended December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013 of approximately $41.02 million, $4.0 million, and $0, respectively. These amounts are included in selling, general and administrative expenses in our consolidated statements of operations.

There are 16,500,000 stock options and 2,500,000 restricted stock units, or RSUs, available for issuance under the W2007/ACEP Holdings, LLC 2013 Management Incentive Plan, or 2013 Plan, that was approved on March 26, 2014. On March 26, 2014, our Board of Directors approved the grant of 2,500,000 RSUs under the 2013 Plan to executive officers and certain key employees, effective April 1, 2014. RSUs only vest upon a qualifying event (generally an initial public offering, the sale or disposition of Holdings’ membership interests in the Company, or sale or other disposition of Holdings). Additionally on March 26, 2014, our Board of Directors approved the grant of 13,035,000 stock options to be measured and valued over the next three years in accordance with ASC 718, effective April 1, 2014. In 2015, the Company measured and expensed 3,258,750 stock options granted under the 2013 Plan that have already vested. In 2014, the Company measured and expensed 6,517,500 stock options granted under the 2013 Plan that have already vested. The remaining stock options will be measured and expensed ratably over the next ~~two~~year ~~years~~ based on the establishment of performance and service conditions and will vest upon the achievement of such performance and service conditions. The stock options expire 10 years from the grant date.

A summary of stock option activity for the ~~year~~years ended December 31, 2015 and 2014 is as follows:

	Options	Range of Exercise Prices		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life
						(in years)
Outstanding at December 31, 2013	—	$	—	$	—	—
Granted	13,035,000	1.00		1.00		9.25
Exercised	—	—		—		—
Forfeited	—	—		—		—
Expired	—	—		—		—
Outstanding at December 31, 2014	13,035,000	$1.00	~~1.00~~	$	1.00	9.25
Vested December 31, 2014	6,517,500	$	1.00	$	1.00	9.25
Granted	—	—		—		—
Exercisable at December 31, 2014	6,517,500	$	1.00	$	1.00	9.25
Exercised	—	—		—		—
Forfeited	—	—		—		—
Expired	—	—		—		—
Outstanding at December 31, 2015	13,035,000	$	1.00	$	1.00	8.25
Vested December 31, 2015	9,776,250	$	1.00	$	1.00	8.25
Exercisable at December 31, 2015	9,776,250	$	1.00	$	1.00	8.25

The fair value of each stock option granted under the 2013 Plan is estimated on the date of the grant using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions:

Assumptions:	2015		2014
Expected term (years)	43.5 ~~- 5.5~~		4.5 - 5.5
Risk-free interest rate	1.7473% ~~- 1.93%~~		1.74%-1.93%
Expected volatility	8160%	%	81%
Dividend yield	NAN/A		N/A

The weighted average fair value of options granted during 2015 and 2014 was $0.37 and $0.62, respectively.

6268

A summary of RSU activity for the ~~year~~years ended December 31, 2015, and 2014 is as follows:

	RSUs	Grant Date Fair Value per RSU
Outstanding at December 31, 2013	—	$	—
Granted	2,500,000	0.96
Exercised	—	—
Canceled	—	—
Vested	—	—
Outstanding at December 31, 2014	2,500,000	$0.96	~~0.96~~
Granted	—	—
Exercised	—	—
Canceled	—	—
Vested	—	—
Outstanding at December 31, 2015	2,500,000	$	0.96

As of December 31, ~~2014~~2015 there was $2.4 million of total unrecognized compensation cost related to all unvested RSUs. As of December 31, ~~2014~~2015 no RSUs vested as the shares only vest upon the occurrence of a qualifying event. Compensation costs will be recognized when a qualifying event becomes probable.


Note 12.	Commitments & Contingencies

Legal Proceedings

We are, from time to time, parties to various legal proceedings arising out of our businesses. We believe, however, that there are no proceedings pending or threatened against us, which, if determined adversely, would have a material adverse effect upon our business financial conditions, results of operations or liquidity.

Sales and use tax on complimentary meals

In March 2008, the Nevada Supreme Court ruled, in a case, Sparks Nugget, Inc. vs. The State of Nevada Ex Rel. Department of Taxation, that food and non-alcoholic beverages purchased for use in providing complimentary meals to customers and to employees were exempt from sales and use tax. The Company paid use tax on these items through February 2008 and has filed for refunds for the periods from February 2005 to February 2008 related to this matter. The Company is claiming the exemption on sales and use tax returns for periods after February 2008 in light of this Nevada Supreme Court decision and as such has not paid any sales or use tax for those periods.

In February 2012, the Nevada Tax Commission ruled that customer complimentary meals and employee meals are subject to sales tax. Based on this decision, the Nevada Department of Taxation declared that these meals were subject to tax and that complimentary meals provided to customers would be subject to sales tax at the retail value of the meal and employee meals would be subject to sales tax at the cost of the meal. These meals would be subject to tax effective February 15, 2012 but not due and payable until July 31, 2012. The payable date for these sales taxes has since been amended to the earlier of: 1) the last day of the next month following approval of the regulation by the Legislative Commission; 2) the last day of the next month following a Nevada Supreme Court Decision relating to or affirming that complimentary and/or employee meals are subject to sales tax; 3) the effective date of any related legislation; or 4) June 30, 2013.

In the third quarter of 2013, we recorded a credit to sales tax expense of approximately $1.1 million to reverse previously accrued taxes on complimentary meals provided to customers and employees based on the reversal of the regulation by the Nevada Legislative Commission.

6369


Note 13.	Selected Quarterly Financial Information (Unaudited)



	Year ended December 31, 2015
	First		Second		Third			Fourth		Total
	(In thousands)
Net Revenues	$	94,370	$	95,728	$	93,664		$	89,305	$	373,067
Income from operations	14,414		14,652		11,094			7,354		47,514
Net income (loss)	$	7,982	$	7,435	$	(6,700	)	$	3,345	$	12,062



	Year ended December 31, 2014
	First		Second		Third		Fourth		Total
	(In thousands)
Net Revenues	$	89,011	$	89,422	$	87,893	$	84,805	$	351,131
Income from operations	11,331		8,174		7,097		6,749		33,351
Net income	$	4,521	$	1,682	$	587	$	190	$	6,980

	Year ended December 31, 2013
	First			Second		Third			Fourth			Total
	(In thousands)
Net Revenues	$	86,350		$	88,418	$	84,344		$	78,323		$	337,435
Income from operations	7,824			11,033		6,795			4,342			29,994
Net income (loss)	$	(2,974	)	$	97	$	(9,410	)	$	(2,848	)	$	(15,135	)

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A(T). CONTROLS AND PROCEDURES

Our principal executive officer and principal financial officer, based on their evaluation of our disclosure controls and procedures (as such terms are defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this annual report on Form 10-K, have concluded that our disclosure controls and procedures are effective for ensuring that information required be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Management is required to base its assessment of the effectiveness of our internal control over financial reporting on a suitable, recognized control framework, such as the framework developed by the Committee of Sponsoring Organizations (COSO). The COSO framework, published in Internal Control-Integrated Framework, is known as the COSO Report. Our Management has chosen the 2013 COSO framework on which to base its assessment. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, ~~2014~~2015.

This annual report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report on Form 10-K.

There were no changes in our internal control over financial reporting that occurred during the last quarter of ~~2014~~2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of certain events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

ITEM 9B. OTHER INFORMATION

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Identification of Directors and Officers

The following table sets forth certain information as of March 26 23, ~~2015~~2016 concerning our directors, executive officers and key employees:

Name	Age	Position
Alan S. Kava	4950	Board Member
Peter A. Weidman	4142	Board Member
Frank V. Riolo	6364	Chief Executive Officer and Board Member
Edward W. Martin III	5051	Chief Operating Officer, Chief Financial Officer, Treasurer and Board Member

Name	Age	Position
Phyllis A. Gilland	5657	Senior Vice President, General Counsel and Secretary
Ronald P. Lurie	7375	Executive Vice President, General Manager — Arizona Charlie’s Decatur
Paul N. Hobson	4849	Vice President, General Manager— Stratosphere Casino Hotel & Tower
Sean L. Hammond	4748	General Manager — Aquarius Casino Resort
Mark A. Majetich	6465	Senior Vice President, General Manager — Arizona Charlie’s Boulder

Alan S. Kava has served as a director since December 31, 2009. Mr. Kava is a member of the audit committee and compensation committee. He is a Managing Director and Partner of Goldman, Sachs & Co. where he is co-head for the Americas of the Real Estate Principal Investment Area. He is a member of the Investment Committees of The Whitehall Street Real Estate Funds, Goldman Sachs Real Estate Mezzanine Partners and the Caribbean Property Fund. Mr. Kava is a member of the Northeast Board of Directors for the Diabetes Research Institute and a director of Hilton Corporation. Prior to joining Goldman, Sachs & Co., Mr. Kava was an associate attorney in the corporate and real estate departments of Simpson Thacher & Bartlett from 1990-1997.

Peter A. Weidman became a director on January 19, 2010. Mr. Weidman has been a managing director of Goldman, Sachs & Co. since 2007, where he works in the Real Estate Principal Investment Area. Prior to joining Goldman, Sachs & Co. in 1999, Peter worked as an analyst in the Real Estate Investment Banking Group at Salomon Brothers and then at Averstar Capital Partners, a real estate development and private equity firm in New York.

Frank V. Riolo has served as our Chief Executive Officer since April 2008 and as a director since September 2008. In October 2011, Mr. Riolo became a member of the Board of Directors for Centaur Holdings LLC, a gaming and horse racing company in Indiana. Additionally, he operates Riolo Group, LLC, consulting Native American Governments on strategic initiatives, economic development, and gaming operational improvement. Prior to joining American Casino & Entertainment Properties LLC, Mr. Riolo served as Chief Executive Officer of Viejas Enterprises, from 2002 to 2007, a Native American gaming company operating in the State of California.

Edward W. Martin III has served as our Chief Financial Officer and Treasurer since October 2008 and as a director since March 2009. He has also served as Chief Operating Officer since August 2015. From September 2003 to May 2008, Mr. Martin was Vice President of Gaming Development for Station Casinos, Inc., a provider of gaming and entertainment in Las Vegas, NV. From September 2000 to August 2003, Mr. Martin was Senior Vice President of Finance and Strategic Planning for Silverton Casino, LLC., a provider of gaming and entertainment in Las Vegas, NV. Mr. Martin was Chief Financial Officer of the Maloof Companies from May 1994 to September 2000. From 1999-2011, he was a member of the Board of Directors of Nevada First Bank and its successor the Bank of Nevada, the Nevada affiliate of Western Alliance Bancorporation. As a member of the board he spent time as Chairman of the Audit Committee and a member of the Regulatory Oversight Committee. In August 2010, Governor Jim Gibbons appointed him to the Board of Trustees of the College Savings Plans of Nevada for a four year term and was reappointed in ~~2014~~2015 by Governor Brian Sandoval In ~~November~~August ~~2013~~2014, Mr. Martin became a member of the Board of Directors for The CENTECH Group, Inc., a provider of systems and solutions for federal government agencies.

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Phyllis A. Gilland has served as our Vice President, General Counsel and Secretary since October 2008. Ms. Gilland is the corporate Compliance Officer. Prior to joining ACEP, from 2000 to 2007 Ms. Gilland served as general counsel and chief financial officer for Taylor Construction Group Companies, headquartered in Des Moines, Iowa with affiliates around the country, including Las Vegas, Nevada and with several of their subsidiaries. Prior to Taylor Construction, she served as general counsel for Principal International, Inc. from 1999 through 2000 and associate general counsel for Principal Financial Group from 1994 through 1999. In addition, Ms. Gilland has held positions with the Resolution Trust Corporation and KPMG.

Ronald P. Lurie has served as Executive Vice President and General Manager of Arizona Charlie’s Decatur since January 1999. From November 1990 until January 1999, Mr. Lurie held various positions at Sunset Coin, an affiliate of Arizona Charlie’s, Inc., including as General Manager of Sunset Coin. In addition to his more than 25 years in the gaming industry, Mr. Lurie served as a Las Vegas City Councilman from 1973 to 1987 and as the Mayor of Las Vegas from June 1987 to June 1991.

Paul N. Hobson has served as General Manager of Stratosphere Casino, Hotel & Tower since January 2011. He also served as the General Manager of Aquarius Casino Resort from December 2008 to December 2010. From 1998 to 2008, he was a member of Primm Valley Casino Resorts executive team; most recently as Senior Vice President of Operations in Primm, Nevada. During his tenure there, his areas of responsibility expanded while in the employment of the Primadonna Co., LLC, MGM MIRAGE and Herbst Gaming. Mr. Hobson brings more than 20 years of gaming and hospitality experience, and has also held financial management positions with both Caesars Palace in Las Vegas, Nevada and Caesars Tahoe in South Lake Tahoe, Nevada.

Mark A. Majetich has served as Senior Vice President and General Manager of Arizona Charlie’s Boulder since April 2004, and Vice President and General Manager for Arizona Charlie’s Boulder since May 2001. He served as Director of Operations at Arizona Charlie’s Boulder from February 2001 until May 2001. From June 2000 until January 2001, he was Director of Hotel Operations for the Stratosphere. From November 1992 until August 1999, Mr. Majetich held various positions at the Excalibur Hotel/Casino. He has more than 35 years of experience in the gaming industry.

Sean L. Hammond has served as General Manager of the Aquarius Casino Resort since January 2011. From August 2009 to January 2011, he held the position of Vice President of Marketing and Player Development. Mr. Hammond joined the Aquarius in May of 2006 when he was hired as Vice President of Player Development. Prior to his employment at the Aquarius, he worked at the Tropicana Express (formerly Ramada Express) in Laughlin, Nevada from February 1990 through May of 2006 as Director of Player Development & Casino Events.

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Qualifications of Board of Directors

The board of directors has concluded that, based on each director‘s experience, qualifications, attributes or skills on an individual basis and in combination with those of the other directors, each director should serve as a director. Among other attributes common to all directors are their ability to review critically, evaluate, question and discuss information provided to them, to interact effectively with the various service providers to the Company, and to exercise reasonable business judgment in the performance of their duties as directors. In addition, the board of directors has taken into account the actual service and commitment of the directors during their tenure in concluding that each should continue to serve. A director‘s ability to perform his or her duties effectively may have been attained through a director‘s educational background or professional training; business, consulting, public service or academic positions; experience from service as a director of the Company, public companies, or non-profit entities or other organizations; or other experiences. Also, set forth below is a brief discussion of the specific experience qualifications, attributes or skills of each director that led the board of directors to conclude that he or she should serve as a director.

Alan S. Kava was selected to be a director of the Company given his experience as co-head for the Americas of the Real Estate Principal Investment Area and as a member of the Investment Committees of The Whitehall Street Real Estate Funds, Goldman Sachs Real Estate Mezzanine Partners and the Caribbean Property Fund, as well as a director of Hilton Hotels Corporation, his previous experience as an associate attorney in the corporate and real estate departments of Simpson Thacher & Bartlett, and his experience in the real estate, hotel and gaming industries.

Peter A. Weidman was selected to be a director of the Company given his experience as a managing director of Goldman, Sachs & Co. and his work in their Real Estate Principal Investment Area, his experience as an analyst in the Real Estate Investment Banking Group at Salomon Brothers and then at Averstar Capital Partners, and his experience in the real estate, hotel and gaming industries.

Frank V. Riolo was selected to be a director of the Company given his experience operating Riolo Group, LLC and serving as Chief Executive Officer of Viejas Enterprises, as well as his experience serving as our Chief Executive Officer and his experience in the real estate, hotel and gaming industries.

Edward W. Martin, III was selected to be a director of the Company given his experience as Vice President of Gaming Development for Station Casinos, Inc., Senior Vice President of Finance and Strategic Planning for Silverton Casino, LLC, and Chief Financial Officer of the Maloof Companies, as well as his experience serving as our Chief Financial Officer and Treasurer and his experience in the real estate, hotel and gaming industries.

Family Relationships

No family relationships exist between any directors or executive officers of ACEP.

Audit Committee

On December 31, 2009, Mr. Kava became a director and was appointed to the audit committee. On January 19, 2010, Mr. Weidman became a director and was appointed to the audit committee.

Our Board of Directors did not have an “audit committee financial expert”, within the meaning of Item 407(d)(5) of Regulation S-K, serving on the audit committee. The Board believed that each member of the audit committee was financially literate and possessed sufficient experience, both professionally and by virtue of his service as a director and member of the audit committee, to be fully capable of discharging his duties as a member of the audit committee. However, none of the members of the audit committee had a professional background in accounting or “preparing, auditing, analyzing or evaluating financial statements”.

If the audit committee determined that it requires additional financial expertise, it would have either engaged professional advisers or sought to recruit a member who would qualify as an “audit committee financial expert” within the meaning of Item 407(d)(5) of Regulation S-K.

Audit Committee Report

The audit committee has confirmed that: (1) the audit committee reviewed and discussed our ~~2014~~2015 audited financial statements with management, (2) the audit committee has discussed with our independent auditors the matters required to be discussed by AS 16, The Auditors Communication With Those Charged With Governance, (3) the audit committee has received the written

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disclosures and the letter from the independent accountant required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with the independent accountant the independent accountant’s independence, and (4) based on the review and discussions referred to in clauses (1) (2) and (3) above, the audit committee recommended to the Board of Directors that our ~~2014~~2015 audited financial statements be included in this annual report on Form 10-K.

This report is provided by the following directors, who constitute the audit committee:

Alan S. Kava

Peter A. Weidman

Code of Ethics

We have adopted a code of ethics that applies to our Chief Executive Officer, Chief Financial Officer, and other senior officers, or persons performing similar functions. The Code of Business Conduct and Ethics is incorporated by referenced as Exhibit 14.1 as previously reported in our Annual Report on Form 10-K, filed with the SEC on March 21, 2013 (SEC File No. 000-52975).

Corporate Governance Guidelines

Our Corporate Governance Guidelines may be obtained without charge, by writing to American Casino & Entertainment Properties LLC, 2000 Las Vegas Boulevard South Las Vegas, NV, 89104, attention: Investor Relations.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file with the SEC reports of ownership of, and transactions in, certain classes of our equity securities. Such directors, executive officers and 10% owners are also required to furnish us with copies of all Section 16(a) reports they file.

On March 26, 2009, our Chief Executive Officer and our Chief Financial Officer each filed Form 3 with the SEC due to their status as executive officers of the Company. These filings, which were due to be filed with the SEC upon their becoming our executive officers, did not report any beneficial ownership of our equity securities. Based solely upon our review of Forms 3 and 4 filed with the SEC for our Company with the SEC, we do not believe there were any other late filings or known failures to file under Section 16(a) during our most recent fiscal year or prior fiscal years.

ITEM 11. EXECUTIVE COMPENSATION

Compensation Committee Report

Our Board of Directors reviewed and discussed the Compensation Discussion and Analysis contained in this annual report on Form 10-K with management. Based on that review and discussion, the Board of Directors recommended that the Compensation Discussion and Analysis be included in this annual report on Form 10-K.

This report is provided by the following directors, who constitute the compensation committee:

Alan S. Kava

Peter A. Weidman

Compensation Committee Interlocks and Insider Participation

During our ~~2014~~2015 fiscal year, none of our officers or former officers (a) participated in deliberations concerning executive compensation of our Board of Directors, or (b) served on the board of directors or compensation committee (or other board committee performing equivalent functions) of another entity, one of whose executive officers served on our Board of Directors.

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Compensation Discussion and Analysis

Overview

Our Board has established a standing compensation committee. The entire compensation committee participates in deliberations concerning executive compensation and annually reviews the performance, salary and bonus of our Chief Executive Officer and Chief Financial Officer. Our Chief Executive Officer reviews the performance, salary and bonus of the other executive officers. The conclusions reached and the recommendations based on these reviews, including with respect to salary adjustments and annual bonus awards, if any, are then presented to the Board. We feel it is beneficial to have our entire Board participate in discussions and decision-making concerning executive compensation. The Board does not delegate the authority to establish executive officer compensation to any other person and has not retained any compensation consultants to determine or recommend the amount or form of executive and director compensation. Instead, the Board has relied on recommendations from our human resources personnel, Chief Executive Officer and appropriate, legal, tax and accounting advisors.

Compensation Philosophy and Objectives

Our executive compensation philosophy is designed to support our key business objectives while maximizing value. The objectives of our compensation structure are to attract and retain valuable employees, assure fair and internally equitable pay levels and provide a mix of base salary and variable bonuses that provides motivation and awards performance. At the same time, we seek to optimize performance and manage compensation costs.

The primary components of our executive compensation are base salary and annual bonus, payable in cash. Base salary and bonus are determined based on job function and each executive’s contribution to our performance and achievement of our overall business objectives.

We are a limited liability company with two members, and our securities are not publicly traded. On March 26, 2014 our Board of Directors approved the W2007/ACEP Holdings, LLC 2013 Management Incentive Plan, or 2013 Plan, that allows for the issuance of securities to our employees.

Individual Performance Measurement

Our board of directors sets performance goals for our executive officers, including operational, growth and leadership goals for the organizations they manage. At the end of each year, the board of directors, with input from our ~~chief~~Chief ~~executive~~Executive ~~officer~~Officer, assesses each executive’s performance against his or her pre-established goals. The board of directors uses this assessment to inform its discretion in determining the individual component of the cash bonus. This performance appraisal process is largely subjective, with much discretion exercised by our board of directors and performance review by our ~~chief~~Chief ~~executive~~Executive ~~officer~~Officer. There is no specific weight given to any one individual goal or performance criterion. The assessment is based on our board of directors’ and ~~chief~~Chief ~~executive~~Executive ~~officer~~Officer’s determinations regarding how well the executive performed his or her job, and such assessment is qualitative, not quantitative, in nature. For example, when determining how well each of the executive’s grew his or her organization, they placed more importance on the quality of the new hires than on the number or percentage of people hired. The performance appraisal process is the same for each of our executive officers.

Base Salary

We view executive officer base salaries as a tool that provides executives with a reasonable base level of monthly income relative to the jobs they are doing and market-competitive salaries. The compensation committee participates in deliberations with respect to base salary, and then makes recommendations to the board of directors for the compensation of the ~~chief~~Chief ~~executive~~Executive ~~officer~~Officer, ~~chief~~Chief ~~financial~~Financial ~~officer~~Officer and other executive officers as it may determine. The entire ~~board~~Board of ~~directors~~Directors then sets final salaries for the ~~chief~~Chief ~~executive~~Executive ~~officer~~Officer and the ~~chief~~Chief ~~financial~~Financial ~~officer~~Officer. Base salary is paid for ongoing performance throughout the year and is determined based on job function and each executive’s contribution to our performance and achievement of our overall business objectives.

Bonus

Our annual bonuses are intended to reward particular achievement during the year, motivate future performance and attract and retain highly qualified key employees. Although we intend for performance-based incentives and rewards to be substantial when warranted, these incentives are secondary to career growth, work environment and engaging work opportunities. We seek to develop a highly-motivated and collaborative workforce that pursues achievements for the sake of progress and innovation

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before individual gain. When ACEP as a whole, as well as individual executive officers, achieve our goals, we ensure that appropriately significant economic rewards follow.

All of our executive officers are eligible to receive discretionary cash bonuses.

Plan-Based and Equity Awards

On March 26, 2014 our Board of Directors approved the 2013 Plan that allows for the issuance of securities to our employees. The 2013 Plan was established to attract, retain and motivate ACEP’s employees, to compensate employees for their contributions to the long-term profits of ACEP and to encourage employees to acquire a proprietary interest in the success of ACEP. On March 26, 2014, our Board of Directors also approved the grant of 13,035,000 stock options and 2,500,000 restricted stock units, or RSUs, under the 2013 Plan to executive officers and certain key employees, effective April 1, 2014. Stock options generally vest ratably over 4 years and include a performance and service condition; the stock options expire 10 years from the grant date. RSUs vest upon certain events (including an initial public offering, the sale or disposition of Holdings’ membership interests in the Company, or a sale or other disposition of Holdings).

Perquisites Benefits

Our executive officers, like our other employees, participate in various employee benefit plans, including medical and dental care plans; flexible spending accounts for healthcare; life, accidental death and dismemberment and disability insurance; employee assistance programs (e.g., confidential counseling); and paid time off. Like our other employees, we also pay life insurance premiums for the benefit of our executive officers. Our offering of benefits is designed to enable us to attract and retain our workforce in a competitive environment.

The Company has a retirement savings plan under Section 401(k) of the Internal Revenue Code covering its non-union employees. The plan allows employees to defer, within prescribed limits, up to 75% of their income on a pre-tax basis through contributions to the plan. The Company matched, within prescribed limits, 50% of eligible employees’ contributions up to 6% of any individual’s earnings. AsThe ~~of April 5, 2009, the~~ company ~~suspended the 401(k) match program and~~ made no matching contributions for the years ended December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013.

The total value of all perquisites provided to each of our executive officers is less than $10,000.

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Executive Compensation

The following table sets forth the compensation earned during the years ended December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013, as applicable, by our Chief Executive Officer, or PEO, Chief Financial Officer, or PFO, and our three other most highly compensated executive officers and key employees for services rendered in all capacities for the year.

ANNUAL COMPENSATION (1)

	SUMMARY COMPENSATION TABLE (1)
Name and Principal Position	Year	Salary ($)	Bonus ($)(2)	Restricted Stock Units ($) (3)	Stock Option Awards ($) (4)	All OtherCompensation($) (5)	Total
Frank V. Riolo (PEO)Chief Executive Officer	~~2014~~2015	600,000	~~330~~400,000	—	2613,~~036,642~~606	147,~~384~~293	21,~~981~~620,~~026~~899
	2013	600,000	350,000	—	—	18,395	968,395
	2014	600,000	330,000	—	2,036,642	8,203	2,974,845
	2012	600,000	300,000	—	—	12,782	912,782
	2013	600,000	350,000	—	—	12,075	962,075
Edward W. Martin III (PFO) Chief Financial Officer & Treasurer	2014	400,000	230,000	—	1,018,321	16,887	1,665,208
Edward W. Martin III (PFO) Chief Operating Officer, Chief Financial Officer & Treasurer	2015	400,000	300,000	—	306,803	8,912	1,015,715
	2013	400,000	250,000	—	—	20,870	670,870
	2014	400,000	230,000	—	1,018,321	7,055	1,655,376
	2012	400,000	200,000	—	—	17,874	617,874
	2013	400,000	250,000	—	—	8,756	658,756
Phyllis A. GillandSenior Vice President,General Counsel & Secretary	~~2014~~2015	220,000	75100,000	—	~~407~~122,~~328~~721	127,~~871~~127	~~715~~449,~~199~~848
	2013	220,000	80,000	—	—	11,799	311,799
	2014	220,000	75,000	—	407,328	7,411	709,739
	2012	216,031	60,000	—	—	7,497	283,528
	2013	220,000	80,000	—	—	7,029	307,029
Sean L. HammondGeneral ManagerAquarius Casino Resort	2014	200,000	60,000	—	203,664	5,476	469,140
Thomas E. Haas Senior Vice President of Finance (PAO)	2015	250,000	26,250	—	46,020	4,374	326,644
	2013	200,000	60,000	—	—	4,433	264,433
	2014	250,000	25,000	—	152,748	2,845	430,593
	2012	200,000	50,000	—	—	3,948	253,948
	2013	250,000	25,000	—	—	2,260	277,260
Thomas E. HaasVice President of Finance	2014	250,000	25,000	—	152,748	6,342	434,090
Sean L. Hammond General Manager Aquarius Casino Resort	2015	200,000	40,000	—	61,361	3,204	304,565
	2013	250,000	25,000	—	—	5,997	280,997
	2014	200,000	60,000	—	203,664	2,458	466,122
	2012	250,000	20,000	—	—	6,026	276,026
	2013	200,000	60,000	—	—	1,996	261,996


(1)	Pursuant to applicable regulations, certain columns of the Summary Compensation Table and each of the remaining tables required by applicable SEC regulations have been omitted, if there was no compensation awarded to, or earned by or paid to any of the named executive officers by us.

(2) For the year ~~2014~~2015, represents amounts approved by the Board, upon recommendation of the compensation committee, on January 1520, ~~2015~~2016, related to ~~2014~~2015. The amounts were paid in ~~2015~~2016. For the year ~~2013~~2014, represents amounts approved by the Board, upon recommendation of the compensation committee, on January 1715, ~~2014~~2015, related to ~~2013~~2014. The amounts were paid in ~~2014~~2015. For the year ~~2012~~2013, represents amounts approved by the Board, upon recommendation of the compensation committee, on January 1617, ~~2013~~2014, related to ~~2012~~2013. The amounts were paid in ~~2013~~2014.

(3) The grant date fair value of 2014 restricted stock units.:



Frank V. Riolo	$	1,440,000
Edward W. Martin III	$	720,000
Phyllis A. Gilland	$	240,000

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(4)	The fair value of each stock option granted under the 2013 Plan is estimated on the date of the grant using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions:

Expected term (years)	43.5 - 5.5
Risk-free interest rate	1.7473% - 1.9395%
Expected volatility	60% - 81%	%
Dividend yield	NA

(5) Includes contributions by ACEP for dollar value of insurance premiums and other compensation related to health insurance payments, auto allowances and other benefits. For ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013 All Other Compensation consisted of the following:

Year	Name	~~Health~~Life ~~andLife~~ InsurancePremiums ~~andBenefits~~and Health Benefits ($)	AutoAllowance($)	Other ($)	Total AllOtherCompensation($)
2014	Frank V. Riolo	9,595	4,789	—	14,384
2015	Frank V. Riolo	3,897	3,396	—	7,293
	Edward W. Martin III	168,~~887~~912	—	—	168,~~887~~912
	Phyllis A. Gilland	115,~~771~~952	—	1,~~100~~175	127,~~871~~127
	Sean L. Hammond	4,876	—	600	5,476
	Thomas E. Haas	3,774	—	600	4,374
	Thomas E. Haas	5,742	—	600	6,342
	Sean L. Hammond	2,604	—	600	3,204
2013	Frank V. Riolo	15,023	3,372	—	18,395
2014	Frank V. Riolo	3,414	4,789	—	8,203
	Edward W. Martin III	207,~~870~~055	—	—	207,~~870~~055
	Phyllis A. Gilland	116,~~699~~311	—	1,100	117,~~799~~411
	Sean L. Hammond	4,333	—	100	4,433
	Thomas E. Haas	2,245	—	600	2,845
	Thomas E. Haas	5,897	—	100	5,997
	Sean L. Hammond	1,858	—	600	2,458
2012	Frank V. Riolo	8,872	3,910	—	12,782
2013	Frank V. Riolo	8,703	3,372	—	12,075
	Edward W. Martin III	178,~~874~~756	—	—	178,~~874~~756
	Phyllis A. Gilland	76,~~497~~929	—	—100	7,~~497~~029
	Sean L. Hammond	3,948	—	—	3,948
	Thomas E. Haas	2,160	—	100	2,260
	Thomas E. Haas	6,025	—	—	6,025
	Sean L. Hammond	1,896	—	100	1,996

Grants of Plan-Based Awards

On March 26, 2014 our Board of Directors approved the 2013 Plan that allows for the issuance of securities to our employees. On March 26, 2014, our Board of Directors also approved the grant of 13,035,000 stock options and 2,500,000 RSUs under the 2013 Plan to executive officers and certain key employees, effective April 1, 2014.

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The following table shows plan-based awards granted to each of our Named Executive Officers during the fiscal year ended December 31, ~~2014~~2015.



				Estimated Future Payouts Under Equity Incentive Plan Awards
Name	Grant Date	Date of Compensation Committee Approval Date		Threshold (#)	Target (#) (3)	Maximum (#)	All Other Stock Awards: Number of Shares of Stock or Units (#)	Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of RSU and Option Awards (4)
Frank V. Riolo	4/1/2014	3/26/2014	(1)		6,600,000			$	1.00	$	4,092,000
	4/1/2014	3/26/2014	(2)				1,500,000	—		$	1,440,000
Edward W. Martin III	4/1/2014	3/26/2014	(1)		3,300,000			$	1.00	$	2,046,000
	4/1/2014	3/26/2014	(2)				750,000	—		$	720,000
Phyllis A. Gilland	4/1/2014	3/26/2014	(1)		1,320,000			$	1.00	$	818,400
	4/1/2014	3/26/2014	(2)				250,000	—		$	240,000
Sean L. Hammond	4/1/2014	3/26/2014	(1)		660,000			$	1.00	$	409,200
Thomas E. Haas	4/1/2014	3/26/2014	(1)		495,000			$	1.00	$	306,900

(1) Stock Option Award

(2) RSU Award

(3) Stock options granted under the 2013 Plan include a performance and service condition.

(4) The amounts shown in this column reflect the grant date fair value of each equity award approved for grant on March 26, 2014.

Outstanding Equity Awards at Fiscal Year-End

The following table shows outstanding unexercised stock options and unvested Restricted Stock Units for each of our Named Executive Officers as of December 31, ~~2014~~2015.

Option Awards

Stock Awards

Name

Number of Securities Underlying Unexercised Options (#) Exercisable

Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (1)

Option Exercise Price ($)

Option Expiration Date

Number of Shares or Units of Stock That Have Not Vested (#)

Market Value of Shares or Units of Stock That Have Not Vested ($)

Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)

Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)

Frank V. Riolo

34,~~300~~950,000

31,~~300~~650,000

1.00

4/1/2024

1,500,000

1,~~260~~560,000

1,500,000

1,~~260~~560,000

Edward W. Martin III

12,~~650~~475,000

1825,~~650,~~000

1.00

4/1/2024

750,000

~~630~~780,000

750,000

~~630~~780,000

Phyllis A. Gilland

~~660~~990,000

~~660~~330,000

1.00

4/1/2024

250,000

~~210~~260,000

250,000

~~210~~260,000

Sean L. Hammond

~~330~~495,000

~~330~~165,000

1.00

4/1/2024

—

Thomas E. Haas

~~247~~371,~~500~~250

~~247~~123,~~500~~750

1.00

4/1/2024

—

(1) Stock options have vested on April 1, 2014, December 31, 2014 and December 31, ~~2014~~2015 and will continue to vest ratably on December 31st of ~~2015 and~~ 2016 if the performance and service conditions have been met.

7480

Potential Payments Upon Termination or Change in Control

We have arrangements with certain of our Named Executive Officers that may provide them with compensation following termination of employment. These arrangements are discussed below under “Employment Agreements”.

Severance Arrangements

We have agreements with certain of our executive officers that provide for additional or accelerated compensation on the termination of the executive’s employment or a change of control of ACEP, as set forth below.

We have entered into an employment agreement with Frank V. Riolo, our Chief Executive Officer, Edward W. Martin III, our Chief Financial Officer and Chief Operating Officer, , and Phyllis A. Gilland, our Senior Vice President and General Counsel that provides that in the event of termination without cause (as defined in the employment agreements), said party will receive all amounts earned, vested, due, and unpaid as of the termination date, plus a lump sum payment equal to one year of base salary, payable on the 60th day following termination.

	Base Salary		Fair Value of Restricted Stock Units		Fair Value of Stock Options		Total
Frank V. Riolo	$	600,000	$	1,~~260~~560,000	$	—	$	12,~~860~~160,000
Edward W. Martin III	~~400,000~~$	400,000	~~630,000~~$	780,000	—$	—	$	1,~~030~~180,000
Phyllis A. Gilland	$	220,000	$	~~210~~260,000	$	—	$	~~430~~480,000

Employment Agreements

We have entered into agreements with certain of our current executive officers and key personnel that regulate their employment with us, their compensation and potential severance packages.

On May 15, 2014, we have entered into amended and restated employment agreements with our Chief Executive Officer, Frank V. Riolo, our Chief Financial Officer and Chief Operating Officer, Edward W. Martin, III, and our Senior Vice President and General Counsel, Phyllis A. Gilland.

The term of each employment agreement commenced on April 1, 2014 and will continue until the executive’s separation from service. Each employment agreement provides for, among other things: (1) base salary at an annual rate of $600,000 for Mr. Riolo, $400,000 for Mr. Martin and $220,000 for Ms. Gilland, (2) an annual bonus, as may, from time to time, be determined in the sole discretion of the Company’s board of directors, and (3) participation in the Company’s benefit plans as generally made available from time to time to similarly situated employees.

Upon a termination of employment due to resignation by the executive without “good reason,” termination by the Company for “cause,” or failure to satisfy certain licensing requirements as set forth in the applicable employment agreement, each executive will be entitled to receive (1) due and unpaid base salary, (2) any earned bonus that is due and unpaid, (3) continued participation in the Company’s group medical plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986 at the executive’s cost provided he or she is eligible for and timely elects to receive such coverage, and (4) incurred but unpaid business expense reimbursements (collectively, the “Accrued Benefits”). Upon termination of employment due to death or disability, resignation by the executive with “good reason,” or termination by the Company without “cause” (any such termination, an “Involuntary Termination”), each executive will be entitled to receive (1) the Accrued Benefits, (2) a lump-sum severance payment equal to one year of base salary, payable on the 60th day following termination and (3) vesting and exercisability, as applicable, of any then-unvested equity awards in accordance with the W2007/ACEP Holdings, LLC 2013 Management Incentive Plan (the “Plan”) and applicable award agreements; provided that the severance payment and any equity treatment are subject to the delivery (and non-revocation) of an executed general release of claims.

During and, in the event of an Involuntary Termination, for six months after, employment, each executive will be subject to a covenant not to compete in the hotel or casino business in or within 100 miles of the Stratosphere Hotel and Casino. In addition, during and for one-year after employment, each executive will be subject to a covenant not to solicit the advertisers, suppliers, vendors, clients, customers, independent contractors, brokers or employees of the Company or its subsidiaries or 81

75During and, in the event of an Involuntary Termination, for six months after, employment, each executive will be subject to a covenant not to compete in the hotel or casino business in or within 100 miles of the Stratosphere Hotel and Casino. In addition, during and for one-year after employment, each executive will be subject to a covenant not to solicit the advertisers, suppliers, vendors, clients, customers, independent contractors, brokers or employees of the Company or its subsidiaries or affiliates, and a covenant not to induce or advise any person not to do business with the Company or its subsidiaries or affiliates.

affiliates, and a covenant not to induce or advise any person not to do business with the Company or its subsidiaries or affiliates.

“Good reason,” as used in the employment agreements, is defined in accordance with the Plan and generally means the occurrence of any of the following: (1) a material reduction in the executive’s duties, (2) a material reduction in the executive’s annual base salary rate, or (3) a relocation of the executive’s place of employment, by the Company, to more than 50 miles from the Company’s headquarters in Las Vegas, Nevada; provided, however, that the executive must give written notice to the Company of the applicable event within 90 days of the occurrence thereof, and the Company will have a period of 30 business days after receipt of such notice to cure the event, and in the event of cure (or the commencement of steps reasonably designed to result in a prompt cure), the executive’s assertion of “good reason” will be null and void.

“Cause,” as used in the employment agreements, is defined in accordance with the Plan and generally means the occurrence of any of the following: (1) failure to perform the executive’s assigned duties, (2) chronic impairment due to alcohol or substance abuse, (3) conviction of a crime that could prohibit the executive from obtaining or maintaining any work card, license or finding of compliance suitability necessary for the executive to maintain employment with the Company, (4) being charged with a felony, (5) violation of a federal or state securities law or regulation, (6) attempted commission of, or participation in, a fraud or act of dishonesty against the Company, W2007/ACEP Holdings, LLC, any subsidiary of W2007/ACEP Holdings, LLC or certain clients or prospective clients, (7) intentional, material violation of any material contract or agreement between the executive and the Company, W2007/ACEP Holdings, LLC or any subsidiary of W2007/ACEP Holdings, LLC, (8) negligent conduct, error or omission in carrying out the duties required by the executive’s job description, (9) conduct that is reasonably expected to cause damage to the reputation of the Company or W2007/ACEP Holdings, LLC, (10) disqualification or bar by any governmental or self-regulatory authority from serving in the capacity required by the executive’s job description or loss of any governmental or self-regulatory license that is reasonably necessary for the executive to perform his or her duties or responsibilities to the Company or (11) any act or failure to act by the executive which causes any gaming or other regulatory authority having jurisdiction over the Company or W2007/ACEP Holdings, LLC to seek any redress or remedy against the executive, the Company, W2007/ACEP Holdings, LLC or any subsidiary of W2007/ACEP Holdings, LLC.

Compensation of Directors

Alan S. Kava and Peter A. Weidman did not receive any compensation for their service as members of our Board in ~~2014~~2015, ~~2013~~2014 or ~~2012~~2013.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Voteco owns 100% of our issued and outstanding Class A Interest. Holdings own 100% of our issued and outstanding Class B Interest. The address of Voteco is 200 West Street, New York, NY 10282 and the address of Holdings is 200 West Street, New York, NY 10282.

Messrs. Kava and Weidman own 100% of the membership interests of Voteco. In connection with his resignation from our Board, Mr. Rothenberg also resigned as a manager of Voteco and renounced any voting or management rights he may have as a member of Voteco. Mr. Angel acquired 100% of Mr. Rothenberg’s membership interest in Voteco on August 20, 2009. As ~~a result~~ of the resignation of Mr. Langer as manager of Voteco on December 31, 2009, Messrs. Kava and Powers were appointed as managers of Voteco. Upon Mr. Power’s resignation from the Board on January 19, 2010, Mr. Weidman was appointed as manager of Voteco. As of October 14, 2010, Messrs. Kava and Weidman are the managers of Voteco.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Related Party Transactions

OnThe ~~February~~Realty ~~20,~~Management ~~2008~~Division weof ~~entered~~Goldman ~~into a consulting agreement with Highgate Hotels~~Sachs, ~~L.P.,~~ or ~~Highgate,~~Goldman ~~pursuant~~Sachs toRMD, ~~which Highgate~~ provides ~~asset~~various ~~management consulting~~ services to us. ~~The~~such ~~agreement~~as ~~was~~environmental ~~amended~~services ~~to reduce fees payable thereunder on June 25, 2009~~ and ~~Highgate~~insurance ~~converted amounts due them from ACEP to contributed capital in Holdings~~brokerage. ~~Highgate~~We ~~owns~~expensed afees ~~less~~of ~~than~~approximately 5%$412,000 ~~membership~~for ~~interest~~the inyear ~~Holdings.~~ended ~~The consulting agreement expired on June~~December 2031, ~~2013.~~2015 ~~Highgate~~compared ~~is entitled~~ to ~~receive~~$394,000 aand $~~1.5~~401,000 ~~million per year base consulting fee~~ for the ~~periods~~years ~~through~~ended ~~February~~December 2031, ~~2011~~2014 and a2013, $1respectively.0 ~~million~~In ~~per year base consulting fee for the periods after February 20~~addition, ~~2011,~~we ~~along~~provided ~~with~~construction ~~additional~~management ~~consulting~~services ~~fees up~~ to ~~$500,000~~Goldman ~~per~~Sachs ~~year~~RMD for ~~periods~~hotels ~~after~~managed ~~February 20,~~by ~~2011 based on EBITDA results at the properties and development fees at 4% of the aggregate costs of any agreed upon development projects~~them. We ~~incurred~~recorded ~~Highgate~~revenues ~~fees~~ of ~~approximately~~ $0 for the year ended December 31, ~~2014~~2015 compared to approximately $~~500,000~~0 and $~~1.0~~330,000 ~~million~~ for the years ended December 31, ~~2013~~2014 and ~~2012~~2013, respectively. As of December 31, ~~2014~~2015 and December 31, ~~2013~~2014, ~~there~~we ~~were~~owed noGoldman ~~amounts~~Sachs ~~due~~RMD to$0. orAs ~~from~~of ~~Highgate~~December 31, 2015 and December 31, 2014, Goldman Sachs RMD owed us approximately $0.

On ~~June~~February 1620, 2008, we entered into ana consulting agreement with ~~Travel~~Highgate ~~Tripper~~Hotels, ~~LLC~~L.P., or ~~TTL~~Highgate, pursuant to ~~utilize~~which ~~their~~Highgate ~~technology~~provides ~~for~~asset ~~online~~management ~~hotel~~consulting ~~reservations~~services to us. ~~TTL~~The isagreement ~~owned~~was byamended anto ~~affiliate~~reduce offees ~~Goldman~~payable ~~Sachs~~thereunder ~~(9)%~~on June 25, an2009 ~~affiliate~~and of Highgate ~~(9)%~~converted ~~and~~amounts andue ~~employee~~them offrom ACEP to contributed capital in Holdings. Highgate ~~(40)~~owns a less than 5% membership interest in Holdings. ~~TTL~~The ~~was~~consulting ~~paid~~agreement 4%expired ofon ~~room~~June 20, ~~revenues~~2013. ~~booked~~Highgate ~~utilizing~~was ~~its~~entitled ~~system~~to receive a $1.5 Asmillion ofper ~~August~~year base consulting fee for the periods through February 20, 2011 and a $1.0 million per year base consulting fee for the periods after February 20, ~~2010~~2011, ~~the~~along ~~fee~~with ~~paid~~additional consulting fees up to ~~TTL~~$500,000 ~~was~~per ~~reduced~~year tofor ~~2%.~~periods Asafter ofFebruary 20, ~~December~~2011 based on EBITDA results at the properties and development fees at 4,% ~~2012,~~of wethe noaggregate ~~longer~~costs ~~use~~of ~~Travel~~any ~~Tripper~~agreed ~~LLC’s~~upon ~~services.~~development projects. We ~~expensed~~incurred Highgate fees of approximately $0 for the year ended December 31, ~~2014~~2015 compared to $~~8,000~~0 and $~~174~~500,000 for the years ended December 31, ~~2013~~2014 and ~~2012~~2013, respectively. As of December 31, ~~2014~~2015 and December 31, ~~2013~~2014, wethere ~~owed~~were ~~TTL~~no ~~approximately~~amounts $0due to or from Highgate.

~~The~~On ~~Realty~~February ~~Management Division of Goldman Sachs~~24, ~~formerly Archon Group~~2015, ~~LP,~~we ~~provides~~entered ~~various~~into ~~services~~an toagreement uswith ~~such~~Travel asTripper ~~environmental~~LLC, ~~services~~or ~~and~~TTL, ~~insurance~~to ~~brokers.~~utilize Wetheir ~~expensed~~technology ~~fees~~for ofonline ~~approximately~~hotel ~~$394,000~~reservations. ~~for~~TTL ~~the~~is ~~year~~owned ~~ended~~by ~~December 31,~~an ~~2014~~affiliate ~~compared~~of toHighgate ~~$401,000~~(23)% and ~~$413,000~~an ~~for~~employee ~~the~~of ~~years~~Highgate ~~ended~~(40)%. From December 31 4, ~~2013 and~~ 2012, ~~respectively.~~through InFebruary ~~addition~~24, 2015 we ~~provided~~did ~~construction~~not ~~management~~use ~~services~~Travel toTripper ~~Archon~~LLC’s ~~for hotels managed by them~~services. We ~~recorded~~expensed ~~revenues~~fees of approximately $030,000 for the year ended December 31, ~~2014~~2015 compared to ~~approximately~~ $~~333,000~~0 and $~~620~~8,000 for the years ended December 31, ~~2013~~2014 and ~~2012~~2013, respectively. As of December 31, ~~2014~~2015 and December 31, ~~2013~~2014, we owed ~~Archon~~TTL ~~$0. As of December 31, 2014 and December 31, 2013, Archon owed us~~ approximately $01,000 and $80,~~000,~~ respectively.

On October 3, 2008, we entered into a participation agreement with Nor1, Inc., or Nor1, to utilize their technology to help sell perishable suite and room inventories. Nor1 gives the guest who books on-line the opportunity to book a non-guaranteed suite or upgraded rooms at a discounted rate if such is available at check-in. If the suite or upgraded room is awarded, Nor1 is paid 25% of the upgrade fee. Goldman Sachs owns less than 5% of Nor1. We expensed fees of approximately $15,000 for the year ended December 31, 2015 compared to $21,000 and $24,000 for the years ended December 31, 2014 and 2013, respectively. As of December 31, 2015 and December 31, 2014, we owed Nor1 approximately $7,000 and $1,000, respectively.

7783

or upgraded rooms at a discounted rate if such is available at check-in. If the suite or upgraded room is awarded, Nor1 is paid 25% of the upgrade fee. Goldman Sachs owns less than 5% of Nor1. We expensed fees of approximately $21,000 for the year ended December 31, 2014 compared to $24,000 and $41,000 for the years ended December 31, 2013 and 2012, respectively. As of December 31, 2014 and December 31, 2013, we owed Nor1 approximately $1,000.

Other Relationships and Policies

Director Independence

We believe that Messrs. Kava and Weidman are not “independent” as defined in the currently applicable listing standards of the New York Stock Exchange, or NYSE, because they are the beneficial owners of 100% of the Class A Interests. ACEP has no securities listed on the NYSE and, therefore, are not subject to the NYSE listing standards.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table sets forth the approximate aggregate fees incurred by our principal accountants for ~~2014~~2015 and ~~2013~~2014 services:

	Grant Thornton, LLP
	2014		2013
	2015		2014
Audit related fees	$	~~435~~450,000	$	~~420~~451,~~000~~300
All other fees (1)	16,300		—
Tax fees (1)	42,500		45,600
Tax fees (2)	45,600		60,600
Total	$	492,500	$	496,900
Total	$	496,900	$	480,600

Grant Thornton, LLP, did not provide any services related to financial information systems design and implementation during ~~2014~~2015 or ~~2013~~2014.

(1) ~~Other~~Fees ~~fees~~related ~~include~~to ~~fees~~the ~~for~~preparation ~~work~~of ~~related~~the toconsolidated ~~our~~tax ~~grant~~return offor ~~stock~~the ~~options~~years ~~and~~ended ~~restricted~~December ~~stock~~31, ~~units~~2014 and 2013.

~~(2)~~It ~~Fees~~is ~~related~~the topolicy of the ~~preparation~~Audit Committee to pre-approve all engagements and fees of the ~~consolidated~~independent ~~tax~~public ~~return~~accountant ~~for~~and ~~the~~during ~~years~~2015 ~~ended~~and ~~December~~2014 ~~31,~~all ~~2013~~such engagements and ~~2012~~fees were pre-approved.

~~It is the policy of the Audit Committee to pre-approve all engagements and fees of the independent public accountant and during 2014 and 2013 all such engagements and fees were pre-approved.~~84

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


(a)	1. Financial Statements

	Page
Report of Independent Registered Public Accounting Firm	4447
Consolidated Balance Sheets as of December 31, 2013 and 2012	45
Consolidated Balance Sheets as of December 31, 2015 and 2014	48
Consolidated Statements of Operations for the years ended December 31, 2013, 2012 and 2011	46
Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013	49
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012and 2011	47
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013	50
Consolidated Statements of Members’ Equity for the years ended December 31, 2013, 2012 and 2011	48
Consolidated Statements of Members’ Equity for the years ended December 31, 2015, 2014 and 2013	51
Notes to Consolidated Financial Statements	4952

7985

3. List of Exhibits

EXHIBITS INDEX

EXHIBITNO.	DESCRIPTION
3.1	Second Amended and Restated Certificate of Formation of American Casino & Entertainment Properties LLC (ACEP) (incorporated by reference to Exhibit 3.1 to ACEP’s Form S-4 (SEC File No. 333-118149), filed on August 12, 2004).
3.2	Amended and Restated Limited Liability Company Agreement of ACEP (incorporated by reference to Exhibit 3.1 to ACEP’s Form 8-K (SEC File No. 000-52975), filed on February 26, 2008).
4.6	Transfer Restriction Agreement, dated February 20, 2008, among Stuart Rothenberg, Brahm Cramer, Jonathan Langer, 2007/ACEP Holdings, LLC and W2007/ACEP Managers Voteco, LLC (incorporated by reference to Exhibit 4.01 to ACEP’s Form 8-K (SEC File No. 000-52975), filed on February 26, 2008).
10.1	Service Mark License Agreement, by and between Becker Gaming, Inc. and Arizona Charlie’s, Inc., dated as of August 1, 2000 (incorporated by reference to Exhibit 10.10 to ACEP’s Form 10-K (SEC File No. 333-118149), filed on March 16, 2006).
*10.2	Employment Agreement, effective April 1, 2014 by and between ACEP and Frank V. Riolo (incorporated by reference to Exhibit 10.01 to ACEP’s Form 8-K (SEC File No. 000-52975), filed on May 16, 2014).
*10.3	Employment Agreement, effective April 1, 2014 by and between ACEP and Edward W. Martin (incorporated by reference to Exhibit 10.02 to ACEP’s Form 8-K (SEC File No. 000-52975), filed on May 16, 2014).
*10.4	Employment Agreement, effective April 1, 2014 by and between ACEP and Phyllis A. Gilland (incorporated by reference to Exhibit 10.03 to ACEP’s Form 8-K (SEC File No. 000-52975), filed on May 16, 2014).
10.5	~~First Lien~~ Credit and Guaranty Agreement by and among ACEP, certain subsidiaries of ACEP, as guarantors, the lenders from time to time party thereto, Deutsche Bank AG New York Branch, as administrative agent, and collateral agent and documentation agent, and Goldman Sachs Lending Partners LLC and Deutsche Bank Securities Inc., as joint lead arrangers, joint bookrunners and co-syndication agents and Deutsche Bank Securities Inc., as documentation agent (incorporated by reference to Exhibit 10.1 to ACEP’s Form 8-K (SEC File No. 000-52975 filed on July 38, ~~2013~~2015).
10.6	~~Second~~First ~~Lien~~Pledge ~~Credit~~ and ~~Guaranty~~Security Agreement by and among ~~ACEP,~~the ~~certain~~grantors ~~subsidiaries~~listed ofon ~~ACEP, as guarantors,~~ the ~~lenders~~signature ~~from~~pages ~~time to time party~~ thereto, and Deutsche Bank AG New York Branch, as ~~administrative~~first ~~agent,~~lien collateral agent ~~and documentation agent, and Goldman Sachs Lending Partners LLC and Deutsche Bank Securities Inc., as joint lead arrangers, joint bookrunners and co-syndication agents~~ (incorporated by reference to Exhibit 10.2 to ACEP’s Form 8-K (SEC File No. 000-52975 filed on July 38, ~~2013~~2015).
10.7	~~First~~The ~~Lien~~Gaming Entities Pledge ~~and Security~~ Agreement by and among the grantors listed on the signature pages thereto and Deutsche Bank AG New York Branch, as ~~first lien~~ collateral agent (incorporated by reference to Exhibit 10.3 to ACEP’s Form 8-K (SEC File No. 000-52975 filed on July 38, ~~2013~~2015).
10.8	First Lien Gaming Entities Pledge Agreement by and among the grantors listed on the signature pages thereto and Deutsche Bank AG New York Branch, as first lien collateral agent (incorporated by reference to Exhibit 10.4 to ACEP’s Form 8-K (SEC File No. 000-52975 filed on July 3, 2013).
14.1	Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to ACEP’s Form 10-K (SEC File No. 000-52975), filed on March 21, 2013).
10.9	Second Lien Pledge and Security Agreement by and among the grantors listed on the signature pages thereto and Deutsche Bank AG New York Branch, as second lien collateral agent (incorporated by reference to Exhibit 10.5 to ACEP’s Form 8-K (SEC File No. 000-52975 filed on July 3, 2013).
21.1	Subsidiaries
31.1	Certification of Principal Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.

8086

10.10	Second Lien Gaming Entities Pledge Agreement by and among the grantors listed on the signature pages thereto and Deutsche Bank AG New York Branch, as second lien collateral agent (incorporated by reference to Exhibit 10.6 to ACEP’s Form 8-K (SEC File No. 000-52975 filed on July 3, 2013).
10.11	Amendment to First Lien Credit and Guaranty Agreement, dated February 24, 2014, by and among ACEP, certain subsidiaries of ACEP, as guarantors, the lenders from time to time party thereto, the Repricing Term Lenders referred to therein, and Deutsche Bank AG New York Branch as administrative agent and collateral agent (incorporated by reference to Exhibit 10.01 to ACEP’s Form 8-K (SEC File No. 000-52975 filed on February 24, 2014).
14.1	Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to ACEP’s Form 10-K (SEC File No. 000-52975), filed on March 21, 2013).
21.1	Subsidiaries
31.1	Certification of Principal Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
+101	The following information from the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2014~~2015 formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, ~~2014~~2015 and ~~2013~~2014; (ii) Consolidated Statements of Operations for the years ended December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013; (iii) Consolidated Statements of Cash Flows for the years ended December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013; (iv) Consolidated Statement of Members’ Equity for the years ended December 31, ~~2014~~2015, ~~2013~~2014 and ~~2012~~2013; and (v) Notes to the Consolidated Financial Statements.
*	Denotes a management contract or compensatory plan or arrangement.
+	Pursuant to rule 406T of Regulation S-T, the XBRL related information in this exhibit is furnished and not filed or a part of a registration statement or prospectus for the purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for the purposes of Section 18 of the Securities Exchange of 1934, as amended, and otherwise is not subject to liability under these sections.

8187

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AMERICAN CASINO & ENTERTAINMENT PROPERTIES LLC

	By:	/s/ Frank V. Riolo
		Frank V. Riolo
		Chief Executive Officer
	Date:	March 2623, ~~2015~~2016

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities indicated with respect to the Board of Directors of American Casino & Entertainment Properties LLC, on behalf of the Registrant in the capacities and on the dates indicated:

/s/ Frank V. Riolo
Frank V. Riolo	Chief Executive Officer(Principal Executive Officer)	March 2623, ~~2015~~2016
/s/ Edward W. Martin III
Edward W. Martin III	Chief Financial Officer, Treasurer(Principal Financial ~~and Accounting~~ Officer)	March 2623, ~~2015~~2016
/s/ Alan Kava
Alan Kava	Board Member	March 2623, ~~2015~~2016
/s/ Peter Weidman
Peter Weidman	Board Member	March 2623, ~~2015~~2016

8288

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED

PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT

REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT

We have not sent any annual reports to security holders covering the year ended December 31, ~~2014~~2015. We have not sent proxies, form of proxy or other proxy soliciting material to our security holders with respect to any annual or other meeting of security holders and will not be doing so subsequent to the filing of this Form 10-K.

8389

Filing Compare · American Casino & Entertainment Properties LLC