v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company recognized income tax expense of $20.7 million, $18.4 million and $20.1 million during the years ended December 31, 2025, 2024 and 2023, respectively, which consists of the following (in thousands):
202520242023
Current provision
Federal
$4,682 $14,700 $5,390 
State
2,635 6,126 7,385 
Total current provision
7,317 20,826 12,775 
Deferred provision
Federal
11,262 (3,244)10,278 
State
2,080 856 (2,932)
Total deferred provision
13,342 (2,388)7,346 
Total Provision
Federal
$15,944 $11,456 $15,668 
State
$4,715 $6,982 $4,453 
Total income tax expense
$20,659 $18,438 $20,121 
A reconciliation of the “expected” income taxes computed by applying the federal statutory income tax rate to the total expense is presented in the tables below in dollars (in thousands) and percentages:
202520242023
Computed “expected” tax expense
$15,106 $11,283 $13,802 
Federal
Tax credits
(327)(153)(281)
Nontaxable and nondeductible items:
Change in fair value of contingent earnout shares120 268 1,793 
Stock-based compensation(87)212 720 
Other nontaxable and nondeductible items
1,241 1,025 821 
Other
446 108 364 
State income taxes, net of federal benefit
4,160 5,695 2,902 
Total income tax expense
$20,659 $18,438 $20,121 
202520242023
Computed “expected” tax expense
21.00%21.00%21.00%
Federal
Tax credits
(0.45)%(0.28)%(0.43)%
Nontaxable and nondeductible items:
Change in fair value of contingent earnout shares0.17%0.50%2.73%
Stock-based compensation(0.12)%0.39%1.10%
Other nontaxable and nondeductible items
1.73%1.91%1.25%
Other
0.61%0.20%0.54%
State income taxes, net of federal benefit
5.78%10.60%4.42%
Total income tax expense
28.72%34.32%30.61%
For the years ended December 31, 2025, 2024, and 2023, state and local income taxes in Illinois comprise the majority of the state income taxes, net of federal benefit.
The Company’s cash payments for income taxes, net of refunds, by tax jurisdiction were as follows (in thousands):
202520242023
Cash payments for income taxes, net of refunds
Federal12,001 $14,805 $4,015 
Illinois2,930 6,842 6,864 
Other States610 659 862 
Total$15,541 $22,306 $11,741 
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows as of December 31 (in thousands):
20252024
Deferred tax assets:
Net operating loss carryforwards$7,926 $7,964 
Interest expense limitation carryforward5,415 10,765 
  Stock-based compensation5,460 4,452 
Lease liabilities2,220 2,397 
Other2,150 5,625 
23,171 31,203 
Deferred tax liabilities:
Property and equipment64,081 58,471 
Location contracts and other intangibles14,589 15,282 
Lease assets2,103 2,294 
Interest rate caplets96 1,585 
Other1,532 943 
82,401 78,575 
  Total deferred tax liability, net$59,230 $47,372 
A valuation allowance is required to be established or maintained when, based on currently available information, it is more likely than not that all or a portion of a deferred tax asset will not be realized. The guidance on accounting for income taxes
provides important factors in determining whether a deferred tax asset will be realized, including whether there has been sufficient taxable income in recent years and whether sufficient taxable income can reasonably be expected in future years in order to utilize the deferred tax asset.
The Company evaluated the need to record a valuation allowance for deferred tax assets based on an assessment of whether it is more likely than not that deferred tax benefits will be realized through the generation of future taxable income. Appropriate consideration was given to all available evidence, both positive and negative, in assessing the need for a valuation allowance. As a result of this evaluation, the Company concluded as of December 31, 2025, that the positive evidence outweighed the negative evidence and that it is more likely than not that its deferred tax assets will be realized.
As of December 31, 2025, and 2024, the Company did not record a liability for unrecognized tax benefits.
The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. As of December 31, 2025, the Company is subject to U.S. federal income tax examinations for the years 2022 through 2024 and income tax examinations from state jurisdictions for the years 2022 through 2024.
The following table summarizes carryforwards of net operating losses as of December 31 (in thousands):
20252024
AmountExpirationAmountExpiration
State net operating losses105,610 2043106,110 2042
Significant equity restructuring often results in an Internal Revenue Code Section 382 ownership change that limits the future use of net operating loss (“NOL”) carryforwards and other tax attributes. With regard to Century Gaming, an ownership change occurred on the date the outstanding equity interests were purchased in 2022. As a result, the Company's use of the acquired NOLs, interest expense limitation carryforward and R&D credit carryforward on an annual basis were limited. As of December 31, 2025, only the interest expense limitation is subject to limitation. The recognition and measurement of the Company's tax benefit includes estimates and judgment by the Company's management, which includes subjectivity. Changes in estimates may create volatility in the Company's tax rate in future periods based on new information about particular tax positions that may cause management to change its estimates.
The Company had no credit carryforwards as of December 31, 2025.
The One Big Beautiful Bill Act (the “Act”) was signed into law on July 4, 2025. The Act contains significant tax law changes impacting business tax payers with various effective dates, with certain provisions effective in 2025 and others to be implemented through 2027. Among the tax law changes that impact the Company are those that relate to the timing of certain tax deductions including depreciation expense, interest expense and research and development expenditures. Because these tax law changes impact the timing of these deductions, they will not reduce the Company’s overall effective tax rate. However, these tax law changes have resulted in a favorable reduction in the Company’s current tax expense which is offset by an increase to deferred tax expense.