The following discussion of our financial condition and results of operations
should be read in conjunction with our audited financial statements, and the
notes thereto, included under Item 8 of this Annual Report on Form 10-K.

The following discussion contains forward-looking statements that involve risks
and uncertainties. Our actual results and the timing of events may differ
materially from those expressed or implied in such forward- looking statements
as a result of various factors, including those set forth in "Cautionary
Note Regarding Forward-Looking Statements" included herein and "Risk Factors"
included in this Annual Report on Form 10-K.

Overview

Golden Nugget Online Gaming, Inc. (formerly known as Landcadia Holdings II, Inc.
or "GNOG", the "Company", "we", "our" or "us") is an online gaming, or iGaming,
and digital sports entertainment company focused on providing our customers with
the most enjoyable, realistic and exciting online gaming experience in the
market. We currently operate in New Jersey, Michigan, and West Virginia where we
offer patrons the ability to play their favorite casino games and bet on
live-action sports events, and in Virginia, where we offer online sports betting
only.

We commenced operations in Michigan in the first quarter of 2021 and commenced
operations in West Virginia and Virginia late in the third quarter of 2021. We
operate as an umbrella partnership C-corporation, or "Up-C," meaning that
substantially all of our assets are held indirectly through Golden Nugget Online
Gaming LLC ("GNOG LLC"), our indirect subsidiary, and our business is conducted
through GNOG LLC.

Acquisition Transaction

As of May 9, 2019, we were a blank check company formed under the laws of the
State of Delaware for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or other similar business
combination with one or more businesses. On December 29, 2020, we completed the
Acquisition Transaction and changed our name to Golden Nugget Online
Gaming, Inc. The Acquisition Transaction was accounted for as a reverse
recapitalization and the reported amounts from operations prior to the
Acquisition Transaction are those of GNOG LLC. (See Note 3 in the Notes to the
Consolidated Financial Statements) for additional information.

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The historical financial information of Landcadia Holdings II, Inc. (a special
purpose acquisition company, or "SPAC") prior to the closing of the Acquisition
Transaction has not been reflected in the financial statements as these
historical amounts have been determined to be not useful information to a user
of our financial statements. SPACs deposit the proceeds from their initial
public offerings into a segregated trust account until a business combination
occurs, where such funds are then used to pay consideration for the acquiree
and/or to pay stockholders who elect to redeem their shares of common stock in
connection with the Acquisition Transaction. The operations of a SPAC, until the
closing of a business combination, other than income from the trust account
investments and transaction expenses, are nominal. Accordingly, no other
activity in the Company was reported for periods prior to December 29, 2020
besides GNOG LLC's operations.

DraftKings Merger



On August 9, 2021, the Company, DraftKings Inc., a Nevada corporation
("DraftKings"), New Duke Holdco, Inc., a Nevada corporation and a wholly owned
subsidiary of DraftKings ("New DraftKings"), Duke Merger Sub, Inc., a Nevada
corporation and a wholly owned subsidiary of New DraftKings ("Duke Merger Sub"),
and Gulf Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary
of New DraftKings ("Gulf Merger Sub" and, together with Duke Merger Sub, the
"Merger Subs"), entered into an agreement and plan of merger (the "DraftKings
Merger Agreement"), pursuant to which New DraftKings will, among other things,
acquire all of our issued and outstanding shares of common stock. The
transactions contemplated by the DraftKings Merger Agreement and the other
related transactions are referred to herein as the "DraftKings Merger."

On the terms and subject to the conditions set forth in the Merger Agreement,
(a) at the Duke Effective Time (as defined in the DraftKings Merger Agreement),
Duke Merger Sub will be merged with and into DraftKings in accordance with the
Nevada Revised Statutes (the "NRS"), with DraftKings becoming the surviving
corporation (the "Duke Surviving Corporation") and (b) at the Gulf Effective
Time (as defined in the DraftKings Merger Agreement), Gulf Merger Sub will be
merged with and into the Company in accordance with the General Corporation Law
of the State of Delaware (the "DGCL"), with the Company becoming the surviving
corporation (the "Gulf Surviving Corporation", and together with the Duke
Surviving Corporation, collectively the "Surviving Corporations"). In connection
with the DraftKings Merger, certain affiliates of Tilman Fertitta will
consummate certain reorganization transactions to allow Landcadia Holdco to
become a wholly owned subsidiary of the Gulf Surviving Corporation following the
consummation of the DraftKings Merger.

The DraftKings Merger Agreement provides that upon the consummation of the
DraftKings Merger, each holder of our common stock will receive 0.365 (the
"Exchange Ratio") of a share of Class A common stock, par value 0.0001 per
share, of New DraftKings (the "New DraftKings Class A Common Stock") for each
share of our common stock issued and outstanding immediately prior to the Gulf
Effective Time, (other than certain excluded shares).

Each share of Class A common stock, par value $0.0001 per share, of DraftKings
("DraftKings Class A Common Stock") issued and outstanding immediately prior to
the Duke Effective Time (other than certain excluded shares) will be cancelled,
cease to exist and be converted into one validly issued, fully paid and
non-assessable share of New DraftKings Class A Common Stock and each share of
Class B common stock, par value $0.0001 per share, of DraftKings issued and
outstanding immediately prior to the Duke Effective Time (other than certain
excluded shares) will be converted into one validly issued, fully paid and
non-assessable share of Class B common stock, par value $0.0001 per share, of
New DraftKings.

At the Gulf Effective Time, each outstanding restricted stock unit issued by us
(a "RSU") that (i) was outstanding on the date of the DraftKings Merger
Agreement or (ii) is issued to our existing employees prior to the completion of
the DraftKings Merger in accordance with existing agreements, will vest, be
cancelled, and entitle the holder thereof to receive a number of shares of New
DraftKings Class A Common Stock equal to the number of shares of our common
stock subject to such RSU immediately prior to the Gulf Effective Time
multiplied by the Exchange Ratio, less a number of shares of New DraftKings
Class A Common Stock equal to any applicable withholding taxes. All other issued
and outstanding RSUs will be automatically converted into an equivalent
restricted stock unit of New DraftKings that entitles the holder thereof to a
number of shares of New DraftKings Class A Common Stock equal to the

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number of shares of our common stock subject to such RSU immediately prior to the Gulf Effective Time multiplied by the Exchange Ratio, and will remain outstanding in New DraftKings.


At the Gulf Effective Time, each outstanding warrant issued by us ("Private
Placement Warrant") to purchase shares of our Class A common stock will
automatically and without any required action on the part of the holder convert
into a warrant to purchase a number of New DraftKings Class A Common Stock equal
to the product of (x) the number of shares of our Class A common stock subject
to such Private Placement Warrant immediately prior to the Gulf Effective Time
multiplied by (y) the Exchange Ratio, and the exercise price of such Private
Placement Warrant will be determined by dividing (1) the per share exercise
price of such Private Placement Warrant immediately prior to the Gulf Effective
Time by (2) the Exchange Ratio.

The DraftKings Merger is expected to be a tax-deferred transaction to our stockholders and warrant holders, and the closing of the DraftKings Merger is conditioned on the receipt of a tax opinion to such effect.



The DraftKings Merger is expected to close in the first quarter of 2022, subject
to the satisfaction or waiver of certain conditions, including, among others,
(i) the absence of certain legal restraints that would prohibit or seek to
prohibit DraftKings Merger; (ii) the receipt of certain regulatory approvals;
(iii) the approval for listing on Nasdaq of the shares of New DraftKings Class A
Common Stock to be issued to DraftKings stockholders and our stockholders; (iv)
the Commercial Agreement (as defined in the DraftKings Merger Agreement) being
in full force and effect; and (v) the absence, since the date of the DraftKings
Merger Agreement, of any effect, event, development, change, state of facts,
condition, circumstance or occurrence that, individually or in the aggregate,
has had or would reasonably be expected to have a material adverse effect on us
or DraftKings.

Concurrently with the execution of the DraftKings Merger Agreement, DraftKings
entered into a support and registration rights agreement (the "Support
Agreement") with New DraftKings, Tilman J. Fertitta ("Fertitta"), Fertitta
Entertainment, Inc., a Texas corporation ("FEI"), Landry's Fertitta, LLC, a
Texas limited liability company ("LF LLC"), Golden Landry's LLC, a Texas limited
liability company ("Golden Landry's") and Golden Fertitta, LLC, a Texas limited
liability company ("Golden Fertitta" and together with Fertitta, FEI, LF LLC and
Golden Landry's, the "Fertitta Parties"), pursuant to which the Fertitta Parties
agreed (i) not to transfer the New DraftKings Class A Common Stock that the
Fertitta Parties will receive in the DraftKings Merger prior to the first
anniversary of the closing of the DraftKings Merger and (ii) from the date of
the Support Agreement to the five-year anniversary of the closing of the
DraftKings Merger, not to engage in a Competing Business (as defined in the
Support Agreement). New DraftKings agreed to provide the Fertitta Parties with
shelf registration rights with respect to New DraftKings Class A Common Stock
and warrants to purchase New DraftKings Class A Common Stock that the Fertitta
Parties will receive in connection with the DraftKings Merger. In addition, the
Fertitta Parties have agreed to execute (and cause its affiliates to execute)
all such agreements and take such action as required to waive the obligations of
all Fertitta Parties to make interest payments on behalf of the Company and of
the Company to issue equity in relation to such payments.

COVID-19



During March 2020, a global pandemic was declared by the World Health
Organization related to the rapidly growing outbreak of a novel strain of
coronavirus (COVID-19). The pandemic has significantly impacted the economic
conditions around the world, accelerating during the last half of March 2020, as
federal, state and local governments react to the public health crisis. The
direct impact on us was primarily through an increase in new patrons utilizing
online gaming due to closures of land-based casinos and suspensions,
postponement and cancellations of major sports seasons and sporting events,
although sports betting accounted for less than 1% of our revenues for 2020.
Land based casinos reopened in July with significant restrictions, which eased
over time. However, virus cases began to increase and capacity restrictions were
reinstituted. As a result, the ultimate impact of this pandemic on our financial
and operating results is unknown and will depend, in part, on the length of time
that these disruptions exist and the subsequent behavior of new patrons after
land-based casinos reopen fully. For the year ended December 31, 2021, there has
been no adverse impact on revenues due to concerns regarding COVID-19.

A significant or prolonged decrease in consumer spending on entertainment or
leisure activities could have an adverse effect on the demand for the Company's
product offerings, reducing cash flows and revenues, and thereby

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materially harming the Company's business, financial condition and results of
operations. In addition, a recurrence of COVID-19 cases or an emergence of
additional variants or strains could cause other widespread or more severe
impacts depending on where infection rates are highest. As steps taken to
mitigate the spread of COVID-19 have necessitated a shift away from a
traditional office environment for many employees, the Company has business
continuity programs in place to ensure that employees are safe and that the
business continues to function with minimal disruptions to normal work
operations while employees work remotely. The Company will continue to monitor
developments relating to disruptions and uncertainties caused by COVID-19.

Components of Our Results of Operations

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.



Our Revenues

Revenues.

Gaming. We earn revenues primarily through online real money gaming, offering a
suite of games similar to those available in land-based casinos, as well as
online sports wagering. Similar to land-based casinos, the revenue recognized is
the aggregate net difference between gaming wins and losses. We record accruals
related to the incremental anticipated payouts of progressive jackpots as the
progressive game is played. Free play and other incentives to customers are
recorded as a reduction of gaming revenue.

Other. We have entered into contracts to manage multi-year market access
agreements with other online betting operators that are authorized to operate
online casino and online sports wagering. We receive royalties from the online
betting operators and reimbursements for costs incurred, such as licensing fees,
investigative fees, and certain back-office costs. Initial fees received for the
market access agreements and prepaid guaranteed minimum royalties are deferred
and recognized over the term of the contract as the performance obligations are
satisfied.

We have entered into contracts to manage multi-year live dealer studio broadcast
license agreements with online casino operators that provide for the use of the
live table games that are broadcast from our studio at the Golden Nugget in
Atlantic City, New Jersey. We receive royalties from the online casino operators
based on a percentage of Gross Gaming Revenue (GGR). We also offer some "private
tables" for which we receive a flat monthly fee in addition to a percentage of
GGR.

Our Operating Costs and Expenses


Cost of revenue. Cost of revenue includes the gaming taxes that are imposed by
the jurisdictions in which we operate, fees paid to platform and content
providers, market access and license fees, brand royalties, payment processing
fees and related chargebacks, labor and other related costs associated with our
live dealer studio and other reimbursable costs incurred.

Advertising and promotion. Advertising and promotion expense includes costs
associated with marketing our product offerings and other related costs incurred
to acquire new customers. We use a variety of advertising channels to optimize
our marketing spend based on performance and the highest anticipated returns

General and administrative expenses. General and administrative expense includes
payment processing fees and chargebacks, professional fees and other fees and
expenses.

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Results of Operations

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 (in
thousands)

                                                    Year Ended December 31,
                                         2021           2020         $Change      % Change
Revenues
Gaming                                $   113,352    $   79,919    $    33,433        41.8 %
Other                                      14,892        11,201          3,691        33.0 %
Total revenue                             128,244        91,120         37,124        40.7 %
Costs and expenses
Cost of revenue                            61,198        36,531         24,667        67.5 %
Advertising and promotion                  61,656        17,468         44,188       253.0 %
General and administrative expense         28,814         8,302         20,512       247.1 %
Merger and Acquisition Transaction
related expenses                            6,332         4,137          2,195        53.1 %
Depreciation and amortization                 255           190             65        34.2 %
Total costs and expenses                  158,255        66,628         91,627       137.5 %
Operating income (loss)                  (30,011)        24,492       (54,503)     (222.5) %
Other expense (income)
Interest expense, net                      21,192        38,492       (17,300)      (44.9) %
Gain on warrant derivatives             (105,213)      (39,586)       (65,627)       165.8 %
Other expense                                 409        25,384       (24,975)      (98.4) %
Total other expense (income)             (83,612)        24,290      (107,902)     (444.2) %
Income before income taxes                 53,601           202         53,399         n/a
Provision for income taxes                (4,276)       (7,651)          3,375      (44.1) %
Net income                                 57,877         7,853         50,024       637.0 %
Net loss attributable to
non-controlling interests                  21,693        17,350

4,343 25.0 % Net income attributable to GNOG $ 79,570 $ 25,203 $ 54,367 215.7 %




Revenues.

Gaming. Gaming revenues increased $33.4 million, or 41.8%, to $113.4 million
from $79.9 million for the year ended December 31, 2021 compared to the year
ended December 31, 2020. The increase was primarily the result of the impact of
our launch in Michigan in late January of 2021. We also commenced operations in
West Virginia and Virginia late in the third quarter.

Other. Other revenues increased $3.7 million, or 33.0%, to $14.9 million from
$11.2 million for the year ended December 31, 2021 compared to the comparable
prior year. Market access and live dealer studio broadcast revenues increased
$2.7 million, or 30.6%, as royalties with existing partners increased and the
addition of a new partner when compared to the prior year period. Reimbursable
revenues under these arrangements also increased by $1.0 million, or 41.3%.

Operating Costs and Expenses.



Cost of revenue. Cost of revenue increased $24.7 million, or 67.5%, to $61.2
million from $36.5 million for the year ended December 31, 2021 as compared to
the year ended December 31, 2020, as a result of the increase in gaming revenue.
Increased gaming taxes and market access fees associated with our launch in
Michigan in late January 2021 and brand royalty expense paid to an affiliate
which began in May 2020 also increased cost of revenue for the year ended
December 31, 2021 as compared to the year ended December 31, 2020

Advertising and promotion. Advertising and promotion expense increased $44.2
million, or 253%, to $61.7 million from $17.5 million for the year ended
December 31, 2021 as compared to the year ended December 31, 2020. This increase
from the prior year is almost entirely attributable to our launch in the
Michigan market in late January 2021.

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General and administrative. General and administrative expenses increased $20.5
million, or 247.1%, to $28.8 million from $8.3 million for the year ended
December 31, 2021 as compared to the year ended December 31, 2020. This increase
is due largely to stock-based compensation of $12.0 million compared to $0.0
million for the year ended December 31, 2021 and 2020, respectively.
Compensation expense is also higher than the prior year period and professional
fees for audit services, tax services, legal services and other costs associated
with being a public company for the entire fiscal year resulted in a significant
increase in expenses as compared to the prior period.

Merger and Acquisition Transaction-related expenses. Merger and Acquisition
Transaction related expenses increased $2.2 million, or 53.1%, to $6.3 million
from $4.1 million for the year ended December 31, 2021 as compared to the year
ended December 31, 2020 and related primarily to regulatory, legal and other
professional fees incurred in connection with the DraftKings Merger. The prior
year expenses were legal and other professional fees related to the Acquisition
Transaction.

Interest expense. Interest expense decreased $17.3 million, or 44.9%, to $21.2
million from $38.5 million for the year ended December 31, 2021 as compared to
the year ended December 31, 2020. We repaid $150.0 million of the principal
balance of the $300.0 million term loan in connection with the December 29, 2020
closing of the Acquisition Transaction and repaid an additional $10.6 million in
February of 2021. In connection with this repayment for the year ended December
31, 2021, we expensed $0.6 million in unamortized discount and loan origination
costs as interest expense.

Gain on warrant derivatives. In accordance with ASC 815-40, we classify our
warrants as derivative liabilities measured at fair value, with changes in fair
value each period reported in earnings. The gain on warrant derivatives amounted
to $105.2 million for the year ended December 31, 2021 as compared to a gain of
$39.6 million for the year ended December 31, 2020, primarily due to changes in
the underlying share price of our class A common stock.

Other expense. Other expense consists of prepayment premiums associated with the
repayment of $10.6 million principal amount of our term loan in February 2021,
partially offset by non-cash gains on the tax receivable agreement during the
period. Other expense in prior year consisted of prepayment premiums associated
with the repayment of $150.0 million principal amount of our term loan in
connection with the Acquisition Transaction on December 29, 2020.

Provision for income taxes. The provision for income taxes was a benefit of $4.3
million for the year ended December 31, 2021 compared to a benefit of $7.7
million for the prior year. This decrease in benefit of $3.4 million is the
result of certain non-deductible expenses in 2021 and the recording of a
valuation allowance on a portion of the net deferred tax assets. Additionally,
the reversal of an uncertain tax position in 2020 increased the tax benefit in
the prior year. The effective tax rate for the year ended December 31, 2021 was
negative 8.0% and reflects that the gain on warrant derivatives of $105.2
million and the loss attributable to the non-controlling interests for the year,
are not subject to federal or state income tax.

Net loss attributable to non-controlling interests. Net loss attributable to
non-controlling interests represents a 41.2% economic interest in the losses in
GNOG, LLC. The non-controlling interests consist of the Class B Units in
Landcadia Holdco held by LF LLC that have no voting rights and that are
redeemable, together with an equal number of Class B common stock, for either
31,657,545 shares of Class A common stock or an equal value of cash, at our

election.

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Year Ended December 31, 2020 Compared to the Year ended December 31, 2019 (in
thousands)

                                                  Year Ended December 31,
                                         2020         2019        $Change      % Change
Revenues
Gaming                                $   79,919    $  47,694    $   32,225        67.6 %
Other                                     11,201        7,727         3,474        45.0 %
Total revenue                             91,120       55,421        35,699        64.4 %
Costs and expenses
Cost of revenue                           36,531       22,318        14,213        63.7 %
Advertising and promotion                 17,468        9,291         8,177        88.0 %

General and administrative expense         8,302        6,040         2,262        37.5 %
Acquisition Transaction related
expenses                                   4,137            -         4,137         n/a
Depreciation and amortization                190          135            55        40.7 %
Total costs and expenses                  66,628       37,784        28,844        76.3 %
Operating income (loss)                   24,492       17,637         6,855        38.9 %
Other expense (income)
Interest expense, net                     38,492            6        38,486         n/a
Gain on warrant derivatives             (39,586)            -      (39,586)         n/a
Other expense                             25,384            -        25,384         n/a
Total other expense                       24,290            6        24,284         n/a
Income before income taxes                   202       17,631      (17,429)         n/a
Provision for income taxes               (7,651)        5,960      (13,611)     (228.4) %
Net income                                 7,853       11,671       (3,818)      (32.7) %
Net loss attributable to
non-controlling interests                 17,350            -        17,350         n/a

Net income attributable to GNOG $ 25,203 $ 11,671 $ 13,532


      115.9 %


Revenues.

Gaming.
Gaming revenues increased $32.2 million, or 67.6%, to $79.9 million from $47.7 million for the
year ended December 31, 2020 compared to the year ended December
31, 2019. The increase was primarily the result of higher table game and slot
revenue during the current year period resulting from an increase in new patrons
using online gaming in
light of the casino closures stemming from the outbreak of COVID-19.

Other.


Other revenues increased $3.5 million, or 45.0%, to $11.2 million from $7.7 million for the year
ended December 31, 2020 compared to the comparable prior year period.
Market access and live dealer studio broadcast revenues
increased $2.9 million, or 48.3%, as royalties with existing partners increased
and the addition of a new partner when compared
to the prior year period. Reimbursable revenues under these arrangements also
increased by $0.6 million, or 34.2%.

Operating Costs and Expenses.



Cost of revenue. Cost of revenue increased $14.2 million, or 63.7%, to $36.5
million from $22.3 million for the year ended December 31, 2020 compared to the
year ended December 31, 2019, as a result of the increase in revenues. Gaming
taxes, royalties and payment processing fees all increased proportionately with
the increase in gaming revenues for the year.

Advertising and promotion. Advertising and promotion expenses increased $8.2
million, or 88.0%, to $17.5 million from $9.3 million for the year ended
December 31, 2020 as compared to the year ended December 31, 2019. We increased
our advertising expenditures during 2020 to attract new and former patrons to
online gaming in light of the casino closures stemming from the outbreak of
COVID-19.

General and administrative Expenses.
General and administrative expense increased $2.3 million, or 37.5%, to $8.3
million for the year ended December 31, 2020 from $6.0 million for the prior
year period. This increase is due largely to

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higher compensation expense and professional fees for audit services, tax services, legal services and other costs associated with becoming a public company when compared to the prior year.



Acquisition Transaction-related expenses. Acquisition Transaction-related
expenses totaled $4.1 million for the year ended December 31, 2020 and represent
costs incurred in connection with the December 29, 2020 Acquisition Transaction
consisting of professional fees and other related expenses.

Interest expense. Interest expense for the year ended December 31, 2020
increased by $38.5 million as a result of the $300.0 million term loan credit
agreement we entered into on April 28, 2020. We also repaid $150.0 million
principal balance of the term loan in connection with the December 29, 2020
closing of the Acquisition Transaction. In connection with this repayment, $8.3
million in unamortized discount and loan origination coasts were expensed as
interest expense. Proceeds received from the initial term loan were distributed
to LF LLC.

Gain on warrant derivatives. In accordance with ASC 815-40, we classify our
warrants as derivative liabilities measured at fair value, with changes in fair
value each period reported in earnings. The gain on warrant derivatives amounted
to $39.6 million for the year ended December 31, 2020 and no such gains were
recognized for the year ended December 31, 2019.

Other expense. Other expense consists of prepayment premiums and other related
costs associated with the repayment of $150.0 million principal amount of our
term loan in conjunction with the December 29, 2020 closing of the Acquisition
Transaction.

Provision for income taxes. The provision for income taxes decreased $13.6
million for the year ended December 31, 2020 compared to the year ended
December 31, 2019, primarily as a result of the decrease in pre-tax income for
the period and the loss attributable to the non-controlling interest for
the year ended December 31, 2020, which is not subject to federal or state
income tax in our consolidated statements of operations. The effective tax rate
for the year ended December 31, 2020 was (3,787.6)% compared to 33.8% in the
prior year comparable period. This reduction in the effective tax rate for
the year ended December 31, 2020 was the result of losses attributable to
non-controlling interests for the post Acquisition Transaction period, which
also reduces the amount of state income tax, and the change in unrecognized tax
benefits for the year ended December 31, 2020 compared to the year ended
December 31, 2019.

Net loss attributable to non-controlling interests. Net loss attributable to
non-controlling interests represents a 45.9% economic interest in our losses
from the closing date of the Acquisition Transaction through December 31, 2020.
The non-controlling interests consist of the Class B Units in Landcadia Holdco
held by LF LLC that have no voting rights and that are redeemable, together with
an equal number of Class B common stock, for either 31,350,625 shares of Class A
common stock or an equal value of cash, at our election.

Liquidity and Capital Resources


We measure liquidity in terms of our ability to fund the cash requirements of
our business operations, including working capital and capital expenditure
needs, contractual obligations and other commitments, with cash flows from
operations and other sources of funding. Our current working capital needs
relate mainly to launching our iGaming and sports wagering product offerings in
new markets, as well as compensation and benefits for our employees. Our ability
to expand and grow our business will depend on many factors, including working
capital needs and the evolution of our operating cash flows.

Further expansion into new markets will likely require additional capital either
from affiliates or third parties and based on our financial performance, we
believe we will have access to that capital. The future economic environment,
however, could limit our ability to raise capital by issuing new equity or debt
securities on acceptable terms or at all, and lenders may be unwilling to lend
funds on acceptable terms or at all in the amounts that would be required to
supplement cash flows to support our expansion plans. The sale of additional
equity investments or convertible debt securities would result in dilution to
our stockholders and may not be available on favorable terms or at all,
particularly in light of the current conditions in the financial and credit
markets. Additional debt would result in increased expenses and would

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likely impose new restrictive covenants which may be similar or different than those restrictions contained in the covenants under our current Credit Agreement.



Credit Agreement. On April 28, 2020, we entered into a term loan credit
agreement that is guaranteed by our indirect parent, comprised of a $300.0
million interest only term loan due October 4, 2023. Net proceeds received from
the term loan of $288.0 million, net of original issue discount, were sent to
the parent of Old GNOG, who issued Old GNOG a note receivable due October 2024
(as amended and restated following the Acquisition Transaction, the "Second A&R
Intercompany Note" (Refer to Note 12 in the Notes to the Consolidated Financial
Statements) in the same amount, with substantially similar terms as the credit
agreement. The Second A&R Intercompany Note was accounted for as contra-equity,
similar to a subscription receivable; however, in the reverse recapitalization
recorded in connection with the Acquisition Transaction, the Second A&R
Intercompany Note from our indirect parent was accounted for as a distribution
to the parent of Old GNOG, reducing retained earnings. The term loan was issued
at a 4% discount. The term loan bears interest at the London Interbank Offered
Rate ("LIBOR") plus 12%, with a 1% floor, and interest payments are made
quarterly. The term loan is secured by the Second A&R Intercompany Note which
effectively, but indirectly provides pari passu security interest with the
Golden Nugget, LLC senior secured credit facility.

In February 2021, we repaid $10.6 million of the term loan and incurred a
prepayment premium of $1.6 million which was expensed as other expense in our
consolidated statement of operations. Additionally, we expensed $0.2 million in
deferred debt issuance costs and $0.4 million in unamortized debt discount as
interest expense in our consolidated statement of operations for the year ended
December 31, 2021.

In connection with the Acquisition Transaction, we repaid $150.0 million of the
$300.0 million term loan and incurred a prepayment premium of $24.0 million,
which along with other related fees and expenses was expensed as other expense
in our consolidated statement of operations during the year ended December 31,
2020. Additionally, we expensed $3.3 million in deferred debt issuance costs and
$5.0 million in unamortized discount as interest expense in our consolidated
statement of operations for the year ended December 31, 2020.

The term loan credit agreement contains certain negative covenants including
restrictions on incurring additional indebtedness or liens, liquidation or
dissolution, limitations on disposal of assets and paying dividends. The term
loan credit agreement also contains a make-whole provision that is in effect
through April 2022. The prepayment premium under the make-whole provision is
calculated as (A) the present value of (i) 100% of the aggregate principal
amount of the term loan prepaid, plus (ii) all required remaining scheduled
interest payments through April 2022, minus (B) the outstanding principal amount
being prepaid.

Agreement with Danville Development. On November 18, 2020, we entered into a
definitive agreement with Danville Development, for market access to Illinois.
Pursuant to this agreement, we have committed to provide a mezzanine loan in the
amount of $30.0 million to Danville Development for the development and
construction of a new Golden Nugget-branded casino in Danville, Illinois. We
currently expect to fully fund the mezzanine loan in the first or second quarter
of 2022. The definitive agreement has a term of 20 years and requires us to pay
Danville Development a percentage of our online net gaming revenue, subject to
minimum royalty payments over the term.

Tax Receivable Agreement. In connection with the Acquisition Transaction, we
entered into the Tax Receivable Agreement ("TRA") with LF LLC as additional
consideration. The TRA generally provides for the payment by us to LF LLC of 85%
of certain tax benefits that we actually realize or are deemed to realize from
the use of certain tax attributes in periods after the closing of the
Acquisition Transaction. We will retain the tax benefit, if any, of the
remaining 15% of these tax attributes.

Assuming no exchange of LF LLC's Class B Units pursuant the A&R Holdco LLC
Agreement, the estimated liability under the TRA ("the TRA liability") of $24.2
million is included on our consolidated balance sheets as of December 31, 2021.
The TRA provides for an accelerated lump sum payment on the occurrence of
certain events, among them a change of control. The planned DraftKings Merger
qualifies as a change of control event, however, will not result in any TRA
liability as LF LLC has agreed to waive this payment contingent upon completion
of the DraftKings Merger. Upon successful completion of the DraftKings Merger,
the TRA will be terminated and the TRA

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liability will be fully satisfied, extinguished, and released. Refer to Note 12 in the Notes to the Consolidated Financial Statements for additional details.



Other Contractual Obligations and Contingencies. We have entered into a number
of agreements for advertising, licensing, market access, technology, and other
services. We also entered into several equipment notes totaling $1.3 million to
finance computer equipment and other related infrastructure with original terms
of three to four years that mature from June 2024 to December 2024.

Contractual Obligations. As of December 31, 2021, we had contractual obligations
as described below. Our obligations include "off-balance sheet arrangements"
whereby liabilities associated with unconditional purchase obligations are not
fully reflected in our balance sheets (in thousands). Refer to Note 11 in the
Notes to the Consolidated Financial Statements for additional details.

                              2022        2023         2024        2025        2026       Thereafter       Total
Term loan credit
agreement                   $      -    $ 139,385    $      -    $      -    $      -    $          -    $ 139,385
Interest on term loan
credit agreement              18,372       13,942           -           -           -               -       32,314
Operating leases                 379          379         259          84           -               -        1,101
Mezzanine loan
commitment                    30,000            -           -           -           -               -       30,000
Other contractual
obligations                   27,309        5,325      26,310      23,684      10,600          53,250      146,478
                              76,060      159,031      26,569      23,768      10,600          53,250      349,278



Considering our cash and cash equivalents of $112.7 million at December 31, 2021
and based on our current and expected cash flows from operations in New Jersey,
we believe that cash on hand and cash generated from our operations will be
adequate to meet our anticipated obligations under our contracts, debt service
requirements, capital expenditures and working capital needs for the next twelve
months. However, we cannot be certain that our business will generate sufficient
cash flow from operations; that the U.S. economy will continue to grow in 2022
and beyond; that our anticipated earnings projections will be realized; or that
future equity offerings or borrowings will be available in the capital markets
to enable us to service our indebtedness or to make anticipated advertising
expenditures. If we expand our business into new markets in the future, our cash
requirements may increase significantly, and we may need to complete equity or
debt financings to meet these requirements. Our future operating performance and
our ability to service or refinance our debt will be subject to future economic
conditions and to financial, business and other factors, many of which are
beyond our control.

Cash Flows. Net cash used by operating activities was $64.1 million for the year
ended December 31, 2021 compared to $20.5 million of cash provided by operating
activities for the year ended December 31, 2020. Factors affecting changes in
operating cash flows are similar to those that impact net income, with the
exception of non-cash items such as gain on warrant derivatives, amortization of
debt issuance costs and discounts, depreciation and amortization, stock-based
compensation and deferred taxes. Additionally, changes in working capital items
such as accounts receivable, accounts payable, accrued liabilities and customer
deposits can significantly affect operating cash flows. Cash flows from
operating activities during the year ended December 31, 2021 were lower as a
result of net income of $57.9 million that included a $105.2 million gain on
exercise of warrants for the year ended December 31, 2021 as compared to net
income of $7.9 million that included a $39.6 million gain on exercise of
warrants for the year ended December 31, 2020. In the year ended December 31,
2021, non-cash items offsetting net income totaled $93.7 million compared to
$12.2 million for the year ended December 31, 2020. A decrease in working
capital items of $28.3 million for the year ended December 31, 2021 compared to
an increase of $24.8 million for the year ended December 31, 2020 also increased
the cash used in operations.

Net cash provided by operating activities was $20.5 million for the year ended
December 31, 2020 compared to $35.2 million for the year ended December 31,
2019. Factors affecting changes in operating cash flows are similar to those
that impact net income, with the exception of non-cash items such as
amortization of debt issuance costs and discounts, depreciation and
amortization, stock-based compensation and deferred taxes. Additionally, changes
in working capital items such as accounts receivable, accounts payable, accrued
liabilities and customer deposits can significantly affect operating cash flows.
Cash flows from operating activities during the year ended December 31, 2020

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were lower as a result of a net income of $7.9 million for the year ended
December 31, 2020 as compared to net income of $11.7 million for the year ended
December 31, 2019. In the year ended December 31, 2020, non-cash items
offsetting net income totaled $12.2 million compared to $0.4 million for
the year ended December 31, 2019. An increase in working capital items of $24.8
million for the year ended December 31, 2020 compared to $23.1 million for
the year ended December 31, 2019 slightly increased the cash provided by
operations.

Net cash used in investing activities was $1.1 million related to property and
equipment additions for the year ended December 31, 2021 as compared to $0.1
million used in investing activities related to property and equipment additions
for the year ended December 31, 2020.

Net cash used in investing activities was $0.1 million related to property and
equipment additions for the year ended December 31, 2020, as compared to $0.0
million used in investing activities for the year ended December 31, 2019.

Net cash provided by financing activities was $102.1 million for the year ended
December 31, 2021, compared to $73.1 million of cash used in financing
activities for the year ended December 31, 2020. The main driver of this
variance is the $110.1 million cash received as a result of the public warrants
exercised early in 2021 offset by the repayment of $10.6 million of the term
loan during the year ending December 31, 2021. Additionally, dividends of $30.6
million were paid to the parent of Old GNOG during the comparable period in the
prior year and contributions from parent of Old GNOG amounted to $16.8 million.

Net cash provided by financing activities was $73.1 million for the year ended
December 31, 2020, compared to $10.9 million of cash used in financing
activities for the year ended December 31, 2019. The main driver of this
variance is the $270.4 million cash received in the Acquisition Transaction
offset by the repayment of $175.4 million of the term loan. There was also a
larger dividend paid to the parent of Old GNOG and amounts paid for debt
issuance costs in 2020, offset by a contribution from our parent. Proceeds
received from the term loan were sent to LF LLC, the parent of Old GNOG, who
issued us a note receivable due October 24, 2024.

Critical Accounting Policies

Use of Estimates



The preparation of the audited consolidated financial statements requires
management to make estimates and assumptions that affect the reported amount of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amount of revenue and
expenses during the period reported. Management utilizes estimates, including,
but not limited to, the useful lives of assets and inputs used to calculate the
TRA liability. Actual results could differ from those estimates.

Emerging Growth Company



Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being
required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act
registration statement declared effective or do not have a class of securities
registered under the Exchange Act) are required to comply with the new or
revised financial accounting standards. The JOBS Act provides that a company can
elect to opt out of the extended transition period and comply with the
requirements that apply to non-emerging growth companies, but any such election
to opt out is irrevocable. The Company has elected not to opt out of such
extended transition period, which means that when a standard is issued or
revised and it has different application dates for public or private companies,
the Company, as an emerging growth company, can adopt the new or revised
standard at the time private companies adopt the new or revised standard. This
may make comparison of our consolidated financial statements with another
company which is either not an emerging growth company or an emerging growth
company that has opted out of using the extended transition period difficult or
impossible because of the potential differences in accounting standards used.

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Revenue and Cost Recognition


We recognize revenue for services when the services are performed and when we
have no substantive performance obligations remaining. Online real money gaming
revenues are recognized as the aggregate net difference between gaming wins and
losses and are recorded as gaming revenue in the accompanying statements of
operations, with liabilities recognized for funds deposited by customers before
gaming play occurs. We report 100% of wins as revenue and our content provider's
share is reported in costs and expenses.

Jackpots, other than the incremental progressive jackpots, are recognized at the
time they are won by customers. We accrue the incremental progressive jackpots
as the progressive games are played, and the progressive jackpot amount
increases, with a corresponding reduction to gaming revenues. Free play and
other incentives to customers related to internet gaming play are recorded as a
reduction of gaming revenue.

We are contracted to manage multi-year market access agreements with online
gaming operators that are authorized to operate real money online gaming and
sports betting, for which we receive royalties and cost reimbursement. Initial
fees received for the market access agreements and prepaid guaranteed minimum
royalties are deferred and recognized ratably over the term of the contract as
the performance obligations are satisfied.

Stock-Based Compensation



We measure compensation expenses for stock awards in accordance with ASC 718,
Compensation-Stock Compensation. We record compensation expense over the
requisite service period for restricted stock units ("RSUs") based on the grant
date fair value of the award. Stock compensation expense for performance-based
restricted stock units ("PBRSUs") is recognized over the requisite period for
each separately vesting tranche as though each tranche of the award is, in
substance, a separate award. This will result in an accelerated recognition of
compensation cost. The grant date fair value of the PBRSUs is estimated on the
date of the grant using a Monte-Carlo simulation model used to simulate a
distribution of future stock price paths based on historical volatility levels.
The expense for RSUs and PBRSUs are included in general and administrative
expense in our statements of operations. Our policy is to account for
forfeitures of share-based compensation awards as they occur. Refer to Note 9 in
the Notes to the Consolidated Financial Statements for additional details.

Income Taxes


We were subject to a tax sharing agreement with certain affiliates prior to the
December 29, 2020 closing date of the Acquisition Transaction and we recognized
tax assets and liabilities associated with temporary differences on a separate
return basis in accordance with GAAP. Following the consummation of the
Acquisition Transaction, we operate as an Up-C, meaning that substantially all
of our assets are held indirectly through Golden Nugget Online Gaming LLC ("GNOG
LLC"), our indirect subsidiary, and our business is conducted through GNOG LLC.

We follow the liability method of accounting for income taxes. Under this
method, deferred income taxes are recorded based upon differences between the
financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the underlying
assets are realized or liabilities are settled. A valuation allowance reduces
deferred tax assets when it is more likely than not that some or all of the
deferred tax assets will not be realized.

We use a recognition threshold of more-likely-than-not, and a measurement
attribute for all tax positions taken or expected to be taken on a tax return,
in order to be recognized in the financial statements. Accordingly, we report a
liability for unrecognized tax benefits resulting from uncertain tax positions
taken or expected to be taken in a tax return. We recognize interest and
penalties, if any, related to unrecognized tax benefits in income tax expense.

Warrant Derivative Liabilities



In accordance with ASC 815-40, Derivatives and Hedging: Contracts in an Entities
Own Equity, entities must consider whether to classify contracts that may be
settled in its own stock, such as warrants, as equity of the entity or as

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an asset or liability. If an event that is not within the entity's control could
require net cash settlement, then the contract should be classified as an asset
or a liability rather than as equity. We have determined because the terms of
public warrants include a provision that entitles all warrant holders to cash
for their warrants in the event of a qualifying cash tender offer, while only
certain of the holders of the underlying shares of common stock would be
entitled to cash, our public warrants are classified as a liability measured at
fair value, with changes in fair value each period reported in earnings.

The sponsor warrants contain provisions that change depending on who holds the
warrant. If the sponsor warrants are held by someone other than the initial
purchasers or their permitted transferees, the sponsor warrants will be
redeemable by us and exercisable by such holders on the same basis as the public
warrants. This feature precludes the sponsor warrants from being indexed to our
common stock, and thus the warrants are classified as a liability measured at
fair value, with changes in fair value each period reported in earnings.

Using the three-tier fair value hierarchy as described in Note 2 in the Notes to
the Consolidated Financial Statements, our public warrants were valued using
level 1 inputs and the sponsor warrants were valued using level 3 inputs. All of
the public warrants were exercised or redeemed during the first quarter of 2021.
The fair value of the sponsor warrants was estimated using a modified version of
the Black-Scholes option pricing formula for European calls. Specifically, we
assumed a term for the sponsor warrants equal to the contractual term from the
closing date of the Acquisition Transaction. We then discounted the resulting
value to the valuation date using a risk-free interest rate. Significant level 3
inputs used to calculate the fair value of the sponsor warrants include the
share price on the valuation date, expected volatility, expected term and the
risk-free interest rate. Refer to Note 2 in the Notes to the Consolidated
Financial Statements for additional details.

Volatility in the value of the public warrants and sponsor warrants may result
in significant changes in the value of the derivatives and resulting gains and
losses on our statement of operations.

Recent Accounting Pronouncements



In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)." This
guidance requires recognition of most lease liabilities on the balance sheet to
give investors, lenders, and other financial statement users a more
comprehensive view of a company's long-term financial obligations, as well as
the assets it owns versus leases. ASU 2016-02 will be effective for fiscal years
beginning after December 15, 2021, and for interim periods within annual periods
after December 15, 2022. In July 2018, the FASB issued ASU 2018-11 making
transition requirements less burdensome. The standard provides an option to
apply the transition provisions of the new standard at its adoption date instead
of at the earliest comparative period presented in the Company's financial
statements. We are currently evaluating the impact that this guidance will have
on our financial statements as well as the expected adoption method. We do not
believe the adoption of this standard will have a material impact on our
financial statements.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit
Losses: Measurement of Credit Losses on Financial Instruments", as additional
guidance on the measurement of credit losses on financial instruments. The new
guidance requires the measurement of all expected credit losses for financial
assets held at the reporting date based on historical experience, current
conditions and reasonable supportable forecasts. In addition, the guidance
amends the accounting for credit losses on available-for-sale debt securities
and purchased financial assets with credit deterioration. The new guidance is
effective for all public companies for interim and annual periods beginning
after December 15, 2019, with early adoption permitted for interim and annual
periods beginning after December 15, 2018. In October 2019, the FASB approved a
proposal which grants smaller reporting companies additional time to implement
FASB standards on current expected credit losses (CECL) to January 2023. As a
smaller reporting company, we will defer adoption of ASU No. 2016-13 until
January 2023. We are currently evaluating the impact this guidance will have on
our consolidated financial statements.

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