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 in our Annual Report on Form 10-K/A for the year ended
December 31, 2020, filed with the SEC.

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 Quarterly Report on Form 10-Q and our Annual Report on Form
10-K/A for the year ended December 31, 2020, filed with the SEC.

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 and Michigan where we offer patrons
the ability to play their favorite casino games and bet on live-action sports
events. We were one of the first online gaming operators to enter the New Jersey
market in 2013 and we commenced operations in Michigan on January 22, 2021.

We are authorized by the New Jersey Division of Gaming Enforcement ("DGE") and
the Michigan Gaming Control Board ("MGCB") to operate interactive real money
online gaming in New Jersey and Michigan.

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.

DraftKings Merger



Merger Agreement



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 "Merger
Agreement"), pursuant to which DraftKings will, among other things, acquire all
of the Company's issued and outstanding shares of common stock (the "GNOG
Shares").  The transactions contemplated by the 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 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 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 LGHN HoldCo, LLC to become a wholly-owned
subsidiary of the Company following the consummation of the DraftKings Merger.



The Merger Agreement provides that upon the consummation of the DraftKings
Merger, each holder of GNOG Shares (each, a "GNOG Shareholder") will receive
0.365 (the "Exchange Ratio") of a share of New DraftKings Class A common stock
(the "New DraftKings Class A Common Stock") for each GNOG Share issued and
outstanding immediately prior to the Gulf Effective Time, other than any
Excluded Shares (as defined in the Merger Agreement).

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Each share of DraftKings Class A common stock ("DraftKings Class A Common
Stock") issued and outstanding immediately prior to the Duke Effective Time 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 DraftKings Class B common stock issued and outstanding immediately
prior to the Duke Effective Time shall be converted into one validly issued,
fully paid and non-assessable share of New DraftKings Class B common stock.



       At the Gulf Effective Time, each outstanding restricted stock unit (a
"GNOG RSU") issued by the Company will automatically and without any required
action on the part of the holder thereof vest, then be cancelled and thereafter
only entitle the holder of such GNOG RSU to receive (without interest) a number
of shares of New DraftKings Class A Common Stock equal to (x) the product
obtained by multiplying (i) the number of GNOG Shares subject to such GNOG RSU
immediately prior to the Gulf Effective Time by (ii) the Exchange Ratio, less
(y) a number of shares of New DraftKings Class A Common Stock equal to the
applicable taxes required to be withheld with respect to such GNOG RSU
settlement.



At the Gulf Effective Time, each outstanding warrant issued by the Company
("Private Placement Warrant") to purchase shares of the Company's Class A common
stock ("GNOG 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 GNOG 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 the Company's 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,
(1) receipt of approval from the Company's stockholders, (2) receipt of
DraftKings stockholder approval, (3) authorization for listing on Nasdaq of
shares of New DraftKings Class A Common Stock issuable pursuant to the
DraftKings Merger upon official notice of issuance, (4) expiration or early
termination of the waiting period (and any extension thereof) under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, (5) receipt of all
requisite gaming approvals by the Company and DraftKings in connection with the
DraftKings Merger, (6) absence of any law or governmental order that is in
effect and restrains, enjoins, makes illegal or otherwise prohibits the
consummation of the DraftKings Merger, and (7) the Registration Statement on
Form S-4 becoming effective in accordance with the provisions of the Securities
Act of 1933, as amended (the "Securities Act").



In addition, the obligation of the Company to consummate the DraftKings Merger
is subject to the satisfaction or waiver of certain additional conditions,
including, among others, the absence, since the date of the 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 Parent Material Adverse Effect (as defined in
the Merger Agreement). The obligation of DraftKings to consummate the DraftKings
Merger is subject to the satisfaction or waiver of certain additional
conditions, including, among others, (1) the absence, since the date of the
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 Company Material Adverse
Effect (as defined in the Merger Agreement), (2) all Company Material Licenses
(as defined in the Merger Agreement) being in full force and effect, and (3) the
Commercial Agreement (as defined in the Merger Agreement) being in full force
and effect.





Related Agreements




Concurrently with the execution of the 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 ("Landry's Fertitta"), 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, Landry's Fertitta
and Golden Landry's, the "Fertitta Parties"), pursuant to which the Fertitta
Parties agreed (i) not to transfer the New DraftKings

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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.




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).

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 business combination. 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.

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 has been 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 2020 with significant restrictions, which
eased over time. However, virus cases began to increase in the fall and winter
of 2020 and capacity restrictions were reinstituted. There is currently
additional concerns regarding COVID-19 variants; 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.

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 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.

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Components of Our Results of Operations

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 entered into 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. 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 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 possible returns.

General and Administrative. General and administrative expense includes administrative personnel costs, professional fees related to legal, audit and other consulting expenses, stock-based compensation and insurance costs.



Results of Operations




                        Three Months Ended June 30,

Six Months Ended June 30,


                  2021        2020      $Change     % Change        2021        2020      $Change     % Change
Revenues
Gaming          $ 28,028    $ 22,047    $  5,981        27.1 %    $ 51,094    $ 36,952    $ 14,142        38.3 %
Other              3,663       2,773         890        32.1 %       7,346       5,211       2,135        41.0 %
Total
revenue           31,691      24,820       6,871        27.7 %      58,440      42,163      16,277        38.6 %

Costs and
expenses
Cost of
revenue           14,745       9,944       4,801        48.3 %      26,861      16,689      10,172        61.0 %
Advertising
and
promotion         16,507       4,609      11,898       258.1 %      30,878       7,586      23,292       307.0 %
Selling,
general and        7,325       1,765       5,560       315.0 %      13,402       3,461       9,941       287.2 %


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administrative
expense
Depreciation
and
amortization             40         49          (9)      (18.4) %           84         83            1         1.2 %
Total operating
costs and
expenses             38,617     16,367       22,250       135.9 %       71,225     27,819       43,406       156.0 %
Operating
income              (6,926)      8,453     (15,379)     (181.9) %     (12,785)     14,344     (27,129)     (189.1) %
Other expense
Interest
expense, net          5,095      7,765      (2,670)      (34.4) %       10,803      7,766        3,037        39.1 %
Gain on warrant
derivatives         (8,884)          -      (8,884)         n/a       (89,975)          -     (89,975)         n/a
Other expense            66          -           66         n/a            432          -          432         n/a
Total other
expense             (3,723)      7,765     (11,488)     (147.9) %     (78,740)      7,766     (86,506)   (1,113.9) %
Income before
income taxes        (3,203)        688      (3,891)     (565.6) %       65,955      6,578       59,377       902.7 %
Provision for
income taxes        (1,638)        587      (2,225)     (379.0) %      (2,116)      2,290      (4,406)     (192.4) %
Net income          (1,565)        101      (1,666)   (1,649.5) %       68,071      4,288       63,783     1,487.5 %
Net loss
attributable to
non-controlling
interests             4,829          -        4,829         n/a         10,536          -       10,536         n/a
Net income
attributable to
GNOG              $   3,264   $    101   $    3,163     3,131.7 %   $   78,607   $  4,288   $   74,319     1,733.2 %

Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

Revenues.


Gaming. Gaming revenues increased $6.0 million, or 27.1%, to $28.0 million from
$22.0 million for the three months ended June 30, 2021 compared to the three
months ended June 30, 2020. The increase was primarily the result of the impact
of our launch in Michigan in late January of 2021.

Other. Other revenues increased $0.9 million, or 32.1%, to $3.7 million from
$2.8 million for the three months ended June 30, 2021 compared to the three
months ended June 30, 2020. Market access and live dealer studio broadcast
revenues increased $0.6 million, or 27.7%, 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 $0.3
million, or 49.4%.

Operating Costs and Expenses.


Cost of Revenue. Cost of revenue increased $4.8 million, or 48.3%, for the three
months ended June 30, 2021 compared to the prior year comparable period as a
result of the increase in gaming revenue for the period. 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 three months ended June 30, 2021
compared to the three months ended June 30, 2020.

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Advertising and Promotion. Advertising and promotion expenses increased $11.9
million, or 258.1%, to $16.5 million from $4.6 million for the three months
ended June 30, 2021 compared to the three months ended June 30, 2020. This
increase from the prior year comparable period is almost entirely attributable
to our launch in the Michigan market in late January 2021.

General and Administrative. General and administrative expenses increased $5.6
million, or 315.0%, to $7.3 million from $1.8 million for the prior year
comparable period. This increase is due largely to stock-based compensation of
$3.0 million during the three months ended June 30, 2021, whereas there was no
stock-based compensation expense in the prior year. Additionally, professional
fees for audit services, tax services, legal services and other costs associated
with being a public company are up significantly over the prior year period.

Interest expense. Interest expense for the three months ended June 3, 2021 was
$5.1 million as a result of the $300.0 million term loan credit agreement we
entered into on April 28, 2020. We repaid $150.0 million of the principal
balance of the 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.

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 during
the three months ended June 30, 2021 amounted to $8.9 million and no such gains
were recognized for the three months ended June 30, 2020.

Other expense. Other expense consists of non-cash gains on the Tax Receivable Agreement during the quarter.


Provision for Income Taxes. The provision for income taxes was a benefit of $1.6
million for the three months ended June 30, 2021 compared to tax expense of $0.6
million for the comparable prior year quarter. This decrease of $2.2 million for
the three months ended June 30, 2021 compared to the three months ended June 30,
2020, is primarily a result of pre-tax losses for the period as the gain on the
warrant derivative of $8.9 million and the loss attributable to the
non-controlling interest for the three months ended June 30, 2021, are not
subject to federal or state income tax in our consolidated statements of
operations.

Net loss attributable to non-controlling interests. Net loss attributable to
non-controlling interests represents a 40.3% economic interest in the losses
from GNOG LLC for the three months ended June 30, 2021. 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.

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

Revenues.


Gaming. Gaming revenues increased $14.1 million, or 38.3%, to $51.1 million from
$37.0 million for the six months ended June 30, 2021 compared to the six months
ended June 30, 2020. The increase was primarily the result of the impact of our
launch in Michigan in late January of 2021.

Other. Other revenues increased $2.1 million, or 41.0%, to $7.3 million from
$5.2 million for the six months ended June 30, 2021 compared to the six months
ended June 30, 2020. Market access and live dealer studio broadcast revenues
increased $1.7 million, or 42.7%, 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 $0.4 million,
or 35.1%.

Operating Costs and Expenses.


Cost of Revenue. Cost of revenue increased $10.2 million, or 61.0%, for the six
months ended June 30, 2021 compared to the prior year comparable period as a
result of the increase in gaming revenue for the period. 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 six months ended June 30, 2021
compared to the six months ended June 30, 2020.

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Advertising and Promotion. Advertising and promotion expenses increased $23.3
million, or 307.0%, to $30.9 million from $7.6 million for the six months ended
June 30, 2021 compared to the six months ended June 30, 2020. This increase from
the prior year comparable period is almost entirely attributable to our launch
in the Michigan market in late January 2021.

General and Administrative. General and administrative expenses increased $9.9
million, or 287.2%, to $13.4 million from $3.4 million for the prior year
comparable period. This increase is due largely to stock-based compensation of
$5.3 million during the six months ended June 30, 2021, whereas there was no
stock-based compensation expense in the prior year period. Additionally,
professional fees for audit services, tax services, legal services and other
costs associated with being a public are up significantly over the prior year
period.

Interest expense. Interest expense for the six months ended June 3, 2021 was
$10.8 million as a result of the $300.0 million term loan credit agreement we
entered into on April 28, 2020. We repaid $150.0 principal balance of the 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 during the six months ended June 30, 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 during
the six months ended June 30, 2021 amounted to $90.0 million and no such gains
were recognized for the six months ended June 30, 2020.

Other expense. Other expense consists of prepayment premiums associated with the repayment of $10.6 million principal amount of our term loan during the six months ended June 30, 2021, partially offset by non-cash gains on the tax receivable agreement during the period.


Provision for Income Taxes. The provision for income taxes was a benefit of $2.1
million for the six months ended June 30, 2021 compared to tax expense of $2.3
million for the comparable prior year quarter. This decrease of $4.4 million for
the six months ended June 30, 2021 compared to the six months ended June 30,
2020, is primarily a result of pre-tax losses for the period as the gain on the
warrant derivative of $90.0 million and the loss attributable to the
non-controlling interest for the six months ended June 30, 2021, are not subject
to federal or state income tax in our consolidated statements of operations.

Net loss attributable to non-controlling interests. Net loss attributable to
non-controlling interests represents a 40.3% and 43.4% economic interest in the
losses from GNOG LLC for the three months ended June 30, 2021 and three months
ended March 31, 2021, respectively. 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.

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

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Credit Agreement. On April 28, 2020, we entered into a term loan credit
agreement that is guaranteed by the parent of Old GNOG, comprised of a
$300.0 million interest only term loan due October 4, 2023. Net proceeds
received from the term loan of $288.0, 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") (Note 10) 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, Second A&R Intercompany Note 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 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 $0.0 million in
deferred debt issuance costs and $0.0 million in unamortized debt discount as
interest expense in our consolidated statement of operations for the three and
six months ended June 30, 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. 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.

Outlook. Considering that we have cash and cash equivalents of $146.0 million at
June 30, 2021 and based on our current level of operations in New Jersey, we
believe that cash on hand and cash generated from our New Jersey 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 2021 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 $30.2 million for the six
months ended June 30, 2021 compared to $11.9 million provided by operating
activities for the six months ended June 30, 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, stock-based
compensation, gains on tax receivable agreement liability, amortization of debt
issuance costs and discounts, depreciation and amortization and deferred taxes.
Additionally, changes in working capital items such as accounts receivable,
accounts payable, accrued liabilities, other assets and customer deposits can
significantly affect operating cash flows. Cash flows used by operating
activities during the six months ended June 30, 2021 were higher as a result of
net income of $68.1 million for the six months ended June 30, 2021 being reduced
by non-cash items totaling $84.4 million as compared to net income of $4.3
million for the six months ended June 30, 2020 being decreased by non-cash items
totaling $0.4 million. Working capital fluctuations further increased cash used
in operating activities by $13.8 million for the six months ended June 30, 2021,
most notably the increase in other assets, compared to cash provided by working
capital fluctuations of $7.9 for the six months ended June 30, 2020.

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Net cash provided by financing activities was $0.5 million and $102.1 million
for the three and six months ended June 30, 2021, respectively, compared to
$11.7 million and $14.1 million of cash used in financing activities for the
three and six months ended June 30, 2020, respectively. The main driver of this
variance is the $110.1 million in net cash received for warrant exercises offset
by the repayment of $10.6 million of the term loan during the six months ended
June 30, 2021. Dividends of $14.0 million were paid to the parent of Old GNOG
during the comparable period in the prior year.

Critical Accounting Policies

Interim Financial Statements


The unaudited consolidated financial statements include all the accounts of GNOG
and its subsidiaries and have been prepared in accordance with accounting
principles generally accepted in the United States of America ("GAAP"). All
significant intercompany accounts and transactions have been eliminated.
Pursuant to the rules and regulations of the Securities and Exchange Commission
("SEC"), certain information and footnote disclosures normally included in
annual financial statements prepared in accordance with GAAP have been omitted.
The interim financial information provided is unaudited, but includes all
adjustments which management considers necessary for the fair presentation of
the results for these periods. Operating results for interim periods are not
necessarily indicative of the results that may be expected for the full year
period and should be read in conjunction with the Company's audited financial
statements and notes thereto included in the Company's Form 10-K/A filed with
the SEC.

In management's opinion, these unaudited consolidated financial statements
contain all adjustments necessary to fairly present our financial position,
results of operations, cash flows and changes in stockholders' equity for all
periods presented. Interim results for the three and six months ended June 30,
2021 may not be indicative of the results that will be realized for the full
year ending December 31, 2021.

Use of Estimates



The preparation of these unaudited 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.

Reclassifications

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

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 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.

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



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For a complete discussion of our critical accounting policies and accounting estimates, please see our Annual Report for the year ended December 31, 2020.

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.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes-Income Taxes
(Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU
2019-12 simplifies the accounting for income taxes by removing certain
exceptions to the general principles in Topic 740. The amendments also improve
consistent application of and simplify GAAP for other areas of Topic 740 by
clarifying and amending existing guidance. ASU 2019-12 is effective for public
business entities for fiscal years, and interim periods within those fiscal
years, beginning after December 15, 2020. The Company is currently evaluating
the timing of adopting this guidance and the impact of adoption on its financial
position, results of operations and

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