MONARCH CASINO & RESORT INC Commitments Disclosure

NOTE 11. COMITMENT AND CONTINGENCIES

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On August 30, 2019, PCL Construction Services, Inc. (“PCL”) filed a complaint in District Court, City and County of Denver, Colorado, against the Company and its Colorado subsidiaries, in connection with the Company’s now completed expansion of the Monarch Casino Resort Spa Black Hawk (the “Project”). The case is captioned PCL Construction Services, Inc. v. Monarch Growth Inc., et al., Case No. 2019CV33368 (the “First Denver Lawsuit”). On December 5, 2019, the Company filed its answer and counterclaim, which alleges, among other items, that PCL breached the construction contract, duties of good faith and fair dealing, and implied and express warranties, made fraudulent or negligent misrepresentations on which the Company and its Colorado subsidiaries relied, and included claims for monetary damages as well as equitable and declaratory relief.

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On March 26, 2021, PCL filed a mechanics’ lien foreclosure action in the District Court, County of Gilpin, Colorado, against the Company and its Colorado subsidiaries, in connection with the Company’s now completed expansion of the Monarch Casino Resort Spa Black Hawk. The case is captioned PCL Construction Services, Inc., v. Monarch Growth Inc., et al., Case No. 2021CV30006 (the “Gilpin Lawsuit”). The complaint essentially mirrors the claims and allegations made by PCL in the First Denver Lawsuit. The Gilpin Lawsuit includes an additional claim, however, for foreclosure of PCL’s purported mechanics’ lien against the property on which the Monarch Casino Resort Spa Black Hawk is situated (the “Property”). PCL also joined additional parties who may claim a purported lien against the Property, as defendants. Many of the Company’s co-defendants have filed cross claims against Monarch for foreclosure of mechanics’ liens and related claims, including unjust enrichment.

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Monarch filed its answer and counterclaims to PCL’s second amended complaint in the Gilpin Lawsuit on July 15, 2021, but a trial of the matter has not been set. The case remains stayed, however, pending the outcome of the First Denver Lawsuit, Case No. 2019CV33368. We are currently unable to determine the probability of the outcome or reasonably estimate the loss or gain, if any.

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On February 9, 2023, Monarch Growth, Inc., Monarch Casino & Resort, Inc. and Monarch Black Hawk, Inc. filed a complaint in District Court, City and County of Denver, Colorado, against PCL, in connection with the Company’s now completed expansion of the Monarch Casino Resort Spa Black Hawk. The case is captioned Monarch Growth Inc., et al., v. PCL Construction Services, Inc., Case No. 2023CV30458 (the “Second Denver Lawsuit”). The complaint alleges, among other things, that PCL breached the construction contract, duties of good faith and fair dealing, and implied and express warranties based on defective and/or nonconforming construction work at the project, and includes claims for monetary damages as well as equitable and declaratory relief.

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On February 14, 2025, the Court issued its Findings of Fact, Conclusions of Law and Order of Judgment in the First Denver Lawsuit. The Court awarded damages in favor of PCL of $74,772,551 for its claims of breach of contract, breach of implied warranty, and breach of the duty of good faith and fair dealing and $144,894 to the Company for its negligence and gross negligence counterclaims against PCL. The Court entered a single judgment in the amount of the net difference between the cross-judgment and awarded PCL a principal judgment amount of $74,627,657 (the “Judgment”).

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On February 28, 2025, PCL filed a Motion to Amend the Judgment to Add Prejudgment Interest, which the Court denied on May 23, 2025. On March 14, 2025, PCL filed a Bill of Costs and Motion for Attorneys’ Fees. Monarch has filed an opposition, challenging PCL’s entitlement to such fees and costs, as well as the computation and amount of the fees and costs PCL seeks. The Court heard oral arguments on PCL’s entitlement to fees and costs on December 12, 2025. On February 4, 2026, the Court issued an Order denying PCL’s Motion for Attorneys’ Fees and Bill of Costs in their entirety.

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On March 21, 2025, Monarch filed a Motion for a New Trial pursuant to C.R.C.P. 59(a)(1), which Judge Luxen denied on May 21, 2025. On March 21, 2025, Monarch also filed a Motion to Amend the Judgment under C.R.C.P. 59(a)(4) to (a) to include an additional $161,666 setoff for Monarch’s sanctions award, and (b) set a 6% per annum post-judgment interest rate on the on the revised $54,660,298 awarded to PCL and a 0% post-judgment interest rate on the $19,835,540 awarded to subcontractors as pass-through claims. On May 21, 2025, the Court partially granted and partially denied Monarch’s Motion to Amend the Judgment. Specifically, in his May 21, 2025 Order, Judge Luxen: (a) revised the total amount of damages due to PCL to $74,465,839 to correct certain mathematical errors in the Order and to offset PCL’s damages award by an additional $161,666 to account for the Court’s November 28, 2023 order entering sanctions against PCL, (b) set a 6% per annum post-judgment interest rate on the on the damages awarded to PCL, and (c) declined to amend its judgment to set a 0% post-judgment interest on the subcontractor pass-through claims.

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On May 30, 2025, Monarch filed a Notice of Appeal with the Colorado Court of Appeals of the District Court’s February 14, 2025 Judgment and the District Court’s post-trial orders. On June 13, 2025, PCL filed a Notice of Cross Appeal of the District Court’s denial of PCL’s Motion for Prejudgment Interest. Monarch has posted a bond to stay enforcement of the Judgment pending such appeal.

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On November 24, 2025, Monarch filed its Opening Appeal Brief. On January 29, 2026, PCL filed a combined Answer in Opposition to Monarch’s Opening Brief and Opening Cross-Appeal Brief (PCL’s “Opening-Answer”). Because PCL’s Opening-Answer exceeded the word limits permitted under the Court’s rules, PCL filed a motion for leave to file its Opening-Answer in excess of the word limit. On February 10, 2026, the Court of Appeals denied PCL’s Motion, ordered that PCL’s oversized Opening-Answer Brief be stricken, and ordered PCL to file an amended Opening-Answer that is within the word limit by February 24, 2026.

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As of December 31, 2025, the Company has $77.3 million in liability related to the PCL litigation, which are presented in balance sheet as following: $47.0 million in Construction accounts payable and $30.3 million in Accounts payable.

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The Company recognized $2.4 million, $0.8 million and $6.9 million in construction litigation expense relating to this lawsuit for the twelve months ended December 31, 2025, 2024 and 2023, respectively, which are included in Other operating items, net on the Consolidated Statements of Operations.

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From time to time, we may be subject to other legal proceedings and claims in the ordinary course of business. Management believes that the amount of any reasonably possible or probable loss for such other known matters would not have a material adverse impact on our financial conditions, cash flows or results of operations; however, the outcome of these actions is inherently difficult to predict.