Golden Entertainment selling Nevada, Montana slot routes for $322.5M; will focus on taverns, casinos
Nevada’s largest slot machine route operator is selling its businesses in Nevada and Montana for a combined $322.5 million to a privately held Illinois-based company.
Las Vegas-based Golden Entertainment said Monday the transaction with J&J Ventures Gaming is expected to close by the end of the year. Golden operates roughly 10,500 slot machines at more than 1,000 non-casino locations in Nevada and Montana.
J&J will also pay $39 million for the estimated closing costs.
“We believe this transaction will provide further success for our route partners through sharing of best practices and new technology,” Golden Entertainment Chairman and CEO Blake Sartini said in a statement. “We anticipate our distributed gaming team members will continue to serve our route partners with the same dedication under J&J Gaming’s ownership.”
Golden, which owns nine casinos in Nevada, including The STRAT Hotel, Casino & SkyPod said the gaming operations at its chain of 64 Nevada taverns, operated under the PT’s, Sierra Gold and other brands, will be managed by J&J under a five-year agreement.
J&J operates video lottery gaming terminals in Illinois and Pennsylvania.
Last August, Golden agreed to sell its Rocky Gap Casino Resort in Maryland to Century Gaming and VICI Properties for $260 million. The transaction is expected to close this summer.
Golden said last week its Nevada and Montana route operations had revenue of $365.4 million in 2022, a little less than one-third of Golden’s $1.12 billion in revenue last year.
The routes were the company’s second-largest revenue bucket behind the $406.9 million produced by the Nevada casino resort segment, which includes The STRAT and the three Laughlin properties: Aquarius, Edgewater and the closed Colorado Belle.
“For Golden, these transactions will allow us to focus our management team and capital on our portfolio of wholly owned casinos and taverns in Nevada and create additional value for our shareholders,” Sartini said.
Golden’s 64 Nevada taverns produced almost $110 million in revenue – gaming and non-gaming – in 2022. The company said last week it was embarking on a remodel of the STRAT’s rooms and would spend $20 million to expand its tavern operations by up to six new locations this year.
JMP Securities gaming analyst Jordan Bender told investors the sales will allow Golden to be a 100 percent Nevada-based company for the first time in nearly a decade. However, he suggested Golden would be open “to several strategic opportunities” and management “will look to merge or sell the business in 2024.”
J.P. Morgan gaming analyst Omer Sander agreed that Golden would either look at buying casinos in Nevada or become an acquisition target for another gaming company.
Illinois companies in control
Monday’s announcement means the bulk of Nevada’s restricted gaming operations – bars, taverns, supermarkets, convenience stores and other locations with 15 or fewer slot machines – will be overseen by two Illinois companies.
Last year, Accel Entertainment acquired Century Gaming, Golden’s chief rival in both states, for $164 million. In Nevada, Century operates 2,600 games in more than 500 locations and has more than 6,100 games in Montana.
Route operators manage the slot machines through either a space lease or a revenue-sharing agreement. The companies also provide the technology and platforms for player loyalty programs. Golden’s platform allows tavern operators to offer rewards unique to their individual customer bases.
According to the Gaming Control Board’s quarterly statistics report, Nevada had 2,040 restricted gaming locations at the end of last year. Clark County had almost 73 percent of the locations with 1,480 taverns, bars and other businesses. Washoe County had 297 restricted gaming businesses.
Statewide, the restricted gaming locations combined for 19,185 slot machines with roughly 75 percent of the games – 14,367 – housed in Clark County. Washoe County restricted locations combined for 2,633 games.
The state does not provide a revenue breakdown from restricted gaming, which is taxed through quarterly and annual fees per slot machine.
On last week’s fourth-quarter earnings conference call, Sartini said Golden’s tavern business “could be transported to other states, which are currently involved in distributed gaming,” such as Illinois and Pennsylvania.
Sartini said Golden is focused on its plans for its tavern business, where the company fully controls a location’s slot revenues. But the company is also monitoring any distributed gaming expansion in other states.
“We’re committed to it,” Sartini said. “We like where we're at in our wholly owned side of the distributed portfolio.”
Shares of Golden, traded on the Nasdaq National Market, closed at $43.30, up more than 6.8 percent Monday after the sale was announced.
Updated at 1:28 p.m. on 3/6/2023 to include Golden's closing stock price.