The Strat owner sells route slots in favor of its own branded casinos and taverns
The largest Las Vegas-based network of pubs and slot routes, met this spring with a wisely weighted decision and loud announcement. Golden Entertainment sells a part of its assets, namely distributed gaming operations, that were always considered solid fundamentals for its business development. Objects of sales (routes for installing and maintaining slots at restaurants, hotel halls, bars, etc.) have already found their new host.
Now the former Golden’s 16800 slots, around 6200 hotel apartments, and 100 table games will be managed by J&J Gaming, the leading operator of darts devices, jukeboxes, etc. in the Mid-Atlantic region. The company was established in 1929 and has received a large experience in terminal operations and gaming expertise by now.
The proceeds from sales will conclude $322 million of aggregate cash + $39 million of estimated cash ($213.5 + $34 million for routes in Nevada and the rest $109 + $5 million for vending Montana routes). Currently, the deals are in the stage of regulatory approval, but Golden’s assets are expected to change the owner by the end of 2023.
The margin from sales is 9 times higher than Golden’s EBITDA for the distributed gaming area of the last year, which amounted to $44.02 million minus $3.8 million of corporate expenses in the sector.
As a part of business agreements, J&J company will provide supporting services for Golden’s gaming operations in PT’s taverns across Nevada.
What does a 2023 deal mean for Golden Entertainment scaling and how can it improve the brand reputation?
Blake Sartini, the organization Chairman, believes this deal will be beneficial for both sides and can contribute to a successful and long-term partnership between companies. CEO emphasized that his company has been building and distributing a high-quality gaming service in Montana and Nevada for already 20 years. He is confident that the former employees will work as efficiently and productively for the new owner, as they did the entire time for Golden.
The transaction will help J&J to implement best business practices and apply new technologies, while Golden will free time and effort for focusing on its own branded bars and casino halls: The Strat, Arizona Charlie’s, and other establishments in the southern part of Nevada. Divesting routes for video game machines in nearly 1000 locations, the corporation will be able to invest in the development of its own 60 classic taverns.
Slot routes sales are not the last deal for Golden company in 2023. Its managers also publicized they are looking for a new owner for their Rocky Gap casino. This sale together with the J&J agreement will greatly increase the enterprise margin.
Still, will Golden be able to generate the same amount of revenue by getting rid of distributed slot routes and a gambling establishment in Maryland? A five-year deal with J&J for serving Golden’s taverns promises to generate the same amount of income as in 2022.
Business analytics considers 2023 Golden Entertainment’s deals will help to attract third-party investments to their company because the organization will be focused on the development of its own casino and tavern directions. Sartini believes this year’s rotations will allow their team to boost all the resources for increasing the brand’s value and making Golden’s shares more attractive for holders.
Investors will be able to easily calculate the valuation of financial deals with Golden because now they won’t add an average (and highly imprecise) number for the distributed gaming sector.
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