Golden Gaming, a dominant slot machine route operator in Nevada, announced last week they will merge with Lakes Entertainment, a Minnesota-based gaming operations company. The company will be called Golden Entertainment, and will transition into a publicly traded corporation. Golden Entertainment will be traded on the Nasdaq and replace Lakes’ current listing.
Blake Sartini, CEO of Golden Gaming, will serve as CEO and chairman of the new company. “I think the most impactful thing that we can do quickly is get into a much more efficient capital structure,” Sartini said. “As a private company, you’re limited with investments.”
Sartini is confident with the new company going public, more opportunities will be available than ever before.
Lakes Entertainment is led by three-time World Series of Poker champion Lyle Berman, the founder of Grand Casinos, a startup tribal gaming operator in the early ‘90s that is now part of the Caesars Entertainment empire. Berman will join the board of the new corporation and sign a three-year consulting agreement.
“Lyle has a vast number of contacts, from a regional standpoint,” Sartini said, which will greatly help, as Golden Gaming currently operates in only Nevada. Golden Gaming operates about 8,000 machines in approximately 600 locations throughout Nevada.
With the merger comes the acquisition of Lakes-operated Rocky Gap Casino Resort in Maryland. Rocky Gap drew $43.2 million in gaming revenue in 2014, and accounted for 4.6 percent of Maryland’s overall market, but many, including Sartini, are quick to consider it more of an entertainment destination than a gaming-driven resort.
Rocky Gap features a 200-room hotel, the only Jack Nicklaus Signature golf course in Maryland, and a casino with 10 table games, a poker room, and 500 slot machines. Sartini loves the location, and the fact 10 million people are situated within a three-hour radius. “The property was very attractive to our current portfolio”, he said.
With Berman’s poker acumen, vast gaming experience, extensive connections, and the fact he was a driving force being the World Poker Tour, some wonder if poker may be on the radar for the new company.
“Not immediately,” Sartini said. He said that Golden Gaming does have a license for online poker in Nevada, with a full understanding of the issue. However, with Berman’s background, and the fact they are set up for the business, it is an area that will be explored at some point down the road.
The merger will also see Lakes sell their 10 percent ownership in Rock Ohio Ventures, a company that owns 80 percent of two racetracks in Ohio and Kentucky and the Horseshoe casinos in Cincinnati and Cleveland for $750,000. Lake reported a net loss of $23.1 million with net revenue of $15.9 million in the third quarter.
This will easily mark the biggest move by Golden Gaming since 2011, when it sold three casinos in Colorado to Affinity Gaming while acquiring two casinos in Pahrump and the company’s Nevada slot machine route operation. That move single handily tripled Golden’s slot machine route operation. “We felt at that time, the time was right to bet on a Nevada rebound,” Sartini said.
Sartini, a 1982 graduate of the University of Nevada, Las Vegas, gambled on his home state and it paid off. Golden Gaming has been on the rise for some time, and continued their growth last year by purchasing four taverns in Las Vegas in October, while expanding their portfolio with the purchase of Sean Patrick’s, a nice compliment to the PT’s, Sierra Gold, and Sierra Junction brands they currently operate. The company also bought a Reno-based slot machine route operator in 2013. Sartini started his career with Station Casinos and is married to the sister of Station leaders Frank and Lorenzo Fertitta.
Now that Golden Gaming has established firm roots in Nevada, Sartini feels the time is now to strike. While they operate over 8,000 machines inside Nevada, he noted there are over 70,000 machines in the U.S. outside of Nevada, which in his eyes present a fantastic opportunity. As states expand gaming, Sartini clearly wants to be included in that venture. The merger is set to be finalized before the end of the year.
