Last year Century Casinos, Inc. (NASDAQ:CNTY) added to its roster of US gaming properties in noteworthy fashion, buying three venues from Eldorado Resorts, Inc. (NASDAQ:ERI). However, the Colorado-based regional operator perhaps isn’t done using purchases to expand its list.
A week before it disclosed its $17.3 billion takeover for Caesars Entertainment (NASDAQ:CZR) last June, Eldorado decided to sell the Mountaineer Casino Racetrack and Resort in West Virginia, and the Isle Casino Cape Girardeau and Lady Luck Casino to Century and Vici Properties (NYSE:VICI) for $385 million.
Last month that transaction closed, as reported by casino.org, increasing the number of gaming properties Century operates in the US to five from two. At the beginning of 2019, the company’s only US venues were namesake properties in Central City and Cripple Creek, Colo. Century also operates casino-resorts in Canada and Europe; however, the company could be in the hunt to add to its local portfolio.
In an interview with the Colorado Springs Gazette, Century co-CEO Peter Hoetzinger said, “This is a transformative acquisition for us (the purchases from Eldorado) — it increases the percentage of our operating profit from U.S. operations from 23% to 72% — and to larger and different types of properties — including hotels and racetracks.”
In recent months, the gaming industry has been overflowing in asset sales, ranging from the high end, multi-billion dollar contracts by MGM Resorts on the Las Vegas Strip, to smaller deals like Eldorado’s recent sale of a Louisiana property to Maverick Gaming LLC for $230 million.
Century, with a market value of around $240 million, is one of the minor publicly traded gaming companies in the US. However, the company had $44 million in cash on hand at the end of the third quarter. For a company of its size, that’s an outstanding sum.
Analysts believe the operator’s strong balance sheet positions it to consider further purchases, particularly if it does so with partners, as it did with Vici on the Eldorado buys. Of the $385 million that was paid to purchase the two Missouri casinos and the West Virginia venue, Vici doled out $278 million for the real estate assets, while Century paid $107 million for operating rights.
Hoetzinger believes there will be plenty more opportunities to scoop up smaller, attractively-priced properties, because there are willing sellers, including Caesars and Eldorado, and a dearth of buyers boasting Century’s license capabilities and robust finances.
Looking For More
Hoetzinger said in the Colorado Springs Gazette interview, it’ll take the company “a quarter or two” to sufficiently absorb the three properties bought from Eldorado. However, he added that in the second half of this year, Century could be a buyer again, with the goal of doing deals similar to the above-mentioned transaction every 18 months.
Outside smart deal-making, analysts see the rise of sports betting in Colorado – scheduled for a May launch – as a possible catalyst for Century’s stock this year, with one saying sports betting in that market could increase the company’s revenue by three percent to 10 percent per year.