Major Canadian gaming behemoth, Gateway Casinos & Entertainment Limited, is reportedly exploring the possibility of a sale estimated around the value of $2 billion, inclusive of debt. This development comes around two months following the passing of the company’s Chief Executive Officer, Tony Santo.
This information was disclosed by anonymous insiders engaged in the matter who confirmed that the gaming operator has enlisted the services of Macquarie Group and Morgan Stanley to review potential buyers or investors.
Gateway Casinos & Entertainment Limited is a leading force in the Canadian gaming and entertainment scene, with a total of 31 gaming facilities spread across British Columbia, Ontario, and Alberta. Of these, two are situated in Alberta while the rest are located in British Columbia and Ontario. Catalyst Capital Group, a private equity firm commanding over $6 billion in managed assets, is the majority shareholder of Gateway since 2010.
The search for a potential buyer throws up several possibilities, although some U.S.-based casino operators are scaling back their investments in Canada. Industry giants like Caesars Entertainment and Century Casinos may be unlikely suitors, but there could be interest from other regional operators and private equity firms.
Gateway could be seen as an attractive proposition not just for the portfolio of real estate it commands but also for the potential to optimise value from the company’s existing services – for instance, by divesting some of its venues. Prospective investors, however, would need to remain optimistic about the future of the Canadian gaming market, which is relatively small with a population of just over 38.25 million, significantly smaller than that of California, US.
It should be noted that despite being structured as a privately held company, Gateway was previously lined up to go public. In December 2019, hedge fund HG Vora attempted to collaborate with Catalyst Capital and Leisure Acquisition Corp to take Gateway public with an estimated valuation of $1.15 billion.
Their plans, however, came to a halt in June 2020, with the deal falling through and no explanation given for its failure. At this stage, it remains uncertain whether Catalyst Capital would entertain the prospect of another reverse merger with a Special Purpose Acquisition Company (SPAC) to monetize its existing stake in Gateway Casinos.
Gateway Casinos currently boasts roughly 7,200 employees and features a mix of gaming options – approximately 391 table games (including 31 poker tables), and 14,288 slots. The company also has 81 food and beverage outlets and 564 hotel rooms.
