COLORADO SPRINGS, Colo. – Century Casinos’ impending $195 million acquisition of the Nugget Casino Resort in Sparks will rewrite the profile of the company.
The regional casino operator, which started in Europe, lacks what gaming watchers consider a flagship station. Its two casinos in the historic Colorado mining communities of Central City and Cripple Creek are repurposed storefront-style buildings with a total of 52 hotel rooms that are primarily reserved for casino gamblers.
“Colorado was effectively Century’s beachhead to start expanding into the United States,” said Stifel Financial gaming analyst Jeffrey Stantial. “At the time, Colorado was the only state that was willing to license a brand new international competitor.”
Century’s casinos in West Virginia and Missouri are within an hour or two drive of metropolitan communities and the locations are not considered major tourist destinations.
The company, which went public in 1994 and opened a headquarters in Colorado Springs, has historically focused its growth internationally, including a set of gaming operations in Alberta, Canada and Poland.
Interest changed in 2019 when Century spent $107 million to acquire the operations of two Missouri properties and the West Virginia Hippodrome Casino.
Northern Nevada provides Century with the opportunity to demonstrate its operational expertise in a destination market.
The Nugget has 1,382 hotel rooms, more than triple Century’s combined hotel rooms in its US portfolio. Game analysts believe the Nugget will represent around 20% of Century’s total annual cash flow once the sale closes in early 2023.
“We have never operated a casino that generates so much non-gaming revenue,” said Century Executive Vice President Andreas Terler, who oversees the company’s US operations. “The property has a great team and the Northern Nevada market has a lot of potential.”
Terler, who lives in Vienna, Austria but travels frequently to the United States, said Nevada has been a target for Century since the company moved to Colorado.
“If you’re a video game company, wouldn’t you want to be in Nevada?” he said. “It was basically a dream for us and we were looking for the right opportunity.”
The Nugget was developed by Northern Nevada gaming pioneer John Ascuaga, who died in June 2021 at the age of 96. Las Vegas-based Marnell Gaming acquired the property in 2016 for an undisclosed price.
“I have a lot of respect for John Ascuaga,” said Terler. “We are not very different from private owners. We love properties and spend time trying to improve them. Anthony and his team have done a great job with the property.”
He said Century has always kept a property’s management team on board following an acquisition and the same approach is planned for the Nugget.
In the deal with Marnell Gaming, Century is paying $100 million for Nugget operations and $95 million for 50% ownership of the real estate. Century has a five-year option to purchase the remaining 50% of the site, located just off Interstate 80 and about three miles from Reno-Tahoe International Airport.
Expansion in the United States
The transition to a casino company focused on US operations has taken longer than expected.
Stantial said large regional casino operators, including Penn National, Boyd Gaming and Eldorado Resorts, dominated the consolidation market during the 2000s and 2010s.
Major operators are now focusing on paying down debt from their balance sheets and launching digital-focused gaming businesses, such as sports betting and online casinos.
“It opened up an opportunity for Century to expand in the United States, as evidenced by the deal with Nugget,” Stantial said.
JMP Securities gaming analyst Jordan Bender said Century’s 2019 deal to buy the operations of Mountaineer Casino and Racetrack in West Virginia and two Missouri riverside casinos in Cape Girardeau and Caruthersville as part of of a $385 million global transaction with the then Eldorado Resorts was the tipping point in the company’s direction.
The deal was made because Eldorado needed to resolve a potential antitrust issue in Missouri that could have affected the company’s $17.3 billion merger with Caesars Entertainment.
Real estate investment firm VICI Properties acquired the land and buildings for the three Eldorado locations and leased the casinos to Century for operation.
Century and VICI teamed up again on August 25 to acquire the Rocky Gap Casino Resort in Maryland from Las Vegas-based Golden Entertainment for a combined $260 million. Century is injecting $56.1 million for operations, while VICI will pay $203.9 million for land and buildings. Century will pay VICI $15.5 million per year under a lease agreement to manage Rocky Gap, bringing its total annual rent to the REIT to $41 million.
“VICI has been a great partner for us,” Terler said ahead of the Maryland casino transaction.
Terler said Mountaineer, which owns nearly 1,500 slot machines, is the top gambling revenue producer of the century. Cape Girardeau, which is located 120 miles south of St. Louis, provides Century with its highest total annual cash flow. The Cape Girardeau and Caruthersville properties are undergoing expansions that have been slowed due to supply chain disruptions.
“(Missouri and West Virginia casinos) were very successful acquisitions and the company wanted to continue to grow [its] footprint in the United States,” Bender said.
Terler suggested that the Nugget would be the company’s new flagship hotel and casino.
“We learned a lot in Colorado. We have learned to operate in all of our markets,” he said. “We have certain types of customers who appreciate small casinos. Sparks is a market with huge potential.
Under Marnell Gaming, the Nugget received upgrades to its management systems, hotel room renovations and the construction of an 8,500-seat outdoor events center adjacent to the resort.
Bender said Marnell had invested $90 million in improvements and the property was in good condition.
“There really won’t be a lot of investment needed from Century once they fully own it,” Bender said. “Reno is more gaming-focused and attracts a lot of destination customers from California for concerts, events, and conventions.”
When the transaction was announced, Century cited Northern Nevada’s economic resurgence that has seen several tech and manufacturing companies, including Google, Tesla, Switch, Amazon and Apple, set up shop in the area.
Bender said Reno’s population growth of 15% between 2010 and 2020 exceeded the national average of 7.4% and an increase in tech and manufacturing jobs led to growth in wages and house prices. above the American average.
“It’s a positive tailwind for the market and the size of the casino’s portfolio,” Bender said. “Additionally, wage growth for Reno’s feeder markets has all exceeded the US average over the past five years and bodes well for casino spending as the market fully recovers.”
Terler said Century is still looking for other opportunities in Nevada, though Las Vegas isn’t on the company’s radar, even though Caesars is looking to sell one of its Strip resorts.
“We are conservative and cautious. We want to demonstrate that we can deliver,” Terler said. “Las Vegas is a different category. Let’s say it’s a long-term goal.
When the Nugget and Rocky Gap deals close next year, Century will operate 11 casinos with 7,140 slot machines and 158 table games.
David Bain, gaming analyst at B Riley Securities, noted that the pending deals will transform Century into an “almost North American” business, with 94% of all cash flow coming from its US and Canadian casinos. In 2019, this figure was 78%.
Century tried to sell its casinos in Poland, but the country borders Ukraine and the conflict with Russia has slowed this process.
Still a Colorado company
Century opened its first Century-branded Colorado casino in 2006 in Central City, located 45 minutes west of Denver. The company was involved with another casino operator in Cripple Creek, located an hour west of Colorado Springs, before expanding to an adjacent casino and adding the Century name to the property.
“As it stands, Colorado is about 10% of the company’s profits,” Bender said.
Terler said Century was happy with how it operated in both markets. The tiny Central City casino has faced competition from major expansion projects in neighboring Black Hawk, including a 536-room hotel tower at Ameristar Black Hawk, which opened in 2009, and a $442 million expansion at Monarch Black Hawk, which included a 516-room hotel. tower.
“We have a good regular customer base at Black Hawk, but these casinos are probably small for us now,” he said.
In Cripple Creek, Las Vegas-based Full House Resorts is spending $180 million to build the 300-room Chamonix Casino Hotel adjacent to its Bronco Billy’s Casino. The development is across East Bennet Avenue from Century Cripple Creek.
“Do you know how Cripple Creek works? People never go to just one casino,” Terler said. “They love crossing the street. Guess who’s across the street?