The Nevada Gaming Control Board Wednesday recommended that J&J Ventures Gaming acquire Golden Entertainment’s Nevada distributed gaming operations for $213.5 million, plus $34 million of purchased cash. The matter goes before the Nevada Gaming Commission on Dec. 21.
In September, Golden Entertainment closed on the sale of its distributed gaming operations in Montana to J&J for $109 million, plus $5 million in purchased cash.
Golden is also entering into a five-year agreement with J&J under which the company will support the gaming operations of Golden’s Nevada branded taverns.
Privately held J&J Gaming is a leading distributed-gaming operator in Illinois and other states. Los Angeles-based private-equity firm Oaktree Capital Management, which last week closed on the purchase of the Casablanca Resort and Virgin River Hotel & Casino in Mesquite, is the majority owner of J&J.
Matthew Wilson, Oaktree’s managing director, said they invested in J&J in 2019, have since made 13 other acquisitions, and have grown revenue by 3½ times; with this acquisition, it will be fivefold. Their capital investment started at $155 million and will be almost $300 million in equity.
“We’re not looking to flip things,” Wilson said. “For us, it’s probably a five-to-seven-year hold to get the value of what we’re building here. Our strategy is to consolidate markets. We have the biggest player in Illinois right now and this gives us the biggest player in Nevada, a strategic market for us. It gives us a foothold here to continue to grow those assets.”
Wilson would like to continue a strategy of growing across the country and diversify risks in states and new markets to build a premium valuation.
“With this acquisition, we will be the market leader in the U.S with approximately 25,000 video gaming terminals in 3,500 locations in five states,” Wilson said. “Once we close this transaction, we’ll do what we’ve done in the past –put capital to work to grow this business in this market as well as Montana.”
Jordan Kruse, a managing director at Oaktree, said the plan is to put the Nevada operations together with its broader J&J platform, invest in high-ROI opportunities, and pursue mergers and acquisitions.
“There’s a great opportunity to improve the value of all the businesses in a larger context using the best practices to grow those businesses profitability,” Kruse said. “J&J has a long and successful history in route-based businesses. It has grown dramatically under our ownership through both organic and M&A in the last four years. There’s a great opportunity to take this platform and grow into other areas within the states we’re in.”
Blake Sartini, chairman and CEO of Golden Entertainment, told the Board that Golden has a diversified gaming portfolio: a Strip casino (the Strat), locals casinos, distributed taverns, and the route business. He said they will continue to grow the tavern portfolio.
“I see this route being in better hands in a route-focused company than more of a diversified gaming company like Golden,” Sartini said. “We’ll continue to be route partners. We’ll still have our taverns, soon to be 70, with the route going forward. It’s a great benefit to our operation to have that support from a national operator.”
