Illinois slot machine route operator Accel Entertainment said Wednesday it acquired a small amusement game operator in Georgia, a state that does not have traditional video gaming terminals or slot machines.
Accel CEO Andy Rubenstein said the acquisition gives the company a potential growth opportunity in the southeastern U.S. market. Georgia lawmakers and gaming proponents are exploring casino and sports betting expansion, but traditional slot machine route operation laws have not been discussed.
Financial terms were not disclosed for the Accel’s purchase of Tom’s Amusement Company, a privately held business with 11 locations in Georgia that have 65 coin-operated amusement machines (also known as COAMs), and operations in more than 110 locations in the southeastern U.S.
The deal also comes with a Georgia COAM Class B Master License. Regulatory approval is required by the Georgia Lottery Corporation.
Georgia law allows gas stations and convenience stores to operate coin-operated amusement machines, also known as COAMs, which are licensed by the Georgia Lottery. The video slots don’t pay out cash, but customers can win lottery tickets or store credits. According to a report on the Accel website, there are 5,000 licensed locations in Georgia with COAMs.
Rubenstein said the southeastern U.S. is “an underpenetrated market which we think has significant growth opportunity and is in line with our previously stated strategy to expand Accel’s presence both organically and through acquisitions.”
In Illinois, Accel operated 11,164 VLTs in 2,353 locations at end of March. All of the company’s VLTs in the state have been shut down since March 16 after the governor halted gaming activity in response to the spreading coronavirus.
Deutsche Bank gaming analyst Steven Pizzella said the 65 terminals being acquired in Georgia amount to less than 1% of the Accel’s total in Illinois. Still, he views the acquisition favorably.
“Some of the investor feedback we heard from our initiation was apprehension regarding Accel’s concentration in the Illinois gaming market, and we believe this move begins to alleviate some of those concerns,” Pizzella said.
Union Gaming Group analyst John DeCree estimated the Georgia COAMs generate an average of $90 hold per day. He said that equates to $2.1 million in annual gaming revenue for Accel.
He called the acquisition “a starter position for a much larger market.” He said 20% of the Georgia business could equal out to $165 million in annual gaming revenue.
Nine states have legal video gaming terminals or slot machines routes in restaurants, bars, taverns, convenience stores and other locations that sell alcohol – Illinois, except for the Chicago area; Louisiana; Montana; Nevada; Oregon; South Dakota; West Virginia; Pennsylvania and Georgia with its non-traditional approach. Missouri, Mississippi, and Indiana have been exploring legalization.
In his initial coverage of Accel, Pizzella said the best expansion opportunities for Accel were continued growth in Illinois, and Missouri, Georgia, or Pennsylvania, pending the states’ regulatory environment.
DeCree said Accel is committed to expanding beyond Illinois, but while Georgia could be a long-term opportunity, he views “pending legislation in Missouri as the significant potential near-term catalyst for the company.”
Shares of Accel closed at $10.20 Wednesday on the New York Stock Exchange, up 64 cents or 6.75%.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
