Maryland: Century Casinos to acquire the operations of Rocky Gap Casino for $56M

Century Casinos has entered into a definitive agreement to acquire the operations of Rocky Gap Casino Resort in Maryland from Lakes Maryland Development, the Colorado-based company announced Thursday. The business will be taking over the operations for approximately $56 million. The transaction is expected to close mid-2023, subject to regulatory and governmental approvals and customary closing conditions.

The deal will be funded using cash from Century Casinos’ balance sheet, the company explained. Simultaneous with the closing of the transaction, an affiliate of real estate investment trust VICI Properties will acquire the real estate assets for approximately $204 million and Century Casinos will amend its triple net lease agreement with VICI to add Rocky Gap.

The amendment to the lease will include an initial annual rent for the Rocky Gap casino of approximately $15.5 million, a press release explains. Additionally, Century Casinos commented that the purchase price for the operations of the Maryland casino represents an implied 2021 EBITDA multiple of 4.9x. The acquisition is expected to be immediately accretive to earnings.

"The addition of Rocky Gap is another important milestone in our pursuit to acquire prime US assets. With this acquisition and our pending acquisition of the Nugget Casino Resort in Nevada, we will oversee a US portfolio that reaches from east to west," Erwin Haitzmann and Peter Hoetzinger, Co-Chief Executive Officers of Century Casinos remarked. 

"We are looking forward to working with the Maryland Lottery and Gaming Control Agency to obtain gaming approvals and with the casino leadership and team members to effect a smooth transition and great future for Rocky Gap," they concluded.

John Payne, President and COO of VICI, added: “We are very excited to expand our existing partnership with Century, given their strong track record of integrating and operating similar high-quality regional resort assets [...]. This transaction allows each of our companies to efficiently create value for our respective shareholders.”

Rocky Gap is located in Flintstone, Maryland in Rocky Gap State Park, which attracts over half a million visitors annually. The full-service resort sits on approximately 270 acres and includes an 18-hole golf course designed by Jack Nicklaus, a 5,000 square-foot events center, several meeting spaces, a spa, and several outdoor activities. 

The property consists of over 25,000 square feet of gaming floor, 630 slot machines, 16 table games, 198 hotel rooms and five food and beverage venues. Rocky Gap Casino Resort had net operating revenue of $78 million and Adjusted EBITDA of $27 million for the year ended December 31, 2021, Century Casinos said.

The property recently invested $10 million in improvements to its hotel, slot machines, restaurants, and sports lounge. Century sees potential to further expand the casino and hotel “and capture more customers from adjacent markets.” 

Additionally, the company also sees a potential opportunity in partnering with a sports betting operator in Maryland “to bring sports betting to Rocky Gap.” This would be in late with the slate of recent sports betting partnerships in the state, which are coming ahead of the upcoming online sports wagering market launch.

Upon closing of the Rocky Gap acquisition and the pending acquisition of Nugget Sparks, which operates the Nugget Casino Resort in Sparks, Nevada, Century's North American portfolio will increase to 11 casinos that include 7,140 gaming machines and 158 table games, the business says. On a pro-forma basis after giving effect to the two acquisitions, the company expects to generate 94% of its Adjusted EBITDA from its North American casinos.