Operator News
US – Delaware North buys VGT operator in Illinois
By Phil - 9 May 2016
Delaware North has completed the acquisition of GEM (Gaming & Entertainment Management – Illinois LLC), the third largest video gaming terminal (VGT) route operator in Illinois.
GEM operates nearly 1,800 VGTs at 438 sites – strategic, high-traffic locations such as bars, restaurants, convenience stores, truck stops, bowling alleys and fraternal organizations. Revenue is split approximately in thirds between the location owner, the VGT operator and the state, with a portion of the state share going to the local municipality.
Illinois limits route locations to a maximum of five VGTs and puts lower limits on wagering and payouts than what patrons experience at casinos. Nonetheless, the industry has experienced steady growth in the state since the Illinois Regulated Route System went live in 2012, and GEM’s growth has been significant, especially with the September 2015 acquisition of a smaller operator.
“The acquisition of GEM, which operates the equivalent of a large gaming venue but spread over the entire state, complements our traditional casino portfolio and positions us for growth in this emerging sector,” said Brian Hansberry, president of Delaware North’s gaming business.
“GEM President Bill Nader and his management team bring great gaming and logistics experience and expertise in this sector that would have been difficult to develop in a start-up operation. With GEM we can leverage opportunities for expansion of route gaming to other states,” Hansberry said.
The VGT model in Illinois has been a boon to the state and is highly likely to be replicated in other states and territories. InIllinois, while existing casino operators (including Delaware North’s Jumer’s Casino & Hotel) were hurt by the introduction of VGTs, the total gaming revenue base has increased dramatically.
“Delaware North brings a wealth of talent and resources to GEM, and its global experience in gaming, sports, hospitality, food service and marketing will help propel GEM to the next level in the route industry,” GEM President Bill Nader said. “Being part of a family-owned and associate-focused company with such a rich history is very exciting for our team, and GEM is proud to be part of the Delaware North family.”
Terms of the acquisition are not being disclosed. Wells Fargo Securities acted as exclusive financial advisor to Delaware North.
The acquisition of GEM represents the second significant acquisition for Delaware North’s gaming business this year. In March, Delaware North acquired Ruby Seven Studios, a leading developer of social casino gaming applications. In April, they launched Lucky North, Delaware North’s own mobile and online social gaming platform.
