Boyd Gaming considers the Kansas Star Casino the crown jewel of the five new casinos it will take over after acquiring Peninsula Gaming.
Las Vegas-based Boyd Gaming announced Wednesday that it has agreed to acquire Peninsula, the Dubuque, Iowa, company that manages the casino in Mulvane, for $1.45 billion.
The acquisition will add five properties to Boyd’s portfolio, including the Kansas Star; Diamond Jo Casino in Dubuque; Diamond Jo Worth in Northwood, Iowa; Evangeline Downs Racetrack & Casino in Opelousas, La.; and Amelia Belle Casino in Amelia, La.
“We’re pleased about all five, but certainly the one with the greatest potential in our view is the Kansas Star,” said Rob Meyne, Boyd Gaming vice president of corporate communication.
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Kansas is a good state to do business in, and the Kansas Star’s first quarter was “nothing but a roaring success,” even though it operates in a temporary facility, he said.
Peninsula recently reported that the casino recorded $50.3 million in net revenue during the first quarter.
Boyd Gaming owns and operates 17 gaming properties in Nevada, New Jersey, Mississippi, Illinois, Indiana and Louisiana. This will be its first foray into the Iowa market, as well as Kansas.
Keith Smith, Boyd’s president and CEO, called the acquisition of Peninsula’s properties “a transformative transaction that fits perfectly into our growth strategy.” It expands the company into markets that offer limited competition and stable gaming and regulatory environments, he said during a conference call.
Smith said the company believes the Kansas Star’s upside is considerable when its permanent facility opens next year, adding more slot machines, table games, a hotel and other amenities. Peninsula has financed that expansion. Boyd would pay for the final phase, which will include more gaming devices, additional hotel rooms and the opening of the Kansas Star’s equestrian and events center.
Bob Boughner, executive vice president and chief business development officer for Boyd, said the company is comfortable about the casino’s competitive environment, referring to a possible tribal casino in Park City – where an attempt by the Wyandotte Nation of Oklahoma to have land placed in trust for a casino is in litigation – as well as a bid to get a new vote on slots at Wichita Greyhound Park. He said the Wyandotte casino is unlikely to happen.
Boyd will fund the transaction with $200 million in cash and approximately $1.2 billion in debt, and Peninsula will include a $144 million note as part of the deal.
The company will need approval from the Kansas Lottery to assume Peninsula’s management contract. State law provides for these types of transactions of its state-owned casinos, according to lottery officials.
Boyd also must pass background checks and be licensed by the Kansas Racing and Gaming Commission.
Meyne said the company expects to be fully vetted by the state.
“We’re ready to come in and start being good partners with the state of Kansas very early in the process,” he said.
It isn’t clear what would happen if Boyd falls short during the licensing and regulatory process, with a casino already built and expanding.
“This is all very fresh and new,” said Bill Miskell, Racing and Gaming Commission spokesman. ”Boyd is a relatively well-known company, but we’re going to go through the process, and I really can’t speculate on what may or may not happen.”
Boyd is one of the oldest casino companies in Las Vegas. It was founded in 1974 by the father-son team of Sam and Bill Boyd. Bill Boyd still serves as its executive chairman. The company employs 22,000 people.
Meyne said the company doesn’t anticipate making changes at the Kansas Star or its other new casinos in the foreseeable future.
“It will be business as usual,” he said. “We’re not coming into Kansas or the new properties in Iowa and Louisiana to make a bunch of changes. We’re coming in to hopefully improve the businesses and make them more successful. We think there’s a good team in place.”