Please ensure Javascript is enabled for purposes of website accessibility

Bally's Goes on Spending Spree, Buys Iconic Tropicana Casino and Gamesys

By Rich Duprey - Apr 13, 2021 at 9:58AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The casino operator is looking to expand further into online gaming.

Casino operator Bally's (BALY 2.22%) opened up its pocketbook today and announced it was going on a shopping spree, buying the iconic Tropicana Las Vegas casino and hotel from Gaming & Leisure Properties (GLPI 2.09%) for $308 million and separately combining with online gaming operator Gamesys in a $2.7 billion deal.

The purpose of the two transactions is to increase Bally's expansion into the rapidly growing online and interactive gaming markets.

Poker chips with a tablet computer

Image source: Getty Images.

With its purchase of the Tropicana, Bally's gets a preeminent spot on the Las Vegas Strip. Gaming & Leisure Properties, a real estate investment trust, acquired the iconic casino and hotel a year ago from Penn National Gaming in exchange for rent credits of $307.5 million at a time when the pandemic was ravaging the casino industry.

Under the agreement, if the REIT sold the property within a year, Penn would receive 75% of the amount above the credits. As the deal was completed on April 20 of last year, Gaming & Leisure sold the property just under the wire. Yet since the purchase price is also almost what the rent credits were, it doesn't appear Penn National will receive much if anything on the sale.

Bally's will also be leasing the real estate back to Gaming & Leisure for 50 years, while also engaging in a sale-and-leaseback arrangement for its Black Hawk, Colorado, and Rock Island, Illinois, casinos for $150 million.

The Gamesys deal was originally announced back in March and will give Bally's access to the gaming company's online casino and bingo games. It also could provide entry into the sports betting market.

Bally's is giving Gamesys investors cash, but will allow them to elect to receive some or all of the price as Bally stock.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Bally's Corporation Stock Quote
Bally's Corporation
BALY
$20.22 (2.22%) $0.44
Penn National Gaming, Inc. Stock Quote
Penn National Gaming, Inc.
PENN
$31.46 (3.42%) $1.04
Gaming and Leisure Properties, Inc. Stock Quote
Gaming and Leisure Properties, Inc.
GLPI
$46.82 (2.09%) $0.96

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.