Lady Luck Casino in Pennsylvania is up for sale

Less than two years after its opening, the Lady Luck Casino at Nemacolin Woodlands Resort is up for sale, and could soon be under new management. Isle of Capri Casinos, based in St. Louis, has begun soliciting would-be buyers for the small Fayette County “resort” casino, which has 589 slot machines and 29 table games. It has hired a California financial advisory group to reach out to potential investors.

Isle of Capri, the operator and co-owner of Lady Luck, opened Lady Luck on July 1, 2013, under a 30-year-lease with Nemacolin. That lease includes a 10-year initial term, plus four built-in renewal terms, each five years long, for the 69,100 square-foot building in which the casino is situated.  In a letter being distributed to those investors this week, Isle of Capri’s advisors note that the buyers would win the rights to the “operating assets, customer list and rights to manage and operate the Lady Luck Casino.”

The casino had troubles from the outset. On opening day -July 1, 2013 - Lady Luck employed 450. Within in two months, it had laid off about 70 employees, or 15 percent of its workforce, because “business [had] been slower than expected.” Part of the reason for that is that the resort-style casino, one of two in the state (the other is Valley Forge Casino Resort near Philadelphia), is handcuffed by the access rules established by the state Legislature and the state Gaming Control Board.

While other Pennsylvania casinos, both the free-standing and the racetrack-connected variety, can be universally patronized, those wishing to gamble at a resort casino must be a resort customer or overnight guest. If they aren’t, they have to buy a US$ 10 gift card, or an annual pass for US$ 45, in order to gamble at Nemacolin. But the casino, while it is the smallest of the 12 now operating in Pennsylvania, seems to have found its footing in the last year. In the investors’ prospectus, Isle of Capri reports that Lady Luck generated gross gaming revenues of US$ 40.2 million for the 12-month period that ended Jan. 31. It also reported that month-over-month casino revenues have increased every month since last July.

And while table game revenues dropped from January 2014 to January 2015, slots revenues were up nearly 39 percent year-over-year, from US$ 1.52 million (January 2014) to US$ 2.12 million (January 2015). At Lady Luck, third-quarter net revenues increased US$ 2 million, or 32 percent, to US$ 8 million, year over year.

This morning, in a third-quarter earnings call, Isle of Capri reported quarterly revenue of US$ 241.1 million, beating Wall Street estimates. Its stock price has climbed 7.5 percent in the last 12 months. Representatives from Isle of Capri and Nemacolin couldn’t be immediately reached.

Several Pennsylvania casinos have already seen changes in operational control or ownership, including Rivers Casino (whose ownership structure changes before it even opened). Also, the estate arm of Penn National Gaming is buying the Meadows Racetrack and Casino in Washington County for US$ 465 million, while the owner of Presque Isle racetrack casino near Erie, MTR Gaming Group, was absorbed by Nevada’s Eldorado Resorts. Any change of control at Nemacolin’s Lady Luck would have to be approved by the state’s gaming regulators.