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To Invent Again

Like butterflies,

two Las Vegas-based gaming companies are emerging

Reinvention is a word commonly used in the gaming industry.

Sometimes it’s a word of self-praise, such as Las Vegas continues to reinvent itself.

Sometimes it’s as an admonition, such as a company with a dated business model needs to reinvent itself.

For two publicly traded casino companies, reinvention is simply a truism.

It is now a well-known story that Eldorado Resorts and Golden Entertainment have transformed from small,

privately held Nevada gaming companies into much larger, multi-state publicly held enterprises.

Over several years, Eldorado has gone from one-and-a-half casinos in Reno into what, when its purchase of Tropicana closes, will be a national company of 26 casinos in 13 states approaching $3 billion in revenue.

Golden, after purchasing Colorado Belle and Edgewater casinos in Laughlin, Nevada, will have gone from primarily a Nevada slot route and tavern operator to principally a casino operator with over $1 billion in revenues.

The transformations are not unknown. We’ve chronicled them and included both companies in our Nevada Triple Play (along with Monarch Casino) as opportunities for investors.

And we’ve watched their stocks rise from $8-something a share each to $47 for Eldorado, and as of this writing, $25 for Golden. But the speed and scope of change has surprised even this bull.

Eldorado began its transformation in acquiring three MTR Gaming properties through merger and going public.

 However, with the purchase Isle of Capri, Eldorado overnight became a national operator of regional casinos.

That seemed like a lot to bite off.

But Eldorado met the challenge and is fulfilling its promise to grow profits through efficiencies.

Then Eldorado announced it is buying Tropicana Entertainment’s seven casinos, including the flagship Trop in Atlantic City, and the MGM Resorts-Hyatt joint-venture Grand Victoria near Chicago.

That would seem like enough for a while, but even before the close of that deal, Eldorado an nounced an agreement with British sports betting operator William Hill to run sports books at its properties.

William Hill is already entrenched in the U.S., operating more sports books than any company in Nevada, with operations in Delaware and New Jersey, and contracts to operate Penn National’s sports books, among others.

The agreement with William Hill offers two potentially big opportunities for Eldorado beyond its own sports books—an ownership position in William Hill and the inclusion of online gaming.

Eldorado will own 20 percent of William Hill US and gets $50 million of parent William Hill Plc. stock.

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