Illinois slot machine provider completes merger, looks to grow in the market Howard Stutz, CDC Gaming Reports · November 22, 2019 at 5:30 am Illinois video gaming terminal provider Accel Entertainment completed its merger with TPG Pace Holdings Corp. Thursday, gaining a listing on the New York Stock Exchange and a business partner with the financial backing to expand its presence in the growing Midwest gaming market. Under the terms of the transaction, which was approved shareholders a week ago, Accel management will roll over 80% of their shares into the publicly traded company and will maintain operating control of the business. TPG Pace, a special-purpose acquisition company created by an affiliate of private equity giant TPG Capital, will be renamed Accel Entertainment. The company is now trading on the New York Stock Exchange under the ticker symbol ACEL. Accel is currently the largest slot machine operator in the Illinois video gaming market, providing some 10,300 video gaming terminals games to more than 2,200 locations statewide. Accel acquired rival Illinois slot route operator Grand River Jackpot in September, which added 1,854 video gaming terminals to the portfolio. Accel also owns a conditional slot route operator license in Pennsylvania but has yet to open operations in the state. At the end of October, Illinois had 7,121 locations with 32,823 video gaming terminals. The locations include bars, taverns, restaurants, convenience stores, fraternal lodges, gas stations and truck stops – anywhere with a liquor license. “This transaction is an important milestone for Accel and our mission of being the partner of choice for local businesses who want to offer gaming to their customers,” Accel CEO Andy Rubenstein said in a statement. Accel Chairman Karl Peterson said TPG sought to sponsor the public listing of an “exciting” growth company. “With today’s closing we have done exactly that,” he said. “We look forward to working closely with Andy and the Accel team to execute the next phase of our business strategy as a leading pure-play publicly listed gaming-as-a-service provider.” Under a gaming expansion plan approved by Illinois earlier this year, locations will be able to add one additional video lottery terminal, bumping the number up to six games. Some of Illinois’ high-volume truck stops can offer up to 10 games, double the previous allotment. Also maximum wagers on gaming terminals will increase from $2 to $4. The maximum payout will grow from $500 to $1,199, with progressive jackpots up to $10,000. Union Gaming Group analyst John DeCree, in a note to investors the day before shareholders voted on the Accel deal, said the number of slot machine route operators in Illinois has shrunk by roughly 30% since 2015. “We expect this trend will continue as scale is a significant competitive advantage in this business,” DeCree said. Video lottery gaming has been a growth story in Illinois, much to the detriment of the state’s riverboat casino industry. Between 2013 and 2017, Illinois casino revenue has declined 15%. In the same five years, revenue from video lottery terminals is up nearly 900%. The activity has also attracted traditional casino operators with riverboat properties. Penn National Gaming, which has Hollywood-branded casinos in Aurora and Joliet, acquired route operator Prairie State Gaming in 2015, which has more than 2,000 gaming terminals in 400 locations. Boyd Gaming, which owns the Par-A-Dice in East Peoria, bought Lattner Entertainment Group last year, which has nearly 1,000 video gaming machines in 220 locations. Las Vegas-based Golden Entertainment, which dominates Nevada’s slot route market, was licensed in Illinois in 2017, but has not moved forward on the operations side. #newsroom – Illinois slot machine provider completes merger, looks to grow in the market. –@howardstutz, CDC Gaming Reports. https://t.co/eL5CRpl4YL @AccelEntertain #CDCgaming — CDC Gaming Reports (@CDCNewswire) November 21, 2019 “We don’t expect Boyd or Penn to commit any meaningful capital to growing their route businesses in Illinois,” DeCree told investors. “In fact, as Penn looks to cull its portfolio of non-core assets, Prairie State Gaming could potentially be for sale.” Seven states – Illinois, Nevada, Montana, Oregon, South Dakota, Louisiana and West Virginia – offer limited stakes, distributed gaming. Pennsylvania legalized the activity almost two years ago, focused just on truck stops, but has been slow to roll out. Nevada’s route operations don’t disclose gaming revenue totals. Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at firstname.lastname@example.org. Follow @howardstutz on Twitter.