Rhode Island’s Twin River Continues Explosive Growth
Twin River Worldwide Holdings continues an aggressive expansion mode that soon will see the Rhode Island-based company operate 10 gaming properties in four states. “We’re still in a heavy acquisition mode,” said George Papanier (l.), president and CEO.
The January 24 announcement that Rhode Island-based Twin River Worldwide Holdings (TRWH) had closed on its $50 million deal with Affinity Gaming to acquire three Colorado casinos—the Mardi Gras, Golden Gates and Golden Gulch—would be big news for any up-and-coming regional operator.
But for TRWH, a public company formed last March with the reverse acquisition of Delaware’s Dover Downs Gaming & Entertainment, the Colorado announcement, followed a few days later by news that DraftKings and FanDuel will manage its retail and online sportsbooks, is par for the course. Twin River shows no sign of slowing its aggressive path of expansion; it’s been in rapid expansion mode for more than 15 years. When the company began to diversify, it was the private owner of one racino, the Twin River Casino (formerly Lincoln Park) in Lincoln, Rhode Island, plus the Arapahoe Park racetrack in Aurora, Colorado.
By 2014, the company’s owners had decided to hedge their bets in the face of coming competition in New England. It was a year away from the opening of the first full-blown Massachusetts racino at Plainridge Park, with MGM Springfield to follow a few years later. Twin River began the diversification that continues to this day, acquiring the Hard Rock Hotel & Casino Biloxi from Leucadia International in 2014 for $250 million. The following year, the operator bought out its local competition, buying the Newport Grand racino, which would be replaced by the new Tiverton Casino Hotel near the Massachusetts border.
The growth has not slowed since—and in fact, has accelerated in the past year.
On March 29, 2019, the operator celebrated its listing on the New York Stock Exchange (ticker symbol: TRWH) after closing its purchase of Dover Downs Gaming & Entertainment and its main property Dover Downs Hotel & Casino, the only full-blown hotel-casino property in Delaware. Twin River had barely begun a program of capital improvements at that property when it was announced last July that it had agreed to purchase the Isle of Capri Casino Kansas City and the Lady Luck Casino Vicksburg in Mississippi from Eldorado Resorts.
When the Eldorado deal closes in the second quarter of this year, Twin River will have grown from that single Rhode Island racino and Colorado horse track into a multi-jurisdictional operator of 10 properties—nine casino properties, along with Arapahoe and its network of off-track betting facilities—across four states.
“We really started our diversification strategy in 2014, with the acquisition of Hard Rock,” said George Papanier, president and CEO of TRWH, in an interview with GGB News. “That was one casino asset, and we’re on our way to nine. And our strategy has been to diversify into markets that are strategic—as in Colorado, because we had Arapahoe Park there. And we’d like to enter into densely populated markets—Kansas City is a good example of that.
“We feel we can compete in any market for market share, and we’d like to be in markets that are somewhat predictable from a cash flow perspective, but also places insulated from any future competition—a good example is Vicksburg, which we’ll be closing on in the second quarter.
“We’re still in a heavy acquisition mode.”
Phil Juliano, the gaming industry veteran who is senior vice president and chief marketing officer of Twin River Management Group, told GGB News that the company’s “heavy acquisition mode” has been one of the highlights of his in a 30-plus-year career.
“George and I are having a good time,” Juliano said. “This is fun. Rather than sitting there with one asset, sweating bullets that expansion doesn’t happen right around you, and then making it difficult to operate day-to-day, this diversification strategy made all the sense in the world.”
“In 2014, we were very aggressive about diversifying away from what we saw was going to be a wave of gaming expansion in New England,” said Papanier. “One of the things we did was acquiring Newport Grand, which was the other license in Rhode Island. We did it for two reasons—one was defensively, because it was good to control as a company the only two licenses in the state. But also, we wanted to take an offensive posture.”
That offensive posture shows no signs of slowing to this day, but in the meantime, Twin River has made the most of all of its acquisitions, in a pattern of generating profit in some of the most challenging markets in the U.S.—like Biloxi, Mississippi, where TRWH has turned the Hard Rock into its greatest success story.
“That’s our shining property on the hill,” said Juliano. “It won two awards for running the best Hard Rock in the Hard Rock brand, and it’s a property Hard Rock doesn’t own.”
According to Juliano, in Biloxi, TRWH implemented a practice that has led to success in all its markets—strategic capital spending. “There’s a lot of irrational spending down there, but we compete hard, and we think our spends are rational,” he said. “And under George’s leadership, his vision for the use of capital in that property, and how we enhanced that property, we don’t have to spend irrationally.
“And we’ve sustained our market share and profitability over the course of the time we’ve been there. We actually grew it dramatically in the beginning, and we’ve sustained it, even though we did not anticipate a new competitor coming into the market, in the form of Scarlet Pearl.”
He added that it helps to be the next-door neighbor of Beau Rivage, the 1,700-room juggernaut of the Biloxi market. “I think we own the best neighborhood in the market; we execute just wonderfully down there. It’s a well-run property, and it’s held its own financially. It improves every year.”
“That actually dovetails really nice into our philosophy,” added Papanier. “When we enter into markets, we have a focus on growing market share. But that is supported by a cap-ex component. Obviously, we want to operate in an efficient manner, but from a cap-ex perspective, we’re interested in brands that we feel are effective in driving traffic, as opposed to just servicing the business that’s already there.”
At Biloxi, the company added national chain restaurants like the Sugar Factory candy and ice cream emporium, Pitbull’s iLov305 restaurant, and Ruth’s Chris steakhouse. “But we also look for brands we consider to be local favorites, and we try to get them to set up shop in our property,” Papanier said. “A good example of that is a local favorite there called Half Shell Restaurant. Phil had a big part in introducing them to our property and getting them to set up shop there. They’re literally a block away. And they do a considerable amount of business at both locations.”
Investing In Delaware
TRWH is currently in the middle of similar cap-ex improvements at Dover Downs. The company recently transformed a former lounge adjacent to the lobby that was closed most of the time into Michele’s Steakhouse Lounge, a beautiful, hardwood-clad classic offering a menu of the very best of steak fare, complete with signature cocktails and appetizers, in an elegant setting that has made a mostly idle space come alive.
Another success story is Longo’s, an outlet of a popular South Philadelphia Italian restaurant—an example of creating a local draw that replaced what was a money-losing restaurant. “It’s been a home run,” Juliano said.
More F&B improvements are on the way, including the first Delaware outlet of the Sugar Factory.
The Longo’s location has two table games in the front, which is symptomatic of an ongoing revitalization of the table-game business at Dover. “We’re growing our table games business,” says Juliano. “We’re seeing Asian play come in here for the first time, ever. We have three mini-baccarat games going many times here on the weekends, and even during the week.
“George tasked us with re-laying out the casino. We took advantage of the central bar; the energy coming near those games will be great. You’ll have a pit that’s quieter that opens on the weekends in the back.” The slot floor, meanwhile, is in the midst of a major renovation. “The communication between us and the lottery (which owns the slot machines) has been excellent,” Juliano said. “They’re bringing in new equipment. We’re leveraging the e-bonusing that was in place there.”
He added that the changes at Dover are already paying off. “We’ve had some wonderful success,” Juliano said. “You only had to follow the record last year. Our market share grew faster than the other competitors. The market grew a little bit, but we grew faster than the market. The success here goes back to a balancing act I always talk about. You’ve got to give the customers what they need to visit here. You’ve got to take care of the employees so they want to work here. You’ve got to take care of the shareholders, so they know the deal they made was accretive, and enhance the value of our company. We never lose sight of that.”
Juliano is quick to credit his property executives, including GM Nick Polcino and Frank Policastro, executive director of casino operations in player development. “We’ve got casino guys here—real, genuine casino guys,” Juliano said. “And the people who were already here when we arrived have stepped up, big time. They’re responding in a fantastic way, and I’m proud of them.
“The way to success here will be the balance of the capital we inject into the property and the marketing programs we design that are targeted at the right people—and the way we take care of these people and build relationships with them. Relationship is built off the idea that ‘I’m interested in you.’ You’re the customer, and I’m interested in you. You get that going throughout the property, and you drive that home. That’s one of the bedrocks of our success in Rhode Island, with a 72 percent tax. At the end of the day, we’ll make sure we don’t waste anything, so we’ll return a maximum profit.”
“Phil doesn’t give himself enough credit,” added Papanier. “We’ve produced really good early results. Again, we acquired (Dover Downs) effectively April 1, 2019. And it was mostly on the strength of the marketing strategies. We started to deploy some capital, we feel we’ve driven some incremental gaming business from the opening of Michele’s Steakhouse Lounge. We’ve configured our table-game pits around the Fire & Ice Bar, which was really under-utilized. It’s created a lot of higher energy on the gaming floor.”
Papanier and Juliano say the same strategies are likely to ensure success in TRWH’s new ventures in Colorado, Kansas City and Vicksburg. In all three cases, the operator has acquired properties seen as underutilized. In Colorado, the Affinity casinos had been on the sales block for a long time, and according to Juliano, improvements will begin immediately. “We think there’s opportunity there,” he said. “There are three casinos with three separate brands. I envision someday it being just the Mardi Gras, (the brand of) the casino in the center of it all.
“And we also have the recognized-brand sportsbook, which will put some life into it. We’ll tell a good story there.”
Vicksburg has been a challenging market, but “better days are in front of Vicksburg,” says Juliano. “I think we’ll reinvigorate the property with our marketing philosophy, and a sensible, reasonable capital plan that addresses some of the immediate needs they have. No one’s paid attention to them. Eldorado had them on the selling block from jump street. We think we can reinvigorate that, and also think there’s a little bit of a cross-marketing opportunity between Vicksburg and Biloxi. I’m excited about that.”
“The good news about that market is that it’s a finite market,” added Papanier. “There are four properties there. I don’t want to blame Eldorado, but that was one of the stepchildren of the company, and they started to remove focus from that asset. And that’s similar to what they did in Kansas City, as well. That became an opportunity for us.”
Papanier said he is particularly excited about the prospect of maximizing the potential of the densely populated Kansas City market. “We like to enter into densely populated markets, and Kansas City is a good example of that,” he said. “We feel we can compete in any market for market share, and we’d like to be in markets that are somewhat predictable from a cash flow perspective, but also in places insulated from any future competition.”
Don’t expect the expansion fiesta to end soon. “We’re open to all markets,” Papanier said, noting that even an opportunity in Atlantic City, where Juliano worked for the Wynn and Trump organizations earlier in his career, is not out of the question. “As I said, we’re not afraid of competitive markets, and that’s a significant-sized market—$3 billion, including internet gaming,” Papanier said of Atlantic City. “The market’s there, and if the asset’s right and we can get it at a fair price, we’d be interested in pretty much any market.
“Our company’s about building value. If there’s an opportunity to build the value and it’s accretive to the company, we’re going to be taking a hard look at it.”