By Dietrich Knauth
NEW YORK (Reuters) - Georgia-based slot machine operator Lucky Bucks filed for bankruptcy Friday, saying that it had reached a deal to cut $500 million in debt and turn over the company's equity to its lenders.
Lucky Bucks suffered from increasing interest rates on its debt, an inflationary environment that reduced consumers’ use of slot machines, and a regulatory crackdown on slot machine operators in Georgia, according to its court filings in Wilmington, Delaware bankruptcy court.
Georgia law places strict limits on slot machines, prohibiting cash winnings, and preventing locations like gas stations and convenience stores from having more than nine slot machines or deriving more than 50% of their revenue from slot machines, according to the company.
The state's increased policing of those rules caused the removal of 500 Lucky Bucks slot machines in the first five months of 2023 alone, according to court documents.
Headquartered in Norcross, Georgia, Lucky Bucks operates in 345 locations throughout Georgia with approximately 2,300 slot machines. The machines are classified as “skill-based” games under Georgia law, and winning must be redeemed for non-cash merchandise or lottery tickets instead of cash.
James Boyden, Lucky Bucks’ executive vice president of corporate development, said in a statement that the bankruptcy would not cause any disruption for the company’s employees, business partners, or consumers.
Lucky Bucks may choose to sell its business if a buyer steps forward with a better offer than the proposed debt-reduction deal, according to court documents. Lucky Bucks entered bankruptcy with $610 million in debt. The proposed restructuring is supported by 86% of the company’s lenders, the company said in a statement.
Lucky Bucks is owned by private equity firm Trive Capital, which acquired the company as part of its 2020 acquisition of the formerly public company Seven Aces.
Before filing for bankruptcy, Lucky Bucks had lobbied for a Georgia law that would have protected slot machine operators from “predatory” competition. The proposed bill, which was not passed by Georgia’s legislature, would have prevented a new slot machine from being installed in the nine months following the removal of a different company's slot machine.
The case is Lucky Bucks Inc, U.S. Bankruptcy Court for the District of Delaware, No. 23-10758.
For Lucky Bucks: Dennis Dunne and Tyson Lomazow of Milbank LLP and Russell Silberglied of Richards, Layton & Finger PA
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