Rick's Cabaret's Parent May Abandon Colorado Casino Plans
RCI Hospitality Holdings Inc., the parent company of Rick's Cabaret and other gentlemen's clubs, could possibly abandon their plan to set up casinos in Colorado. In late 2022, the firm purchased a 4-story, 30,000 sq ft building at 130 Main Street in Central City for $2.4 million in cash, intending it to be transformed into Rick's Cabaret Steakhouse & Casino. RCI had informed investors at that time that its related entities had applied for a gaming license to operate 175 slot machines, 6 blackjack tables, 1 craps table, and 1 roulette table in Central City.
However, recent statements from the company suggest potential second thoughts regarding its Central City plans. No final decision has been made yet, but there's a possibility of RCI finding better ways to invest the capital instead of waiting for the Colorado regulatory process to solidify.
"We may end up withdrawing the gaming license instead of paying all this money for the investigation and waiting the timeline they want," said RCI President and CEO Eric Langan during the company's first-quarter earnings conference call.
With over 60 gaming venues, gentleman's clubs, and sports bars spread across the US, RCI is a major player in the industry.
RCI's Casino Plans in Central City on the Fence
Although the $2.4 million RCI spent on the Central City property is not a huge amount, it could still be quite significant for a business with a market cap of $449 million. The use of this property for gaming purposes is becoming less justifiable, especially when the owner is paying regulatory fees and taxes on the land, and there's no certainty of obtaining a gaming license. These factors might be reasons why Langan considered the company's Colorado casino plans to be "in limbo."
"I'm currently evaluating that timeline with our new focus on capital allocation, doing a lot of math right now, and calculating whether or not we want to even continue to focus on that at all or take our money and energy and focus instead on core businesses," said Langan on the call.
He also mentioned the possibility of a share buyback program as an alternative to the casino efforts in Colorado. With RCI down 29.5% year to date, this would be beneficial.
RCI Still Interested in Colorado, Despite Gaming Delays
Although the casino endeavor might be delayed or abandoned, RCI remains committed to Central City. It will proceed with opening Rick's Cabaret Steakhouse there and is also planning a new Bombshells restaurant in the city. No matter what happens with the gaming license, RCI's adult entertainment and dining options could still place the company strategically if Central City and Colorado indeed see increased casino expansion.
Other gaming venues in Central City include Century Casino, Dostal Alley Casino, Dragon Tiger Casino, and Easy Street Casino, among others.
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Source: www.casino.org
