By Dietrich Knauth
NEW YORK (Reuters) – Georgia-based slot machine operator Lucky Bucks filed for bankruptcy on Friday, saying it had reached an agreement to reduce its $500 million debt and return the equity of the company to its lenders.
Lucky Bucks suffered from rising interest rates on its debt, an inflationary environment that reduced consumer usage of slot machines, and a regulatory crackdown on slot machine operators in Georgia , according to his documents filed in court in Wilmington, Delaware.
Georgia law imposes strict limits on slot machines, prohibiting cash winnings and preventing places like gas stations and convenience stores from having more than nine slot machines or deriving more than 50% of their revenue from the machines slot, according to the company.
Increased state oversight of these rules has resulted in the removal of 500 Lucky Bucks slot machines in the first five months of 2023 alone, according to court documents.
Based in Norcross, Georgia, Lucky Bucks operates in 345 locations across Georgia with approximately 2,300 slot machines. The machines are classified as “skill-based” games under Georgia law, and winnings must be redeemed for non-cash merchandise or lottery tickets instead of cash.
James Boyden, executive vice president of business development at Lucky Bucks, said in a statement that the bankruptcy would cause no disruption to the company’s employees, business partners or consumers.
Lucky Bucks may choose to sell its business if a buyer presents a better deal than the proposed debt reduction deal, according to court documents. Lucky Bucks went bankrupt with $610 million in debt. The proposed restructuring is backed 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 former public company Seven Aces.
Before filing for bankruptcy, Lucky Bucks had lobbied for a Georgian law that would have protected slot machine operators from “predatory” competition. The proposed bill, which was not passed by the Georgian legislature, would have prevented the installation of a new slot machine within nine months of the removal of another company’s slot machine.
The case is Lucky Bucks Inc, US 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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(Reporting by Dietrich Knauth)