RCI closes $2.4 million deal with Central City

By Don Ireland – Weekly Register Call Senior Reporter

RCI Hospitality Holdings closed a $2.4 million deal with Central City earlier this month to purchase the former Scarlet’s Casino building at 130 Main St. However, that acquisition is only the first of several planned in Colorado by the adult-entertainment company. 

Eric Langan, RCI CEO and president, previously announced plans to purchase three former casino properties at the other end of Main Street, the former Coyote Creek Casino at 101 Eureka Street and 98 and 102 Lawrence Street. The sale closing for those properties is expected to occur before March 2023. He estimated that RCI will spend approximately $24 million to purchase and remodel the two casinos, which will open as new casinos – one featuring a Rick’s Cabaret Steakhouse & Casino and the other featuring a casino with a sportsbook/nightclub.

Central City isn’t the only metro Denver location that RCI is eyeing for expanding its nationwide collection of businesses, which includes strip clubs/cabarets, restaurants and casinos. Recently, RCI announced a $5.2 million deal to purchase the Grange Food Hall on Arapahoe Road in Greenwood Village. The Grange facility includes several restaurants, including the Crack Shack, Menya Ramen, Seoul Mandoo, Tilford’s Wood Fired Pizza and Uptown & Humbolt. The current property also has Little Dry Creek Brewing, which would supply microbrews to its other metro operations, according to RCI.

Langan explained his interest in the Denver area. “[There is] nearly a quarter of diverse population of millennials, making it one of the best cities for this demographic in the country and it’s also become another tech hub with a new nickname of Silicon Mountain.” Previously, he said the Central City casinos and entertainment will attempt to attract an evening crowd to Central City, primarily in the male 30-to-50 age demographic. 

When reporting its earnings this month for the 2021-22 fiscal year, RCI said it earned $267.6 million in revenues for the period ending Sept. 30. The NASDAQ-listed company’s stock was trading slightly above $92 per share last week. The NASDAQ Global Market under the symbol RICK.

During its most recent operating quarter, the company reported $71.73 million in revenue and $10.58 million in net income. In October 2021, RCI made its largest-ever acquisition effort, which included nightclubs in six states for $88 million. The purchase included several Denver-area strip clubs, including the Diamond Cabaret, La Boheme Gentlemen’s Cabaret and PT’s Centerfold club.

RCI previously announced it plans to build one of its Bombshells, a military-themed bar and grill, in Aurora. “We already purchased the land in Aurora. We will begin the permitting process in January and hopefully start construction in April so we can open [in] early 2024,” Langan commented.

The company currently owns more than 60 locations in multiple states. Langan noted, “Our business has remained strong, while we are seeing some regional weaknesses here and there. We are confident overall business will be fine, and we will continue to expand our market share, with special attention to the Denver metropolitan area.”

According to Langan, the former Scarlet’s building could be open for the 2023 Christmas holiday season if the company finishes its remodeling, obtains a Colorado gaming license, and installs slot machines and gaming tables. “We are getting bids for the roof work over the next few weeks. We have hired the architect out of Denver,” he said.

RCI is hoping to close on the Tebo casino property in the first half of February, Langan said. “I have a master plumber coming out to figure out the water main tap issue the first week of January. The architect has been hired for this property as well as we are waiting on the as-built plans so we can start the planning process for a remodel.”

During a Dec. 14 call with RCI investors, Langan reported, “Last year, $1 billion was wagered in slot machines in Central City, generating more than $80 million in adjusted gross proceeds. We see this Rick’s as a club with a casino component. Our plan is to feature Classic Rick’s Cabaret entertainment, fine dining, as well as casino and sports betting. We’ve applied for a license to operate 175 slot machines and seven tables.”