Designing and servicing electronic games at fraternal lodges proves to be lucrative work for Greenville entrepreneur Garrett Blackwelder.
The gambling industry is famously profitable, as visitors to elaborate casinos can attest. But there’s also plenty of opportunity in the lesser-known business of charitable gaming, in which much of the revenue is funneled to local organizations such as Veterans of Foreign Wars and Elks Clubs.
That was evident when Greenville’s Grover Gaming agreed to sell its charitable gambling division to slot machine manufacturer Light & Wonder for as much as $1.05 billion. That includes $850 million in cash upon the deal’s closing, and potentially $200 million more if certain financial targets are achieved through 2028.
Garrett Blackwelder founded Grover in 2013 after earning a bachelor’s degree at East Carolina University in 2000. He now employs more than 400 people and develops software for games such as Peggy’s Big Break; video lottery terminals; andgaming systems for tribal casinos and charitable gaming sites.
It has more than 10,000 leased electronic pull-tab units in North Dakota, Ohio, Virginia, Kentucky and New Hampshire, which operate under a recurring revenue model that leads to predictable cash flows. Electronic pull-tab devices combine bingo and scratch-off lottery tickets, allowing players to win money if they get the right combination of numbers or symbols. They are legal in 11 states, including the five where Grover now operates with service technicians and relationship managers keeping customers happy.
The billion-dollar sale only includes Grover’s charitable gaming business, which officials say makes up about half of its total operation. The remaining business is an independent
entity owned by Blackwelder, who agreed to work with Light & Wonder for at least three years.
Grover had revenue of $135 million last year, while its profit before interest, taxes, depreciation and amortization was about $111 million, reflecting a margin of more than 80%. Light & Wonder is the second-largest slot machine maker after International Game Technology. It agreed to pay about 7.7 times the adjusted earnings, according to Bloomberg News.
Light & Wonder CEO Matt Wilson told analysts in February that he expects more states to permit charitable gaming, which is part of the rationale for buying Grover. The business “is generally seen as a more palatable form of expansion in states that are traditionally opposed to gaming,” according to a February report in gamingbusiness.com, a trade publication.
Grover has 1,500 customers in the business in five states, versus Light & Wonder’s 700 customers across North America, Wilson noted. “We could’ve built it organically, but it could’ve taken us five, six, seven years to get to this level of scale,” he says. “We get to buy 10,000 units immediately and then layer in our content.”
Light & Wonder expects the transaction to close by June 30. It was formerly known as Scientific Games before rebranding in 2022 and had a market cap of about $8.7 billion mid-March.
Grover Gaming employs people in nine states, including a design studio in Wilmington and a software development center in Chicago.
Blackwelder called Light & Wonder “an ideal partner for us, given our similar company cultures and dedication to innovation and customer service.’’
Grover Chief Development Officer Kevin Morse added, “The real winners are the charities and fraternals in these markets, because of the exciting game content L&W brings to the table. We are excited to see charitable gaming taken to a new level.”
In 2021, Grover said it had raised more than $200 million for charitable organizations. While the machines are mostly in lodges of fraternal groups, some states allow them in bars and restaurants. ■
