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What in the World is a COAM?

I first looked into COAMs a couple of years ago, when a very large investor wanted to know if he should put a few tens of millions of dollars into a company involved in the business in Georgia.  Before I could advise him, I had to first figure out what in the world is a COAM.

My interest was renewed this year when I was asked by another big money firm about the proposal by the largest COAM operator, Lucky Bucks, to borrow $500 million.  Lucky Bucks will use $290 million to pay off existing debt, which makes sense because interest rates are now so low.  But it also will use $191 million to pay a dividend to its shareholders.  The remaining $19 million will go to fees and expenses.  

What type of company makes so much cash that it can borrow half a billion dollars and give themselves $191 million, while not using any of it to grow the business?

What is a COAM?  The letters stand for Coin Operated Amusement Machines, but the only ones of interest to gamblers, operators and investors are the Class B COAMs in Georgia.

OK, so what are Class B COAMs?  The short answer is they are VLTs, with a few weird twists.

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