Acquisitions Anonymous - #1 for business buying, selling and operating - Buying a Bingo Hall?! The Most Unusual Business Deal We’ve Seen

Episode Date: February 21, 2025

You won't believe this unique real estate investment: a Bingo Hall for sale in Michigan!Business Listing - https://abb-businessbrokers.com/long-time-bingo-hall/Acquisition Lab – Your premier buy-side advisory service for buying a business. Check them out at https://www.acquisitionlab.com/HoldCo Conference – The ultimate event for entrepreneurs and investors in the holding company space. Get your tickets at https://www.holdcoconference.comIn this episode, the team dives into an unusual investment opportunity: a long-standing Bingo Hall in Michigan. Mills Snell, Michael Girdley, and Heather Endresen discuss the business model, potential risks, and whether this is a viable acquisition. They explore the regulatory gray areas of bingo operations, compare them to other gambling-adjacent businesses like poker rooms in Texas, and debate the long-term sustainability of the industry as demographics shift. Is this a hidden gem or a risky play?Key Highlights:- Why Bingo Halls are so hard to find on the market-  The real estate play behind this business opportunity- The regulatory and compliance risks of bingo and gambling-adjacent businesses- Is the decline of baby boomers a long-term headwind for Bingo?-  Can an SBA loan be used for this kind of acquisition?-  The parallels between Bingo Halls, poker rooms, and other gaming-related businessesSubscribe to weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking here Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations. For inquiries or suggestions, email us at [e-mail]

It's a very, very interesting ecosystem that we haven't really touched before. You as the property owner can't profit from the actual games. So it sounds like the cash flow is relatively fixed. In a small market like this, nobody can come in and compete with you profitably because there's only enough business to handle one bingo hall. We'll set, acquisitions, anonymous. We don't have 100% beer anymore. And thumbs downing on just the plus inventory.

Welcome to Acquisitions Anonymous. Michael here. Today was a terrific episode about a type of business we've never, ever, ever, ever done before. And I have not seen Mills this excited in a long time. It is actually a gambling establishment up in Western Michigan. And it took a really, I think, fascinating turn as we started to talk about Mills' dreams and desires to eventually own his own bingo hall in the future. So check out the deal. us what you think and enjoy the episode. Here we are. Are you ready to take a leap into business ownership but you don't know where to start? Well, look no further than Acquisition Lab, the premier resource for entrepreneurs seeking to buy their dream business. Founded by Harvard MBA and acquisition expert Walker Dibble, the Lab is your fast-tracked success in the search diligence and acquisition process. With hands-on support, world-class resources and a community of like-minded entrepreneurs, Acquisition Lab gives you the tools and confidence to navigate every step of the journey. And we're proud to call Walker and Chelsea, the lab's director, longtime friends of the podcast.

They're passionate about helping entrepreneurs like you take the next big step. So don't wait to make your business ownership dream or reality. Visit AcquisitionLab.com today to learn more and schedule your free consultation. And when you do, be sure to tell them the Acquisitions Anonymous podcast sent you. Go ahead, Mills. This is where I usually start saying something obnoxious. So once you start today, so we start on a good, why don't we start on a good note? I am so excited about this deal.

because I've never, I've never looked at one of these before. I have also never, I don't think, I've never been to one of these before. And I'm not talking about adult establishments. I'm talking about a bingo hall. Have you guys ever looked at a bingo hall? Oh, these are. If you try and Google bingo hall for sale, you can't find them. So that's what, that's part of the reason I'm really exciting.

They're rackets. Let's do this. Bingo. All right. So let's see. long it's long time by the way i thought we're supposed to do some chit chat before we get to the deal oh i'm sorry i was just too excited no he's excited yeah he's excited well so there i'm i'm convinced by the way the reason this podcast works so i've gotten really big into learning how to do storytelling this past year

the reason this podcast works is because every episode basically follows a dramatic arc right like there's the the settings of everything normal that's the chit chat part then there's the call to action like oh, there's a deal that shows up, right? And then like there's complexity where we talk about it. And then eventually like there's resolution. Do we like it or not? And then there's some bad jokes. And then we figure out what things we said that were inappropriate to edit out later.

So like that's how the art goes. So if you think about it, like I think that's why this works. Every episode is a story. You're right. And there's the unveil. Like we're unveiling it. We don't, contrary to popular belief, we don't spend, you know, hours and hours prepping for these episodes.

And so I'm unveiling. this to myself and to Michael and Heather at the same time, and we'll see if it's a decent teaser or not. All right. This is from ABB, which I don't really know them, but they're a business broker. It says long time bingo hall. This established and profitable bingo venue makes for a very attractive investment opportunity. Located in West Michigan, this auditorium has been in business continuously for over 40 years and is a

mainstay in the community. There's nothing needed to hit the ground running. Currently, the hall hosts nine sessions or games per week. Bingo is played every day. Many nonprofits see bingo as an essential way to raise money for their worthy causes. In addition to live bingo games, there are also pull tabs and concessions. I have no idea what pull tabs are. It's located in Michigan.

It's a bingo hall. The asking price is $1,150,000. their revenue is $280,000, and they're doing $168,000. It seems like in the most recent year in free cash flow. The furniture fixtures and equipment are included. It's been around since before 1980. They have one part-time employee. The auditorium is 8,000 square feet.

The building on the property that is leased out is approximately 1,200 square feet. I'm not I'm not really sure what that means. It's very visible on the expressway. Steel construction with kitchen. Current auditorium built in 2004. The real estate is owned by the current owner and it's not really clear. What are you? Yeah.

Oh, it looks like down here financing is available for the real estate. So I think this price. Must be the real estate. Yeah. Yeah. Maybe this asking price is because we're at a 10x multiple. there's probably some purchase price allocation here. But currently there are nine games per week,

but the facility is licensed for up to 14 games per week. There's an interesting nugget that they drop it. Bingo played every day. And twice on Friday and Saturday, electronic gaming is under consideration by the state of Michigan. There's not much competition. The closest competitor is an hour away. And these are very geographically constrained businesses.

Support and training, seller will train a new owner. All games are run by the nonprofits, no involvement by the owner. So it's almost like a kind of a salon, like a booth rental type scheme here. Concessions are subcontracted out to a third party. Cleaning of the auditorium is performed by a third party. This is basically a real estate play and the seller wishes to retire. What do you guys think about this? So I understand this is a rural being. go hall in western michigan we think yes well maybe not western michigan it just says michigan but

the nearest one is over an hour away so that probably means it's not detroit wayne county area right i think they do so he did say west yeah yeah so hither how does this work like are there like so basically this is just the venue and they have one part-time employee who opens it and kind of make sure things go right but then the non-profits like churches the churches uh you know they say other charities probably have a regular. Veterans, yeah, different groups have a regular,

probably schedule, I would imagine. You maybe keep a few times slots open for special events, you know, for different charities that might only do this once a year or something. But yeah, probably has a regular group of kind of tenants, you know, that come in and run their bingo program

and pay you for the time that they, that they spent there. And you've got to open it and close it schedule it and clean it up sounds like that's about it right do you guys know anybody who's like really into bingo do you have any any crazy like great aunts or anything who are really into bingo i don't no no my relatives are all intelligent people mills how dare you okay wow now we're really getting canceled people love bingo the people who love bingo yeah yeah and it is you know it's it's It's this kind of gray area from a compliance standpoint and probably an ethical moral standpoint.

It's kind of gambling, which is why this business doesn't. They're just kind of saying you can come in and use the space, but we're permitted at the state level in order to run a certain number of games. And this is state by state. It varies widely. There's one right around the corner from our shop. And like people who are really into sports betting, it's almost a little bit similar. So look at, I'm going to share another screen. This is the one not that far from our shop.

Mr. Bingo, Charleston Highway. Look at the like the specific language and vocabulary that they use. Today at Mr. Bingo, West Columbia, $7,300, $1,500, 90 faces for 10 or 80 faces for 15 plus the five dollar tax ticket like what does any of that even mean that sounds like like horse racing almost exactly it's like it's like sports betting where like you really there's some now this is just a game of chance right there's no skill to bingo but that's how they that's how they kind of straddle this line of you know they're not running a casino they're running a pure game of chance and they even make mention of the fact that michigan is considering you know allowing electronic gaming

which is another, you know, another game of chance where it's kind of in that gray area. Is it predatory? Is it skill-based? It's a very, very interesting ecosystem that we haven't really touched before. This is fascinating. I'm so glad you found this. So, I mean, here in San Antonio and in Texas, like you drive around and there are these buildings that just say bingo on the front.

And there are like hundreds of people inside of them playing bingo. It is crazy how busy these things get. And I need to Google it. It's one of those things where I've always kind of like at the periphery, I'm like, man, this is a fascinating business, but I've never gone deep in it. The thing I've been told is you have to be associated with like a church here in Texas because it's Texas, right? Like, yeah, like God needs to be involved in everything. Like it's Texas.

So basically like a church runs it of some sort, but there's never like a church name on it. Yeah. But one of the patterns. I've noticed is there's usually like a crappy looking church building like like within a couple hundred feet. And then there'll be like a 5,000 foot square foot, 10,000 square foot, Taj Mahal bingo palace with like blinking lights. Like right next to it. That seems to be the pattern. But doesn't the real profit from the games goes in to the non to the church or the nonprofit? And that's sort of what makes this legal. In this case, yes. In this case it is. Now like in South Carolina, that's not the case. Oh.

They can be that I'm 99% sure they can be for profit entities. It's not this same regulatory scheme. Okay. So it has to be non-profit. You as the property owner can't profit from the actual games. So it sounds like the cash flow is relatively fixed. I mean, I bet if we look back at historic financials on this,

it's going to be pretty flat every year. And, you know, there may not be many growth opportunities. So what you're buying here is real estate that has really steady tenants, I guess. It's kind of akin to that. It's like if you were renting out a wedding venue, you know, if you're using it 50% of the time, you know how much money you're making.

If you're at 90% capacity, you know how much money you're making. In this case, your purchase price for the property, so to speak, for the venue is set. And then it's just a utilization play. Well, that's how they're asking us to price this, basically. If you do it like, like as a real estate play, which it says the auditorium is included. right? And so that's what I hope it is. Otherwise, this is the world's most interesting, but terrible deal. If, but so cash flow is 168,000 asking prices 1.1 million. So they're basically selling this thing at like an 11 cap, right, or a 12 cap of cash flow. So like that's pretty good. It's also

case in point, you know, cap rates are higher in rural places because if your tenant disappears, you don't have a lot of other options. Yeah, there's not a lot of room to back. And you don't really have leases here. You just have the fact that the nonprofits will probably continue to show up for a long time to come. And like they mentioned, right, they have a, they have a permit. The facility is licensed for up to 14 games per week. So, you know, is there enough demand to do five more games a week?

We're not really sure. But I don't think that somebody just across the street could decide, like, you know, I want to open a bookstore and you got to get your certificate of occupancy, but you don't have to go through this other regulatory hurdle, which is a plus for this. It'd be like, you know, buying a permitted site that, you know, allows you kind of continued use in that way. Right. Yeah. Well, I mean, in theory, you have a moat because there's like this moat of small markets sometimes where like in a small market like this, nobody can come in and compete with you profitably because there's only enough business to handle one bingo hall.

Yeah. And so, like, you don't have to worry about a second bingo hall setting up because, like, you're, you're just like, anybody would be crazy to compete with you because it's just, it's going to be improbable if they do. So there's a big advantage like these guys have up being, you know, first to market here. And so why sell it? They're, they want to retire. They're old.

but they're not doing anything. It's probably like estate planning, Heather. They're really old. I mean, it's nice cash flow for even a retired people. So yeah, I guess it's not as important, I guess, here that because you're really not buying an active business. It's pretty much just a straight real estate play. So could you use an SBA loan? I don't think so.

I don't. You're the expert, but I can't imagine, right? It's so on the fringe. I don't think so for two reasons. One is it's too passive. It's too much just like a real estate rental kind of business rather than an actual operating business. We went through a lot of eligibility back and forth for even hair salons at one time.

And they finally decided that, you know, hair salons were okay because there was more, there was actually more work involved in self storage, the same thing. But this, I think, doesn't really meet the tests that they're doing very much. One half, you know, part-time person that kind of proves that they're not. So I don't think you can do SBA because of that. And then I think even if that wasn't the issue, probably the gambling element of it would also be an issue. Three years ago, Kelsey and I decided that we wanted to launch a conference. It was in a space that nobody else was talking about yet, Holdco's.

I only attended three live events last year and only one big conference. And that was Holdco Conference. We ran two amazing events in Cleveland, one in 22 and one in 23. And after the event in 2023, we decided that we really really. had to take it up to the next level. We took a little bit of a break. We started looking for how could we turn this conference into something that a decade from now, we can be proud that we launched it. Someone and some team needed to step up, and we're doing that. I'm partnering with Kelsey and John to host Holdco Conference in 2025. We're so excited to partner with Gurley and his team

for Holdco Conf 2025. If you're somebody who runs a Holdcoe wants to run a Holdco in the future, isn't our buddy named Matt Paulson who hates Holdco's because he has problems, and you want to learn how to manage multiple businesses at once, want to learn how to incubate companies. That's my joy. I love doing it. I'm excited to talk about it. And you want to connect with other people that are building portfolios of companies as a hold co practitioner, then this is for you. The big news is it gets to be a ski conference plus whole co-conf. So this conference is for folks that are building a holdco as their main strategy. So you're going to be incubating businesses. You're going to be buying businesses and you're going to be growing through holdcos. You should come to Utah next spring.

We're not doing this like other conferences because frankly, I hate those other conferences. This is much more of a sense of camaraderie and very little of the let's get drunk and have a cocktail party and pretend its progress type conferences that a lot of things are. So space is limited. Get your tickets now and we'd love to see you. It's going to be very small, very intimate, and filled with great people. Check out holcoconference.com for more deeds.

It's interesting, like from a real estate, like highest and best use standpoint, they're getting like over $23 a square foot in like the equivalent. of like of rent, which for a 12,000 square foot building in rural Western Michigan has got to be like top desicile. You know, this isn't medical office space. This isn't cold storage. It's just a building with it a lot of people can fit in. I mean, you could just get a real estate loan for this, right? I think so. Yeah. It's got it's an auditorium. They know they can get it appraised. The big question is Canada appraised for $1.1 million or more. And that may be the limiting factor with this. Yes. Why this is still on the market. Right.

what are the comps they don't have any it's interesting in south carolina you can't serve i think this is true in south carolina north carolina you can't serve alcohol at places like this they mention concessions but i think there's um video poker like had a big heyday in south carolina and then got shut down and now there's these things called um sweepstakes which is kind of like it adds like a, I think a minimal, almost imperceptible level of skill to the video poker. And they're kind of in this regulatory gray area where they haven't been shut down, but they get shut down on a case-by-case basis. And I know somebody who owns a bunch of sweepstakes places.

And they're very nondescript, like kind of like you said, like I don't even think they say sweepstakes. Like they don't say like this bingo. But they can't actually make money selling food and drink in them. But they want people to stay. because it's obviously a profit center for people to sit there and keep like, you know, tapping the button on the machine. And so they give away like little cans of like Coke and like bags of chips.

But they can't, they're prohibited from selling any food. And they definitely can't serve up. Yeah, right. Yeah. They can't even sell soda. No, no. So it's like, they're like, hey, look, we'll give you this stuff so that you, you know, aren't leaving to go get some food and then, you know, something comes up and you can't come back.

So the complexity from a regulatory and compliance is really interesting. You would want to go to school on it, but it's not one of those things that is very clean cut. It's not like, hey, I want to be a lawyer. What do I do? Okay, you go to law school. You sit for the bar. You pass the bar. You're a lawyer.

Go get a job at a law firm. This is kind of like the guy who might explain it to you probably doesn't want to explain it to you because there's some ambiguity of, you know, the legality of what he's doing. So there is a similar parallel. to this that has been the explosion of poker rooms in the state of Texas. Have you guys read about these things? Yeah. Well, let me mansplain it to you, Heather, since we're. Please.

Since it's Friday. Well, you are actually, so part of making a great podcast is, and Bill and I talk about this, whatever somebody says, have you guys heard about this, the answer is always no, because that means somebody has a prepared bit they want to do. So a plus for you, Heather, Mills, F minus, do better next. I got it. Duly noted. Okay, so basically, you know, casino gambling is illegal here in the state of Texas except for a few exceptions, right? We have, you know, there's like an Indian casino down an Eagle Pass and stuff like that, but it's not, it's not much, right?

So it's created this scenario where you either have to drive or fly and like besides California, the number one like provider of tourists to Las Vegas is Texas, like by far. And so because we have no casino gambling, there's a bunch of other stuff going on, Bingo. And one of the most recent explosions has been this idea of poker room. So it's like a casino poker room. But instead of what they do to get around it, around the casino regulations, is they don't take a rake out of each pot. What they actually do is they treat it like a private card club where people come in and they pay per hour to sit in the seat and play cards with other members of the card club, which is totally legal. Like you can totally do that in the same second. So there's been this explosion and like within 10 miles of where I'm sitting, there's like three or four like 20,000 square foot massive like poker rooms. Wow.

And it's fascinating to watch. But it's totally because they've figured out how to circumvent kind of the casino and gambling loss we have here. That's nuts. For every law, there's a way around it feels like. Amen to that. Yeah. And so like when you underwrite something like that, you know, you kind of almost have to plan for. the regulatory risk of, you know, a new state senator comes in and this could, this could get defined more clearly and could either, you know, make it go away just by law or could make it

more allowed. And then all of a sudden, like, now your competition is through the roof, even more so. Yeah. Yeah. It's the funny thing about this listing is it's like they know there's a high risk in this thing and they're trying to price it like a well-priced real estate deal. but like I don't think they're pricing in enough risk for this to be a good deal. Like yeah, this thing's been around for 20 years, but there's regulatory risk coming up. And, you know, if these, this, you know, if you lose these tenants or the nonprofits decide to go someplace else, like an 11 cap doesn't sound that exciting to me. When plan B is, oh, we're going to give it back to the bank.

And does this eventually become unpopular when the baby boomers die? hate to say, but when they die. I mean, are the Gen X is next? Are we going to be playing bingo? I don't think so. I don't want to go to bingo. I got to go talk to people. Michael, your homework in between now and next Tuesday when we record.

Maybe we'll give you until next Friday. You need to go into one of these bingo places. One of my like recurring bike rides, rides past one all the time. Should go in in your spandex. I mean, I'll do whatever you want. Anything for good radio for the. podcast. I will say this broker, they know, they know what they have. They say this is mostly a landlord opportunity and ownership mainly involves the leasing of the auditorium to nonprofits.

If you own real estate in West Michigan, this is for you. That's, that's the moral of the story for this listing. So I think to answer your question, Heather, I think there is a big headwind for this business where 7,000 baby boomers are dying per day. That's the number in the United States. Like there's a lot of baby boomers and they're, you know, they're getting in their 70s and 80s. But the, I think the tailwind that's happening is Western Michigan is like getting super discovered as a retiree place. Like, like we went last summer to stay with our friend who's a baby boomer and a delightful human being up in Charlevoie. And he's like, yeah, here's all these people from San Antonio that are buying houses up here. Like it is becoming the place to be in the summer. And

frankly, like, it was like Maui weather the whole time, but better. Like that, that's how nice it was. I was like, this is really nice. But our baby, I mean, are our baby boomers moving there? Or is it they're trying to get the next? I don't know. I just think that 10 years from now, there's probably less people playing bingo than there are today.

I would say, A, I agree with that. I would say, B, I'm very bullish on Western Michigan. And one of the things we did, I don't know if you guys ever seen this, but people buy these like million dollar cigar boats like cigarette boats that are like 800 horsepower and then they go do these events where they like go go at 400 miles an hour all around the great lakes are you familiar with this no but it sounds amazing remember what you told me no and that's really the truth it's crazy yes thank you you think you guys are doing a great job today a plus for both of you good job no it's crazy like these and it's it's all dudes no no women no women no women

want to buy a million dollar like you know Miami vice boat and run it on the on the great lakes and it's just insane so they'll go do these like poker runs where you go like to have lunch and drink beer and then you get a card at each stop and like they sell out but there's like millions of dollars of boats passing you just like a parade through this whole thing and uh yeah it's like it's i'm long i'm long western michigan because of that kind of stuff like that's not going anywhere. Where else can you go and do that besides Fort Lauderdale, Miami? Pretty insane. Okay. Well, what do we think about this one? Thumbs down. I want to find, I want to find one for sale near me. Not to not necessarily to buy, but just to actually be able to do like more due

diligence. In a few years, you're going to be the headline speaker of Holdco conference because you're going to be owning a bingo place, a roofing place, a business brokerage, and a cheese factory. And glasses. All vice businesses, you know, in their own way. All right. So Mills is going to buy a bingo parlor, but not this one. Heather, where are you at on it?

I'm thumbs down. I don't like it. My customers are dying. On that note. On that note, I think for the right prices is a good deal, but I would be wary at an 11 cap. I would do it. As a concept.

as a concept it's really cool this particular deal is on the like i think these transact completely off the radar like it's not public they don't go to market this one is on the market for a reason and and they've acknowledged it but it tells you something like when you see a business for sale and you're like never seen that or heard that before and i've looked at a lot of these there's usually there's usually a story behind that there's something to the algorithm of only try to buy businesses that never show up on biz by sell like you've never see that type on biz by sell like go buy that business love it there go i'm dropping i'm dropping i'm dropping science all right guys uh great episode do we have a call to action today mills are we supposed to tell people to do anything go to your local bingo

oh no i'm just kidding um if you enjoyed this podcast send it to a friend who loves bingo and go to acqueu anon dot com to find more deals in whatever uh whatever niche you like and political conspiracy Yeah. Yo, Michael has this, this moment. I think we've been doing this going on four years. Michael has a moment once a year where he's like, we got to change the name. We got to change the name. Are you having that moment right now?

No, no, I think it's great. Don't change it. It's like we're like the caller daddy of small business. The name makes no sense, but it totally works. On that note, thanks everybody. sticking around. We'll see you next week.