Eldorado Resorts has been on a buying spree lately. This time, however, it is doing the selling. Some speculate that its latest move could be the next step in securing a deal with Caesars Entertainment.
Eldorado sold its West Virginia casino, Mountaineer Casino, and two other properties, to Century Casinos and VICI Properties, a real estate investment trust.
Tom Reeg, chief executive officer of Eldorado, commented on the deal:
“The agreements to divest Mountaineer Casino, Isle Casino Cape Girardeau and Lady Luck Casino Caruthersville are consistent with our continued focus on optimizing the results from our regional gaming platform.”
The other two properties are in Missouri and are riverboat casinos:
- Isle Casino Cape Girardeau
- Lady Luck Casino Caruthersville
Speculation about an Eldorado and Caesars deal grows
For months, there have been talks about the possibility of an Eldorado and Caesars Entertainment deal. Deutsche Bank Gaming Analyst Carlo Santarelli said that Missouri was “deemed a potential competitive issue” to closing that deal.
Selling the properties eliminates the problem and helps provide additional capital.
Stifel Gaming Analyst Steven Wieczynski noted to investors:
“Although we have no direct insight into the matter, we suspect investors will speculate as to whether or not this could be Eldorado’s first step toward making another transformational acquisition in the space.”
What does the sale mean for Mountaineer?
Century Casinos Co-Chief Executive Officer Peter Hoetzinger commented on why Mountaineer and the other two properties are a great fit.
“We believe these assets are a great fit for our portfolio and will complement Century Casinos’ expertise in operating small to midsized casinos. We are pleased to partner with VICI Properties to structure this transaction in a manner that we expect will be immediately accretive to our operating results.”
Most likely, it is business as usual for Mountaineer Casino.
Mountaineer is benefitting from being one of three active sportsbooks in the Mountain State. It is sitting solidly in the second position in regards to sports betting revenue — a distinction held before the closure of two WV sportsbooks.
In fact, it’s sportsbook operator William Hill was recently approved to launch online sports betting in WV.
Of course, everyone is anxious, bettors and books alike, for the return of online betting after a bumpy road following the initial launch. Unfortunately, the process is moving at a snail’s pace.
The West Virginia Lottery is proceeding with an abundance of caution to ensure the operations meet the legal requirements of the Wire Act.
Additionally, Mountaineer is looking ahead to 2021, the target date for the launch of online casinos in WV.
Details of the Eldorado deal
The agreement is worth $385 million. VICI Properties will assume the land and real estate associated with the contract for $278 million. And Century Casinos will pay $107 million for the rights to the operating assets for the three properties.
Additionally, Century is to pay VICI an annual payment of $25 million for all three properties for the first 15 years. The contract includes the option to renew every five years for 20 years.
The properties will be the first in Century’s portfolio outside of Colorado in the US. The company also operates properties in Canada, the UK and on some luxury cruise ships.
VICI, on the other hand, owns 22 casinos across the US, including several popular gaming destinations:
- New Jersey
Reeg spoke of strengthening Eldorado’s bottom line:
“Following the completion of these transactions, Eldorado will continue to benefit from our geographically diverse portfolio of regional gaming assets that we believe have potential for further margin growth and increased cash flow.”
Look for the deal to close in early 2020, pending regulatory approval.