After an active acquisition phase, Eldorado Resorts has taken a different approach by engaging in a selling process. Speculation arises as this strategic move may potentially contribute to a future partnership with Caesars Entertainment.
Century Casinos and VICI Properties, a real estate investment trust, acquired Mountaineer Casino in West Virginia along with two other properties from Eldorado.
The deal was commented on by Tom Reeg, the CEO of Eldorado.
“We are aligning our efforts to enhance performance within our regional gaming platform by divesting Mountaineer Casino, Isle Casino Cape Girardeau, and Lady Luck Casino Caruthersville.”
The remaining two properties are situated in Missouri and function as riverboat casinos.
- Isle Casino Cape Girardeau
- Lady Luck Casino Caruthersville
Speculation about an Eldorado and Caesars deal grows
The possibility of an Eldorado and Caesars Entertainment deal has been a topic of discussion for several months. According to Deutsche Bank Gaming Analyst Carlo Santarelli, the presence of Missouri was considered a potential obstacle to finalizing the deal.
By selling the properties, the issue can be eliminated while also generating extra capital.
According to Stifel Gaming Analyst Steven Wieczynski, he informed investors that…
Despite lacking direct insight, our suspicion is that investors will engage in speculation about whether or not this could be Eldorado’s initial move towards making another impactful acquisition in the industry.
What does the sale mean for Mountaineer?
According to Peter Hoetzinger, the Co-Chief Executive Officer of Century Casinos, the Mountaineer property, along with the other two properties, aligns perfectly with their goals and objectives.
“We are confident that these assets align perfectly with our portfolio and will enhance Century Casinos’ proficiency in managing small to midsized casinos. We are delighted to collaborate with VICI Properties to strategize this transaction in a way that we anticipate will have an immediate positive impact on our operational performance.”
Mountaineer Casino is likely to continue with its normal business operations.
Mountaineer is reaping the rewards of being one of the three operating sportsbooks in the Mountain State. It currently holds a strong position as the second highest earner in terms of sports betting revenue, a title it maintained even after the closure of two other WV sportsbooks.
Recently, the sportsbook operator William Hill was granted approval to commence online sports betting in WV.
The return of online betting is eagerly anticipated by both bettors and books, but unfortunately, the progress has been agonizingly slow.
The West Virginia Lottery is taking extra precautions to ensure that its operations fully comply with the legal obligations set forth by the Wire Act.
In addition, Mountaineer has set its sights on 2021 as the desired timeframe for the introduction of online casinos in WV.
Details of the Eldorado deal
The total value of the agreement amounts to $385 million, with VICI Properties acquiring the land and real estate linked to the contract for $278 million. Additionally, Century Casinos will pay $107 million to obtain the operating assets for the three properties.
In addition, Century will make an annual payment of $25 million to VICI for all three properties during the initial 15-year period. The agreement also grants Century the opportunity to extend the contract every five years for a total of 20 years.
Century’s portfolio will expand beyond Colorado in the US with the addition of these properties. Additionally, the company manages properties in Canada, the UK, and even on select luxury cruise ships.
On the flip side, VICI possesses a total of 22 casinos throughout the United States, encompassing numerous sought-after gaming locations.
- Nevada
- New Jersey
- Pennsylvania
Reeg discussed the enhancement of Eldorado’s financial performance.
After these transactions are finalized, Eldorado will still enjoy the advantages of our wide-ranging collection of regional gaming assets. We firmly believe that these assets hold potential for more margin growth and boosted cash flow in the future.
The deal is expected to be finalized in early 2020, subject to regulatory approval.