Eldorado Resorts last week announced that it will sell its Eldorado Resort and Casino in Shreveport, Louisiana to privately-held Maverick Gaming for $230 million. The cash sale will remove a regulatory block to Eldorado’s planned $17.3 billion merger with Caesars Entertainment.
Subject to regulatory approvals, the transaction is expected to close this year, possibly in the first quarter.
Although the focus is on the huge Caesars/Eldorado merger, Las Vegas-based Maverick Gaming continues to build a burgeoning empire with the purchase. When added onto the three casinos it recently acquired in Colorado, Maverick will have 27 properties. The company has casinos in three states, including Nevada, Colorado and Washington. With this purchase, it will enter the Louisiana market in a big way, with a 1,500-slot casino and 400-room hotel.
The sale has been an open secret for several months, following Eldorado CEO Tom Reeg’s comment that his company would need to sell a property in northern Louisiana to avoid being a target of a federal antitrust action. The merger will give the company the Horseshoe Bossier City, which is 2.5 miles from Shreveport.
Reeg released a statement that said, “The agreement to divest the Eldorado Shreveport is consistent with our continued focus on reducing debt ahead of the expected closing for the Caesars transaction in the first half of 2020.”
Last month, Eldorado sold two casinos in Missouri and one in West Virginia to Century Casinos and VICI Properties for a total of $385 million. It is in the midst of selling casinos in Mississippi and Missouri to Twin River Worldwide Holdings for $230 million.
Once the flurry of transactions is complete, Eldorado will control five casinos in the Pelican State.
Investors were expecting the announcement, and some analysts, such as David Katz of Jefferies Gaming, think more casino properties will change hands before and after the merger closes. At that point, the merger will require approvals by regulatory agencies in the 18 states where the two companies operate casinos, as well as a nod from the Federal Trade Commission.
Katz told investors last week, “The continued evolution of the combined company should include further property sales in other markets, the largest of which should occur post-closing.” He added, “Nonetheless, we believe there remains considerable value to be captured from the combined entity.”
Comments made by Reeg have led to speculation that one of three casinos owned by Eldorado and Caesars in Lake Tahoe, Nevada—possibly the Montbleu Lake Tahoe —will also be sold. He said Eldorado might also sell one of its New Jersey properties such as the Tropicana Atlantic City or one of the three Caesars casinos there.
Deutsche Bank Research analyst Carlo Santarelli says that’s probably unnecessary, due to the competitive nature of the New Jersey market.
Remarking on the purchase that gives Maverick a foothold in a fourth state, CEO Eric Persson said his company would be able to tap the lucrative Dallas-Fort Worth market. That market is doubly enticing because of the Lone Star State’s hostility to most forms of gaming, forcing Texans who like to gamble to leave the state. Fortunately for them, Shreveport is a three-hour drive.
“Maverick continues to bet on diversified economies as we expand our gaming portfolio,” Persson said. “The population in the Dallas market exceeds 7.5 million people, and Dallas encompasses the third-largest concentration of Fortune 500 companies in the United States.” He added, “Maverick’s focus to date has been on the growing, vibrant and dynamic economies of Salt Lake City, Seattle, and Denver.”
The company is making the purchase using cash on hand and financing from two privately held investment firms, HG Vora Capital Management and Angelo Gordon.
Maverick’s executive team, which includes CEO Persson, the former senior vice president of slots at Las Vegas Sands and Justin Beltran, former vice president of slots at the Bellagio and Marina Bay Sands, is aggressively acquiring properties.
Maverick was formed in 2017 and almost immediately began buying up small to medium-size casinos. In an interview with GGB News in October, Persson said, “We think of our company as having an enterprise value of around $1 billion today, and are working towards becoming a $5 billion enterprise value over next five years.”
SunTrust Bank gaming analyst Barry Jonas told CDC Gaming Reports, “We would not be surprised to see Maverick acquire additional properties as larger players look to divest smaller non-core properties and/or FTC mandated sales.”
