When the deal for Century Casinos to buy three small properties from Eldorado Resorts was announced, it immediately led to speculation that Eldorado is prepping itself to buy Caesars Entertainment.
And that might be the case. Certainly, the $385 million Eldorado will receive could put it in a better position to structure a deal for Caesars that could keep its debt-to-EBITDA ratios around 5.5 times.
Eldorado will receive what amounts to 7.5 times EBITDA for the casinos that combined for $51.3 million in 12-month trailing EBITDA, a price somewhat below other REIT-facilitated acquisitions, leading to speculation that Eldorado is a motivated seller. Further, that two of the properties, Lady Luck Caruthersville and Isle Cape Girardeau, are in Missouri, where regulators might expect Eldorado to divest properties if it were to buy Caesars, fed that speculation, too.
Again, the divestitures will certainly help if Eldorado decided to buy Caesars.
However, it should also be noted that Eldorado has said for some time that the company has reached a size where small operations no longer fit into its strategic vision, so it is possible that the sales would have happened anyway, and just happened by good fortune which may aid in any Caesars acquisition.
Perhaps just as interesting is that, at least in this instance, a gaming REIT is stepping into the world of small casino properties to facilitate a sale.
Initially, the three gaming REITs mostly did deals with the companies from which they were spun off—VICI Properties from Caesars, Gaming and Leisure Properties from Penn National and MGM Growth Properties from MGM Resorts.
Even some deals with other companies were still related to sales involving their former parents, such as when Gaming and Leisure Properties helped Boyd acquire two former Pinnacle Entertainment properties that Penn could not keep in its much larger purchase of Pinnacle Entertainment.
So, the VICI-facilitated sale did not involve Caesars, though if VICI helps Eldorado with a purchase of Caesars, this deal might get an assist in the box score.
Trends To Watch: Historical Horse Racing And Tribes Going Commercial
Slot machines with game outcomes determined by drawing results from previously won horse races—historical horse racing machines, or instant racing, as they’re called—continues to creep across the country.
Virginia, which had no gambling of any sort a few years ago, continues to become a gaming state with historical horse racing making its debt.
In May, operations at Colonial Downs and Vinton combined for $4.766 million in revenues, a small number in the great scheme, but $4.766 million in slot-like gaming revenues that wasn’t there last year.
The general opinion is that historical horseracing is just a place holder for Class III slot machines. That seems reasonable, though the success of Churchill Downs’ Derby City operation in Louisville in taking a bite out of slot revenues at nearby Caesars Southern Indiana suggests there might be a broader future for the games.
Meanwhile, tribal gaming operators continue to expand into commercial casinos.
Mohegan has long run a commercial casino in Pennsylvania at Mohegan Sun at Pocono Downs and owns a chunk of Resorts Atlantic City, which it manages.
The Seminole Tribe of Florida’s Hard Rock International moved into Atlantic City last year.
And the Poarch Creek Tribe of Alabama made headlines in buying Sands Bethlehem in Pennsylvania from Las Vegas Sands.
Now, the Pueblo of Laguna in New Mexico is branching out, buying Ellis Park in Kentucky from Saratoga Gaming for $11 million and planning to add 900 historical racing machines to the track’s current 300.
Historical horse racing and tribal gaming expanding into the commercial world, are two trends to watch.
