Jack Ohio Casino Sale
CLEVELAND, Ohio – Vici Properties Inc. Has purchased real estate assets of Jack Entertainment LLC for $843 million in cash. Vici will then lease the property to Jack Entertainment for $65. Hollywood Casino Columbus led the way with revenue of $226.4 million followed by Jack Cleveland Casino at $204.8 million. Jack Cincinnati was a $450 million development that opened in March 2013.
A week after news broke that Cavs owner Dan Gilbert may be looking to sell off his casinos, the initial dust has settled on the reports. Gilbert's Jack Entertainment refusing to confirm or deny the Bloomberg report.
'It is JACK Entertainment's long-standing policy to not comment on rumors or speculation,' according to the JACK Entertainment statement.
While the article mentioned former Gilbert partner Caesars as a potential bidder for the properties including the Jack Casino in Downtown Cleveland and Jack Thistledown Racino in nearby North Randall, many believe the possible availability may have piqued the interest of others.
'There's going to be a lot of interest from many different parties,' said Roger Gros, the casino analyst and publisher of Global Gaming Business.
'There are a couple of companies out there that have been very aggressive, a company called El Dorado which owns Presque Isle Downs over in Pennsylvania, they also own Mountaineer Race Track in West Virginia, so they're familiar with the Ohio market. They would certainly be interested in the Ohio casinos,' Gros said.
'There's a lot of interest in the industry right now, the regional casinos are very successful now so he's really kind of selling at the top of the market. There's been a lot of talk about how long is this going to last, the good economy and once that kind of dips you're going to see the regional casinos die along with it so it is probably the best time for him to sell.'
Gros admits he was somewhat surprised by Gilbert looking to exit the casino world, a move that some have speculated could be tied to an interest on Gilbert's part to own either a pro football or baseball team since those leagues, unlike the NBA, don't allow team owners to own and operate casinos.
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'They were building up a company here that was pretty dynamic, they learned a lot from Caesars,' Gros said of Gilbert's initial partner in his Ohio operations before parting ways with the creation of the Jack Entertainment brand.
While the U.S. Supreme Court's decision this spring opening the door to sports betting added another tool to casino arsenals, Gros doesn't believe in the end it plays all that much of a role in any casino owners decision to buy or sell at this point.
'Frankly it's not a big money maker for the casinos, it attracts people there to go to the bars and restaurants and if you have a hotel you stay in the hotel maybe for the big sports weekend but in terms of the money that is actually derived from sports betting? It's 2 or 3 percent at the most for any casino in terms of their gross gaming revenue and that's pretty insignificant,' Gros said.
CINCINNATI - Jack Entertainment Chairman Dan Gilbert could fetch up to $2.7 billion if he cashed in all his chips on casino investments in Cincinnati, Cleveland, Detroit and elsewhere.
But industry analyst Chad Beynon said Gilbert could also generate “$1.5 billion or so” by continuing to operate casinos and selling off real estate assets tied to gaming.
Beynon, who follows the gaming industry for Macquarie Capital, compiled the estimates at WCPO’s request after a Sept. 5 Bloomberg report that Gilbert is evaluating a potential sale. Bloomberg quoted 'people familiar with his plans' as saying Gilbert hired Deutsche Bank and Credit Suisse to represent the company in a sale process.
Detroit-based Jack Entertainment declined to comment. The Ohio Casino Control Commission said it had no information about a potential sale.
'Should any of Ohio’s casinos be sold in the future, once an agreement in principal has been reached the affected company will appear before the Commission at a public meeting to provide an update,' said spokeswoman Jessica Franks. 'Given the nature of the discussions, however, most of that update will likely take place in an executive session.'
Beynon, who has followed the gambling industry for more than a decade, said Jack Entertainment would be attractive to Las Vegas-oriented gaming companies that view the Midwest as a feeder market.
“Ohio and Michigan, those are attractive markets,” Beynon said. “There is not additional competition in the near term. They’re very stable or growth markets and they don’t really have any destination property to send your best guest.”
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In addition to Jack casinos in Cincinnati and Cleveland, Gilbert owns Thistledown Racino in Cleveland and Greektown Casino-Hotel in Detroit. He’s also a partner at Turfway Park in Florence and Horseshoe Baltimore Maryland Casino. Gilbert is the founder of Quicken Loans and owner of the NBA's Cleveland Cavaliers.
His privately held casino company doesn’t release financial details, but Beynon said the combined enterprise generates about $1 billion in annual revenue. Based on an industry-average profit margin of 25 percent, he said the properties are worth between $2.2 billion and $2.7 billion.
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“Ohio’s had one of the best gaming growth rates in the country over the past couple years,” Beynon said. “It still looks like it’s a growing market, certainly not mature.”
The casino industry is in the middle of an acquisition binge, driven by rising expectations from a Supreme Court ruling that allows states to legalize sports betting and the creation of real estate investment trusts that help casino operators raise money for expansion.
Beynon said Caesar’s Entertainment Corp. is the most likely buyer, as it once managed Gilbert’s Cincinnati and Cleveland casinos and it purchased two Indiana racetrack casinos in July.
“The Jack assets would be bigger, but it fits what Caesars is looking for,” Beynon said. “So I’d say they’re number one” among contenders.
In addition to Caesars, Beynon thinks Las Vegas-based Boyd Gaming Corp. could make a run for Jack Entertainment. So could Scioto Downs owner Eldorado Resorts or Churchill Downs Inc., which owns the home of the Kentucky Derby and 50 percent of Miami Valley Gaming, along with several other racetrack and gaming properties.
Beynon said a sale might impact corporate jobs at Jack Entertainment but probably wouldn’t have a big impact on local jobs in casinos. He said a sale could be good for loyalty-card players because national companies tend to have more travel perks available than regional casino operators.