Caesars Jettisons Another Racino, Harrah’s Louisiana Downs

Article by : Helen Sep 22, 2020

Caesars Entertainment has dropped another racino sale-related announcement. This time, it has agreed to sell its Harrah’s Louisiana Downs to Rubico Acquisition. The latter is going to pay $22 million to Caesars for purchasing the racino. Out of these $22 million, Caesars will receive $16.5 million from the deal, while the rest of the profit ($5.5 million) will go to VICI Properties.

Located in northwestern Louisiana, Harrah’s Louisiana Downs has had its doors opened to customers since 1974. It is a 150,000-square-feet racino that combines 1,300 slot machines on the floor with horse racing tracks. The pre-merger Caesars Entertainment (then known as Harrah’s Entertainment) purchased the property in 2002. In 2017, fifteen years later, it was sold to VICI Properties, its corporate spin-off specializing in gaming, entertainment, and hospitality real estate, and leased back to Caesars.

The sale is still in progress as it has to be approved by the regulatory bodies; there are also “other closing conditions” that need to be taken care of. Caesars Entertainment has stated they expect the deal to be closed at the end of this year or at the beginning of the next one.

Caesars retains control of two more racino properties in the state of Indiana: Indiana Grand and Harrah’s Hoosier Park. As Caesars set a $500 million goal for cutting costs after the merger, Harrah’s Louisiana Downs is probably not the last property that we are going to see being sold in an attempt to reduce operational costs and gain an influx of cash. The company will likely attempt to reduce its racino portfolio, and Indiana-based properties would be a great starting point.

Caesars Entertainment is a new market leader that arose from the aftermath of a merger between Eldorado Resorts and Caesars Entertainment Corporation. Eldorado Resorts proposed the merger in March 2019, and it took a bit more than a year for the companies to have the acquisition approved by the state regulators in 10 states and the Federal Trade Commission. Eldorado Resorts agreed to pay $17.3 billion to take over Caesars.

Obtaining the FTC and state regulators’ approval required selling several real estate properties to ensure no competition laws are violated. This is why earlier this year, pre-merger Eldorado Resorts announced it was selling the Eldorado Shreveport Resort (Louisiana) and Casino and the Mont Bleu Casino Resort & Spa (Nevada). Twin River Worldwide purchased these two properties for a total of $155m, with the deal closed in July. Eldorado also agreed to get rid of three properties in Missouri after the state’s Gaming Commission requested it.

Furthermore, the Indiana Gaming Commission required the merged company to jettison three properties they own in this state as a large number of casinos it operates poses a threat for competition in the market. Caesars is free to choose which casinos it would prefer to sell as the Commission’s decision did not specify which properties should be sold.

The newly merged business is a giant in its industry with more than 55 casino properties worldwide, including owned or leased properties in 16 out of 50 U.S. states. It is also well-known for its 8 casino hotel establishments located on the Las Vegas Strip. Experts confirm the company is now a decent rival for such gambling industry leaders as Wynn Resorts Ltd and MGM Resorts International.

Helen

Chief Editor

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