Economy forced Caesars to change plans
November has started with two household names in US gaming signing off on major strategic acquisitions, while a third has heeded rising interest rates and tighter purse strings and stepped back from its intention to sell one of its eight Las Vegas Strip properties.
The latter, Caesars Entertainment, announced Tuesday that it was shelving its Strip property sale plans. On the same day, Boyd Gaming wrapped up its $170m purchase of online gaming technology firm Pala Interactive. Gaming reporter Howard Stutz sharing the news via Twitter:
Tuesday’s biggest deal, however, emerged from the Louisville, Kentucky headquarters of Churchill Downs Incorporated (CDI), which has completed its previously announced acquisition of Peninsula Pacific Entertainment (P2E) for $2.75bn.
CDI’s completed purchase followed receipt of customary licensing approvals from Virginia, New York, and Iowa, and makes it the new owner and operator of racetracks and casinos in New York and Virginia, including Hard Rock Hotel & Casino in Sioux City, Iowa. CDI’s strategy behind its P2E deal is to expand its geographic US footprint.
An opportunity to create a viable regional online casino business, meanwhile, is the aim of Boyd’s Pala gambit.
Upstate and downstate focus
With a limited pool of bargain-minded buyers unable to offer what Caesars was asking — approximately $2.5bn — for a Strip property speculated to be Flamingo Las Vegas or Planet Hollywood, the Las Vegas-headquartered casino and hotel giant won’t waste any more energy pursuing a sale.
the challenging market made it “an easy decision” not to sell
Caesars CEO Tom Reeg went as far as apologizing to investors over the Las Vegas Strip u-turn during a third quarter earnings call, stating that the challenging market made it “an easy decision” not to sell. The discretionary process of the potential sale created “an unnecessary overhang in the stock,” Reeg said, adding it was a “self-inflicted error” and one that he claimed responsibility for.
In the earnings call, Caesars’ chief financial officer Bret Yunker countered his firm’s lack of traction in the Las Vegas property market by talking up plans around its surprise bid for a downstate casino license in New York.
For the upstate New York market, however, CDI is now a player. The acquisition of “substantially all” of P2E’s assets gives CDI the Del Lago Resort & Casino in Waterloo, complete with a sportsbook, around 1,700 slot machines, 80 table games, and a 205-room hotel.
CDI expects the P2E transaction, which it first announced in February, to close by the end of 2022. According to an official release, the buyout also includes Colonial Downs Racetrack in New Kent, Virginia, and six statewide historical racing facilities known as Rosie’s Gaming Emporiums. CDI will also gain the rights to both develop a Rosie’s Gaming Emporium in Emporia and, in partnership with Urban One, the $565m ONE Casino + Resort destination casino in Richmond, Virginia.
For Boyd, the acquisition of Pala brings it a new player account management system, online poker and casino, plus social casino and poker platforms.
give Boyd “full control” over development, technology, and player experience
President and CEO of Boyd Gaming Keith Smith said the Pala buyout was part of the Nevada-based gaming and hospitality company’s iGaming strategy and that the purchase would give Boyd “full control” over development, technology, and player experience.
Smith added that the integration of online casinos with Boyd’s existing retail operations will drive growth of both verticals and enable his brand to “further leverage and monetize our expansive customer database and the amenities of our nationwide portfolio of properties.”