Commercial Gaming

Caesars Moves Toward Monetizing Brand, Rewards Program in Southern Indiana Sale

Last week, Caesars Entertainment (NASDAQ:CZR) said it’s selling Caesars Southern Indiana to the Eastern Band of Cherokee Indians (EBCI) for $250 million. It’s a move that sets the stage for the operator to derive added financial benefit from its most iconic brand and one of the industry’s largest loyalty programs.

Caesars Southern Indiana. An analyst sees brand benefits in the company’s recent sale of the venue. (Image: YouTube/WHAS.com)

The sale of the venue was widely expected, because Eldorado Resorts – the company that purchased Caesars earlier this year for $17.3 billion – previously pledged to the Indiana Gaming Commission (IGC) that it will divest three venues in the Hoosier State. Still, Union Gaming analyst John DeCree sees value for investors in the deal’s fine print.

Although the sale of Caesars Southern Indiana comes as no surprise, given it was mandated by the Indiana Gaming Commission before year end, the devil is in the details,” said the analyst in a recent note. “As part of the transaction, Caesars announced a long-term agreement with EBCI for the continued use of the Caesars brand and Caesars Rewards loyalty program at the Southern Indiana property.”

DeCree rates Caesars stock a “buy,” with a $100 price target, implying upside of more than 35 percent from where the shares trade at this writing.

For Caesars Stock, More Benefit Than Meets the Eye

The Nevada-based gaming company operates venues under the Caesars, Harrah’s, and Horseshoe brands, among others. But Caesars is, by far, the most well-known, and the one with the most cache, providing the firm opportunities to cash in on that recognition in a cost-effective fashion.

As part of the Indiana deal with ECBI, Caesars will generate annual fee income of more than $6 million by allowing the tribe to retain the Caesars name on that venue. It will permit the buyer to continue offering the Caesars Rewards loyalty program to patrons, according to Decree.

“This marks the first move towards optimizing and monetizing the Caesars Rewards database as previously discussed by management,” said the analyst. “We believe this will be just the first of many licensing and branding agreements that will evolve into a lucrative, high-margin, fee stream for the company.”

When Eldorado completed its takeover of “old Caesars” in July, that transaction created a massive influx of new members to Caesars Rewards. Based on pre-merger figures, there are approximately 65 million participants in the loyalty platform.

There are six tier levels: Gold, Platinum, Diamond, Diamond Plus, Diamond Elite, and Seven Stars.

Other Branding Efforts

The operator is planning to rename Harrah’s New Orleans, which is the only casino in that city, with the Caesars brand.

Earlier this year, the company was able to wring $20 million out of the Bally’s mark, selling that label to Twin River Worldwide Holdings, with the buyer becoming Bally’s in the process.

The next moves for the Caesars brand and the rewards program haven’t been revealed. But given the company’s penchant for selling regional venues to smaller operators with less brand recognition, there should be more opportunities for licensing revenue via either the label or Caesars Rewards.

Todd Shriber

Gaming Financials, Casino Business----Todd Shriber got his start in financial markets as a reporter with Bloomberg News. Later, he became a trader at a Southern California-based long/short hedge fund, where he specialized in trading sector and international ETFs leading up to and during the financial crisis. Currently, he analyzes, researches, and writes on ETFs for a variety of Web-based publications and financial services firms. Shriber has been quoted in Barron's, CNBC.com, and The Wall Street Journal. His work has been published on sites such as Benzinga, ETF Daily News, ETF Trends, MarketWatch, Fox Business, and Nasdaq.com. He joined the Casino.org news writing team in 2019, and lives in Southern California, where he enjoys golf and taking his black lab to the dog park. When in Las Vegas, he likes to wager on college football, the NBA, three-card poker, and roulette, even though he knows better. Email: todd.shriber@casino.org

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  • if Caesars can sell Caesars Southern Indiana for $250 million, why was Bally's AC only sold for $20 million? I know that Bally's AC was in disrepair, but $20 million? Caesars also sold the Bally's brand for $20 million, why is the Bally's brand not worth more?

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Todd Shriber