Eldorado Resorts has announced a deal to sell two of its properties to Churchill Downs Inc, the parent company of the famous Kentucky racetrack.
Churchill Downs will acquire Presque Isle Downs & Casino in Erie, Pennsylvania, and Lady Luck Casino Vicksburg in Mississippi for $178.9 million and $50.6 million, respectively.
Both Eldorado and Churchill Downs have embarked on ambitious expansion campaigns in recent years. Churchill Downs is America’s most profitable racetrack operator, which over the past decade has steadily acquired casinos and racinos in Mississippi, Ohio, and Maine.
Eldorado, meanwhile, became a powerful force in the regional casino market through its $1.7 billion merger with Isle of Capri Casinos last year. The deal more than doubled the size of the Reno-based company, creating a portfolio of 19 properties in 10 states across the US.
Eldorado Resorts CEO Gary Carano said his company was still focused on growing the company’s footprint across the US, despite the sale.
“Our agreements to divest Presque Isle and Lady Luck Vicksburg are consistent with our strategy to maximize returns from our portfolio of regional gaming assets through investments in new properties as well as opportunistic divestitures,” he said. “The sale price represents an attractive multiple of these properties’ trailing twelve months cash flows.
“We remain fully committed to expanding our platform into growth markets that we believe have the potential for high returns as well as deploying capital toward high return investments in our existing properties,” he added.
Route to Sports Betting for Churchill Downs
For Churchill Downs CEO Bill Carstanjen, the two acquisitions represented an “appealing investment” that fitted with the company’s portfolio.
He said that the acquisition of Presque Isle with give Churchill Downs a foothold in Pennsylvania, which will allow it to participate in Pennsylvania’s impending online gambling market.
Should the US Supreme Court strike down the federal ban on sports betting, as expected, it would also offer Churchill Downs an inroad into a potentially lucrative regulated sports betting market.
The Lady Luck Vicksburg, meanwhile, is immediately adjacent to Churchill Downs’ Riverwalk casino and will offer the company “operational efficiencies in a stable region,” Carstanjen said.
The deal follows a failed attempt in November by Eldorado to sell its Isle of Capris Casino Lake Charles in Louisiana to New Mexico tribal operator Laguna Development. Laguna backed out of the deal when it suspected its attempt to obtain a license in Louisiana would not be successful, but it didn’t say why. It forfeited a $20 million deposit to Eldorado.