Caesars Entertainment will get to operate three casinos in Indiana, thanks to a ruling Thursday by that state’s gaming regulatory body.
The Indiana Gaming Commission voted 4-1 to accept a request by the Las Vegas-based company to take Horseshoe Hammond off the market.
Last July, the IGC approved the $17.3 billion acquisition of Caesars by Eldorado Resorts, which then took on the gaming giant’s name. At that time, Eldorado owned Tropicana Evansville. Caesars owned Horseshoe Hammond, Caesars Southern Indiana, Harrah’s Hoosier Park, and Indiana Grand.
However, the commission stipulated its approval with the requirement that the newly merged company sell three of its five casinos by the end of last year. At the time, those five casinos accounted for 61.1 percent of the adjusted gross revenues that the state’s 13 licensed casinos generated.
The new Caesars sold the Tropicana Evansville to Bally’s in October and then reached a deal with the Eastern Band of Cherokee Indians to sell Caesars Southern Indiana in December. Last November, the IGC gave Caesars an extra year to find a buyer for Horseshoe.
The Bally’s deal officially closed earlier this month, and Caesars CEO Tom Reeg told IGC commissioners the Caesars Southern Indiana sale should close in the next three months.
At Thursday’s IGC meeting, Caesars CEO Tom Reeg told commissioners he did a “poor job” in answering questions from them about their concerns over market concentration. Last July, he tried to get them to sign off on Caesars selling just two properties.
However, since that time, there have been some new developments in the Chicago-Northern Indiana market. Some, like the opening of Hard Rock Northern Indiana in nearby Gary, were expected.
Reeg noted that others, such as the Class III gaming compact approval for the Four Winds tribal casino in South Bend, were “not on the table” a year ago. The Pokagon Band of Potawatomi Indians had expressed interest in a Class III license, but an agreement on the compact wasn’t reached until January and approved by lawmakers until April.
In addition, Reeg added there remains significant uncertainty about the gaming market on the Illinois side. Chicago officials just recently released a request for information solicitation on its casino project. And a casino for Chicago’s south suburbs, approved by Illinois lawmakers in 2019, remains in limbo.
Caesars also got support from Hammond Mayor Thomas McDermott Jr., who wrote to the IGC earlier this month and lobbied on Caesars’ behalf. He said forcing the company’s hand to sell the state’s biggest casino put the northwest Indiana community at risk.
“Divestiture of Hammond’s license, I believe, allows for investment by a casino company with less of a track record and less of a name than Horseshoe and Caesars,” the mayor wrote. The new Caesars management “has proven themselves to me and to our city since becoming owners of the city’s most important private industry.”
Based on the IGC’s financial report for May, the adjusted gross revenues for Hammond ($38 million), Indiana Grand ($30.1 million), and Hoosier Park ($21.2 million) totaled $89.3 million. With a statewide total of $239.4 million, which does not count revenues for the Four Winds casino, those three venues held a 37.3 percent share.
That percentage, though, is likely to drop even more because those figures included Hard Rock’s $21 million in revenues, and that casino was only open for 18 days. Eventually, a planned casino for Terre Haute, whose original license holder saw its permit not renewed at Thursday’s meeting, may also cut into that as well, Reeg said.
“We would expect, given all the competitive openings that we expect to hit Northern Indiana, that (market share) would eventually settle in the low thirties, which is frankly much more in line with what you see in other jurisdictions and where Indiana has been in the past,” Reeg told the commissioners.
However, Commissioner Marc Fine brought up a couple of issues about waiving the requirement to sell. He felt a gaming company with a market share in the low 30 percent range was still too concentrated, and he raised concerns that allowing Caesars to have that much market share would lead to “more concentration than we want” in the years ahead.
He said the commissioners made the right move last year.
I would love to see Caesars stay in Hammond. I think it would be awesome,” said Fine, who cast the lone no vote in the decision. “But we didn’t select the properties for divestiture. These were selected by Caesars. So, if they truly want to stay in Hammond, they should stay in Hammond. They have other licenses and other properties that they can consider.”
However, Fine’s colleagues opted to approve the request, citing the concerns from Hammond, as well as the COVID-19 pandemic and the uncertainty regarding the Chicago area gaming market.