Additional scrutiny from the Federal Trade Commission sunk the plans of regional casino operator Eldorado Resort to sell a Mississippi casino.
Instead, Reno-based Eldorado will keep the Lady Luck Casino Vicksburg, collect $5 million, and part ways with the management contract for the Lady Luck Nemacolin in Pennsylvania.
Eldorado, which has been on a buying and selling spree in 2018, said Monday it would still sell the Presque Isle Downs & Casino in Erie, Pa., to regional gaming rival Churchill Downs for $178.9 million. The sale was announced in February along with an agreement to Lady Luck Vicksburg, also to Churchill Downs, for $50.6 million.
However, the FTC in May filed a “second request” for additional information under the Hart-Scott-Rodino Antitrust Act. In a Securities and Exchange Commission filing Monday, Eldorado said “the time and expense needed to reply” to the second request led to both companies agreeing to end the transaction.
Churchill Downs will pay Eldorado a $5 million break-up fee and will pay $100,000 to assume the management contract of the Lady Luck Nemacolin. The casino is in southwestern Pennsylvania and located about a mile from the entrance to Nemacolin Woodlands Resort. The small casino, which has 600 slot machines and 29 table games, typically ranks 12th out of Pennsylvania’s 12 casinos in terms of monthly gaming revenue.
Eldorado and Churchill Downs expect both transactions to be completed by the end of the year.
Meanwhile, Eldorado CEO Gary Carano said the company is more focused on several larger pending transactions. In April, the company announced it was partnering with real estate investment trust Gaming and Leisure Partners to acquire seven casinos operate by Tropicana Entertainment for a total value of $1.85 billion. The transaction included the Tropicana Resort in Atlantic City and two Nevada casinos – MontBleu in Lake Tahoe and the Tropicana Laughlin.
On the same day, Eldorado agreed to purchase Grand Victoria Casino in Illinois for $327.5 million.
Carano called both transactions “highly accretive, further increase the scale of our regional gaming platform and significantly accelerate the company’s free cash flow growth.”
The transactions will give Eldorado nearly 30 casinos in 12 states, making the company the second largest regional casino operator in the U.S. behind Penn National Gaming.
Eldorado also has a deal with the Cordish Companies to redevelop 223 acres surrounding the Isle Casino Racing in Pompano Park, Fla., with a mixed-use non-gaming development.
Carano said the company’s transactions “reflect our commitment to expand our platform into growth markets that have the potential for high returns while leveraging our asset base to build new value for our shareholders.”
Shares of Eldorado Resorts closed at $42.60 on the Nasdaq National Market Monday, up $1.40 or an increase of 3.4 percent.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
