As part of the divestment plan it agreed to during its merger with Eldorado, Caesars has agreed to sell its Elizabeth casino to the Eastern Band of Cherokee Indians. With the deal, the Native American tribe has officially stepped into commercial gaming
The Eastern Band of Cherokee Indians (EBCI) based in North Carolina has agreed to purchase Caesars Entertainment’s Southern Indiana casino for a price tag of $250 million. The property in question was formerly known as Horseshoe casino before rebranding to Caesars South Indiana and it is located at Elizabeth town in Harrison County, right across the Ohio River from Louisville Kentucky.
Caesars South Indiana has been operational for over two decades, initially severing patrons as a three-storied riverboat gaming facility before it was moved onshore towards the end of last year. The new location for the gaming house is a massive brick-and-mortar campus worth about $90 million. This Elizabeth, Ind. venue boasts of a huge gambling space covering 100,000 square feet packed with table games, poker rooms, and of course, the much-adored slot machines, plus ample dining and entertainment sections.
The Caesars-EBCI deal has been in the works for a couple of weeks now and the sale was officially announced late last week by both parties ahead of the 31st December deadline of Caesars’ divestment requirement. After Caesars Entertainment Corp's billion-dollar merger with Eldorado Resorts Inc, the Indiana Gaming Commission ordered Caesars to sell off three of its five casino properties in the state to foster a competitive environment for gaming brands in the state.
Alongside this South Indiana casino, Caesars also decided to divest its other properties in Hammond and Evansville. Bally’s (formerly known as Twin River World Wide Holdings) agreed to buy the Tropicana Evansville in October, but the deadline for selling Caesar’s Horseshoe Hammond was allowed a one-year extension by the Indiana Gaming Commission. Based on the details of Caesar’s transaction with the EBCI, the purchase should be completed by Q3 next year and as usual, it will be subjected to various regulatory approvals processes in Indiana.
A Two for One Deal for North Carolina’s EBCI as it Ventures into Commercial Gaming
Upon closing the deal, the North Carolina based EBCI will officially enter into a contract with real-estate owners of the purchased casino, VICI Properties Inc. In case you were wondering, VICI is a real estate investment trust that was spun-off from Caesars Entertainment Corporation, and thus, it is also the official real estate owner of all other casinos operating under Caesar’s umbrella before the merge with Eldorado. Per the arrangement, EBCI will pay $32.5 million to VICI every year.
Another interesting aspect of this transaction is the fact that it is also part of an expansion of the 20 years plus partnership between Caesars and the EBCI. After announcing the sale of its property to the EBCI, Tom Reeg, the CEO of Caesars Entertainment expressed his delight in the deal and even disclosed some of the fine details of partnership expansion in his press briefing as follows;
Quote"Expanding our relationship with the Eastern Band of Cherokee Indians is an exciting event for Caesars Entertainment. Since our partnership began back in 1996, we have admired their growth and the success of their properties. We look forward to increasing our relationship by extending the Caesars brand and Caesars Rewards loyalty program to them at Caesars Southern Indiana."
What this means is that the EBCI has also entered into an ongoing licensing agreement to keep using Caesar’s exemplary gaming brand. Better yet, this move marks a tremendous milestone for the sovereign tribe as this is its first-ever commercial casino purchase.
The tribe already created an LLC vehicle whose purpose will be to purchase and operate its commercial casino acquisitions. It’s worth pointing out that per Indiana state law, the EBCI can only directly cash in on 25% of the annual revenue collected from the commercial casino. But then, thanks to the LLC, the remainder of the revenue can be used for reinvestments and entry into other commercial gaming markets in the USA.
EBCI Principal Chief Richard Sneed also released a statement voicing his delight after outbidding over 20 other competitors in the race to purchase Caesar’s Elizabeth property. Part of his statement read;
Quote"The purchase of Caesars Southern Indiana operating company marks the beginning of an exciting new future for the Eastern Band of Cherokee Indians. We are pleased to build upon our long-standing partnership with Caesars as we look to advance our interests in commercial gaming in the coming years."
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