In further evidence of saturation in the gaming industry (if more were needed), Full House Resorts wants to be released from a commitment to buy Fitzgerald’s Casino, in Tunica. Seems that Full House can’t find banks who’ll underwrite the deal. Caesars Entertainment‘s recent decision to close Harrah’s Tunica cannot have helped Full House salt away the sale. Like everyone in the industry, Full House cited the “bad weather” excuse to explain away a 60% drop in cash flow during 1Q14. If Fitzgerald’s lets Full House CEO Andre Hilliou off the hook, the latter can concentrate on finishing an $18 million hotel for its Tunica-area property, Silver Slipper Casino. Considering that the Fitzgerald’s purchase was made in March and terminated in May, one wonders about how thoroughly Full House thought this through.
Fortunately for the industry, Full House’s face-plant was overshadowed by a big purchase in Pennsylvania. Removing a major competitor from the game board, Gaming & Leisure Properties Inc. announced it will buy Pennsylvania’s other major racino, Meadows Racetrack & Racino from Cannery Casino Resorts for $465 million. Since GLPI and Penn 
National Gaming are still connected as REIT and casino manager at large, this structure enables GLPI to circumvent Pennsylvania’s one-and-one-third casino-ownership rules. “GLPI said it will be looking for a third-party company to operate the casino and buy the licenses and operating assets.” And who do you think that will be? For the moment, an entity called Mountainview Racing holds the gaming license, which will be sold along with the operating assets while GLPI retains the physical plant.
GLPI wanted Meadows badly, paying a premium 9X EBITDA to close the deal. That speaks well to Cannery’s stewardship of the property. Whoever gets the gaming license inherits 3,317 slot machines, 61 table games, and 14 poker tables. GLPI’s share of the assets include 11 casual and fine dining restaurants, bars and lounges, a 24-lane bowling alley, and a 5/8-mile racetrack with a 500-seat grandstand. For Deutsche Bank‘s Carlo Santarelli, the transaction was a “re-cementing of the belief that willing sellers exist and deals can be consummated,” he wrote.
“We believe the most likely potential operator would be [Penn National Gaming],” — surprise, surprise — “though regulations will limit the amount of ownership [Penn] could take in the licensed entity (capped at 1/3rd). Thus, it is entirely possible the search widens to alleviate the state restrictions and allow for an easier transaction.” Think of it: GLPI, Penn and possibly a third operator. This could get very cozy.
Dapper Dan Gilbert‘s decision to hedge his bets with casinos in both Ohio and Detroit has come back to bite him. All of Motown’s casinos saw revenue decline last month: 4% each at MotorCity and MGM Grand Detroit. However, by far the worst of it was reserved for Gilbert’s Greektown Casino, down 14% and finishing with distant third in revenues: $27 million … $20 million less than MGM. The Quicken Loans founder seems to have found himself in a bog of quicksand.
The Las Vegas Convention & Visitors Authority has struck off eight new PSAs for McCarran International Airport. Thank God. The previous ones were ‘only’ 10 years old but felt like they’d been made in the Paleozoic Era. I don’t care what anyone else says, this was money well spent.
