MGM Resorts International selling Grand Victoria Casino to Eldorado Resorts – Consumer News

on Apr17

16 April 2018 | 6:36 pm

The Grand Victoria Casino in Elgin, co-developed by a Pritzker family affiliate, is getting a new owner—one that promises to revive what once was the state’s busiest riverboat.

Eldorado Resorts said today it would pay $327.5 million in cash for the 24-year-old property on the banks of the Fox River. The Reno., Nev., company also is acquiring Carl Icahn’s casino operator Tropicana International amid a wave of consolidation sweeping the industry.

The Grand Victoria’s sellers are units of MGM Resorts International and of the Pritzker affiliate, now known as HGMI Gaming Management, which has managed the joint venture and owns half of it.

Asked to comment on the relevance of the pending sale in a state-regulated industry to Democratic nominee J.B. Pritzker’s gubernatorial campaign, spokeswoman Galia Slayen said in a statement, “J.B. has had zero involvement in the management of this company, and trusts benefiting him own less than 2 percent of the business and therefore less than 1 percent of the Grand Victoria.”

She added, “J.B. will divest from any asset he personally owns that does business with the state of Illinois or would receive any kind of government benefit from the state.”

Eldorado said it would apply “operating synergies and cost savings” to the Elgin casino, which like the state’s other nine riverboats has suffered from the rise of video poker at bars and other establishments.

In a statement, Eldorado CEO Gary Carano noted the property “includes excess contiguous acreage for potential future development.” Grand Victoria representatives have talked about adding a concert pavilion and weighing sports gambling, according to the Elgin Courier-News.

Eldorado Resorts did not return a call.

Grand Victoria attracted $168.7 million in bets last year, compared with $256.9 million in 2011 and $437 million wagered in 2007, according to the Illinois Gaming Board. Grand Victoria’s March wagers of $15.8 million were third-most among boats but far behind the $40.4 million of Rivers Casino in Des Plaines.

Rivers was the last riverboat to open in the state, in 2011, and the closest to Chicago’s rich vein of prospective customers. The Empress Casino in Joliet—now Hollywood Casino Joliet—was sold in 2005 as part of Penn National Gaming’s acquisition of Argosy Gaming.

Grand Victoria started as a $100 million venture between Hyatt Development and Nevada Landing Partnership. The casino has 1,088 slot machines, 30 table games and a 12-table poker room, it says.

The deal is expected to close late this year. Eldorado said it aims within 18 months of buying the Grand Victoria to slice by a third—to about 6 times from approximately 9—the cost of the purchase when compared with adjusted earnings (before interest, taxes, depreciation and amortization).

With the Elgin and Tropicana deals, Eldorado will add eight casinos, including two in Nevada, to the 20 it has after buying the Isle of Capri Casinos in May for $1.1 billion. Revenue last year was $1.4 billion, up sharply from $892 million in 2016.

For Eldorado, “the combined transactions increase the company’s geographic diversification, add to earnings and free cash flow and do so at a multiple—after cost savings—well below the average” for regional casino deals, said Brian Egger, an analyst at Bloomberg Intelligence.

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