Caesars Pays Blood Money
After battling to avoid paying a $50 million casino license transfer fee, Indianapolis-based Centaur Gaming announced it will pay the fee prior to or at the closing of a $1.7 billion deal for Las Vegas-based Caesars Entertainment to buy Hoosier Park in Anderson and Indiana Grand near Shelbyville. Centaur General Counsel John Keeler said, “It’s a fair statement that if it all closes, the state will get its $50 million.”
Under state law, the initial casino license holder is required to pay the fee when the controlling interest in the license is sold. Hoosier Park LP and Indianapolis Downs LLC were the initial license holders for Hoosier Park and Indiana Grand, respectively. Centaur was the parent company for Hoosier Park LP.
However, two years after the licenses were issued, in 2010, Centaur filed for Chapter 11 bankruptcy. The bankruptcy plan created new entities to oversee Centaur’s holdings, including transferring the license for Hoosier Park from Hoosier Park LP to Hoosier Park LLC. The $50 million transfer fee did not apply at that time because the arrangement was a result of Centaur’s bankruptcy—one of the few exceptions for waiving the fee.
In April 2011, Indianapolis Downs LLC also filed for Chapter 11 bankruptcy, and in 2013, Centaur acquired the license and rights to Indiana Grand for $500 million. The $50 million fee also did not apply to that transaction because it also involved the initial license holder, in this case Indianapolis Downs, filing for bankruptcy.
Centaur and Caesars have argued for months that the transfer fee should not apply in the current situation because of the bankruptcy restructuring. But the Indiana Gaming Commission has disagreed. Centaur then threatened litigation in a March letter to the commission, and Caesars threatened to pull out of a $90 million expansion project at Horseshoe Southern Indiana Casino. But since then, Caesars has moved forward with the project.
The sale will make Caesars the largest casino owner in Indiana, operating four of the state’s 13 casinos. It already owns Horseshoe casinos in Hammond, serving the Chicagoland area, and Elizabeth, serving southern Indiana and the Louisville area. Horseshoe Southern Indiana may be rebranded as Harrah’s Hoosier Park, officials said. Horseshoe Hammond generated $450 million in gambling revenue in 2016 and Horseshoe Southern Indiana brought in $248 million. Combined, they attract more than 6.5 million guests annually and 1.1 million loyalty program members. Both racinos offer live and simulcast horse racing, over 2,000 of the latest slots and electronic table games, live entertainment and multiple dining outlets.
Centaur’s properties also include off-track betting parlors in Indianapolis, New Haven and Clarksville, which will be transferred to Caesars as part of the acquisition. Last year the Anderson and Shelbyville casinos generated $480 million in casino revenue.
The Indiana Horse Racing Commission approved the sale on June 27 and the Indiana Gaming Commission followed on June 28. Caesars Entertainment’s President and CEO, Mark Frissora said, “We are pleased that the Horse Racing Commission and the Gaming Commission have given us the approvals we need to allow for a smooth transfer of ownership of Indiana Grand and Hoosier Park. This acquisition represents an outstanding opportunity to expand our footprint in a growing region while also leveraging our Total Rewards loyalty network to benefit the customers of Indiana Grand and Hoosier Park. We will continue to offer the excellent customer service that guests of Indiana Grand and Hoosier Park have come to expect and we look forward to welcoming them to the Caesars family.”
Caesars officials said the company will invest an additional $8 million in the two racinos by the end of the year, including table games and skybox suites, plus another $41 million in IT infrastructure, primarily to integrate the Centaur properties into Caesars’ Total Rewards points system.
Caesars Entertainment Regional President Dan Nita said, “We intend to retain the racing managers and the management teams for both Hoosier Park and Indiana Grand if the petition is approved.” The tracks also will maintain NTRA-certified status, host horseman’s events, maintain stalls for horsemen and keep race dates stable, Caesars officials said. Caesars also plans to continue current horsemen’s contracts, distribution agreements, Winner’s Circle OTB locations in Indianapolis, Fort Wayne and Clarksville and finance the state-bred program.