Caesars Entertainment Inc. has agreed to sell its Southern Indiana facility to the Eastern Band of Cherokee Indians for $250 million. According to the decision that was announced in a news release last Thursday, the Reno-based company said it is extending the brand to one of its long-time partners. The Native American tribe already owns casinos in North Carolina, and now it will also boast the 20-year old casino on the Ohio River in Elizabeth, Indiana.
Principal Chief of the Eastern Band of Cherokee Indians (EBCI), Richard Sneed, said the purchase of the Caesars’ property marks the beginning of an exciting new future for the native tribe. He said the Eastern Band of Cherokee Indians are pleased to extend the long-standing partnership with Caesars as they look to advance their interests in commercial gaming in the future.
Caesar’s CEO Tom Reeg also described the expansion of this relationship with the Eastern Band of Cherokee Indians as “exciting”.
Upon closing the transaction, the native tribe will enter a new lease with year one annual rent payments of $32.5 million with VICI Properties Inc, the entity that currently maintains ownership of the real estate property. Caesars Entertainment’s annual payments to VICI Properties will, therefore, decline by $32.5 million. The transaction is likely to close in the third business quarter of the next year.
After the closing of the transaction, both entities will expand their relationship by entering into a long-term agreement that will allow the native tribe to retain the use of the Caesars brand and the casino company’s Rewards Loyalty Program at Caesars Southern Indiana. JP Morgan and Watkins LLP will represent Caesars, while Innovation Capital LLC and Brownstein Hyatt Farber Schreck will represent the EBCI in the transaction process. However, the transaction is subject to regulatory and other customary closing conditions.
Why Was Caesars Ordered to Sell The Southern Indiana Casino?
Caesars South Indiana opened in 1998 as the Horseshoe Southern Indiana, a riverboat casino on the Ohio River. In 2019, it became a 100,000 square foot brick and mortar casino under Caesars, which spent $90 million on the project. However, after Caesars’ merger with Eldorado in a whopping deal of $17.3 billion, The Indiana Gaming Commission ordered Caesars to sell the property, in addition to two other casinos, by December 31. The Hoosier State’s authorities wanted to ensure the merged company doesn’t monopolize Indiana’s casino market.
The tribe is contemplating whether to go through with a $280 million acquisition of the casino. However, the tribe’s spokesperson declined to comment, and although Caesar’s acknowledged, it too remained short of providing a comment.
Tribal Meetings for the Potential Deal
The Eastern Band of Cherokee Indians currently owns two casino establishments in North Carolina, which are both managed by Caesars under its Harrah’s brand. Last month, the tribe passed a resolution calling for around $10 million in expenses to determine the deal after signing a letter of intent for the would-be purchase with Caesars.
The tribal council debated the potential deal for around three hours on last Tuesday before tabling it for further discussion. The council discussed various factors and would finance nearly $160 million of the purchase, besides placing around $120 million through cash, according to testimony at the meeting.