CINCINNATI – Jack Entertainment chairman Dan Gilbert could raise up to $ 2.7 billion if he redeemed all of his chips for casino investments in Cincinnati, Cleveland, Detroit and elsewhere.
However, industry analyst Chad Beynon said Gilbert could also generate “about $ 1.5 billion” by continuing to operate casinos and selling real estate assets related to gambling.
Beynon, who tracks the gaming industry for Macquarie Capital, compiled the estimates at the request of WCPO following a September 5 Bloomberg report that Gilbert was evaluating a potential sale. Bloomberg quoted “people familiar with his plans” as saying that Gilbert had hired Deutsche Bank and Credit Suisse to represent the company in a sale process.
Detroit-based Jack Entertainment declined to comment. The Ohio Casino Control Commission said they had no information about a possible sale.
“Should one of the casinos in Ohio be sold in the future, the company concerned will appear at a public meeting before the commission to provide an update after a fundamental agreement has been reached,” said spokeswoman Jessica Franks. “However, given the nature of the discussions, most of this update will likely take place in a board meeting.”
Beynon, who has been in the gambling industry for more than a decade, said Jack Entertainment is appealing to Las Vegas-oriented gambling companies that view the Midwest as a feeder market.
“Ohio and Michigan are attractive markets,” said Beynon. “In the short term there is no additional competition. They are very stable or growing markets and they have no target property to send your best guest. “
In addition to Jack Casinos in Cincinnati and Cleveland, Gilbert Thistledown owns Racino in Cleveland and the Greektown Casino Hotel in Detroit. He is also a partner at Turfway Park in Florence and Horseshoe Baltimore Maryland Casino. Gilbert is the founder of Quicken Loans and the owner of the NBA’s Cleveland Cavaliers.
His privately held casino company does not release financial details, but Beynon said the combined company had annual sales of approximately $ 1 billion. Based on an industry average profit margin of 25 percent, he said the properties are valued at between $ 2.2 billion and $ 2.7 billion.
“Ohio has had one of the best gaming growth rates in the country in recent years,” said Beynon. “It still looks like it’s a growing market, certainly not mature.”
The casino industry is in the midst of an acquisition spurt driven by rising expectations for a Supreme Court ruling that will allow states to legalize sports betting and set up real estate investment trusts that will help casino operators raise money to expand to collect.
Beynon said Caesar’s Entertainment Corp. is the most likely buyer as it once ran Gilbert’s Cincinnati and Cleveland casinos and bought two Indiana racetrack casinos in July.
“The Jack fortune would be bigger, but it fits what Caesars is looking for,” Beynon said. “So I would say they are number one” among the competitors.
In addition to Caesars, Beynon believes that Las Vegas-based Boyd Gaming Corp. for Jack Entertainment. This also applies to the owner of Scioto Downs, Eldorado Resorts, or Churchill Downs Inc., which owns the Kentucky Derby and 50 percent of Miami Valley Gaming, as well as several other racetrack and gaming properties.
Beynon said a sale could impact corporate jobs at Jack Entertainment but likely wouldn’t have much of an impact on local casino jobs. He said a sale could be good for customers with loyalty cards, as national companies tend to have more travel perks than regional casino operators.