BUSINESS

Churchill Downs plans online expansion; Golden Nugget online rights for sale?

TAGs: Atlantic City, Churchill Downs, churchill downs incorporated, Golden Nugget, Landrys, New Jersey Online Gambling

golden-nugget-sale-churchill-downs-hiringUS horseracing, casino and online betting operator Churchill Downs Inc. (CDI) is considering a $4m expansion of its online operations to take advantage of looming opportunities in the US market. The Louisville-based CDI made its desires known on Thursday at the Kentucky Economic Development Finance Authority (KEDFA) in Frankfort. CDI’s plan, which involves hiring up to 50 local individuals with average annual salaries of $100k apiece, was sufficiently impressive for the KEDFA board to grant preliminary approval for up to $1m in tax incentives over a 10-year period.

CDI CEO Bob Evans said the new Louisville employees would expand “the technology team we have already based in Lexington, KY and Mountain View, CA.” CDI’s online horse betting operation TwinSpires.com is based in Mountain View, but the Greater Louisville Inc. metro chamber of commerce said the new jobs might also be located in Atlanta, the site of the Bluff Media operations CDI acquired in 2012.

As things currently stand, the most promising US online gambling opportunities lie in New Jersey, which is set to open its online market on Nov. 23. However, companies wishing to splash around in the Garden State’s online pool need to partner with one of Atlantic City’s dozen brick-and-mortar casinos. CDI’s name has recently been bandied about as a prospective buyer of the Atlantic Club, one of only two AC casinos – the other being Revel – that have yet to announce some kind of online partnership.

NUGGET FOR SALE?
But hold the phone. On Friday, the Press of Atlantic City reported that AC’s Golden Nugget casino might also be in play. Nugget general manager Tom Pohlman issued a statement saying the Nugget’s parent company Landry’s had been approached by Houlihan Lokey investment bankers about selling the property and/or its internet gambling rights.

Pohlman stated that given the Nugget’s “less than stellar results,” Landry’s told the bankers it “would listen to any proposal.” Despite a $150m renovation in 2012, the Nugget has continued to struggle in AC’s declining market, losing $6.5m in Q2 2013, nearly twice the loss over the same period last year. Landry’s owner Tilman Fertita acquired the Nugget in 2011 for $38m, bringing his total investment in the property close to $200m.

The Nugget has also made investments in the online gambling sector, having teamed with Bally Technologies on a free-play online poker site, GoldenNuggetPoker.com. But Macquarie Capital analyst Chad Beynon suggested Landry’s could maintain ownership of the Nugget while selling off its internet gambling rights for between $50m and $100m.

The news comes one day after UK online gambling operator 2UP Gaming’s US partner claimed to be finalizing a deal to buy an unspecified AC casino. 2UP Gaming claims to have the financial backing of an unidentified Asian investor, who has reportedly agreed to provide $330m to purchase and improve the unidentified casino. Smoke? Fire? Bueller? Bueller?

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