Casino operator Caesars Entertainment is balking at paying an extra $50m in fees to the state of Indiana in connection with its $1.7b purchase of two Indiana racinos.
Last November, Caesars announced a deal to pay $1.7b for two Centaur Gaming properties in Indiana; the Hoosier Park casino in Anderson and the Indiana Grand casino in Shelbyville. Both venues include racetrack operations in addition to traditional casino gaming options.
But Caesars is now trying to get out of paying an additional $50m in transfer fees for the casino licenses. Indiana law requires the initial casino license holder to pay the fee if it sells a controlling interest in the gamine venue.
There are some exceptions to this rule, such as if the transfer occurs as the result of the license holder filing for bankruptcy. Centaur did file for Chapter 11 bankruptcy protection in 2010, and the subsequent restructuring saw the Hoosier Park license transferred to a new entity that was set up to oversee Centaur’s businesses.
In 2011, the company that ran Indiana Grand also declared bankruptcy, and Centaur acquired the venue two years later. In both cases, the $50m transfer fee was waived due to the bankruptcy proceedings.
The Indianapolis Business Journal reported that Caesars’ attorneys sent the Indiana Gaming Commission (IGC) a memo in January that argued for the waiving of the $50m fee, given that neither of the Centaur casino licenses was currently held by the original licensee.
The IGC said it conducted a “thorough review” of the facts and determined that it “respectfully disagree[d]” with Caesars’ conclusion, leaving Centaur on the hook for the $50m fee. But the IGC said the matter would be discussed further when commissioners meet to review the Caesars-Centaur deal in May or June.
However, unless the IGC agreed to waive the fee, Caesars reportedly threatened to scrap its $90m plan to construct a land-based facility to which Caesars planned to transfer the gaming operations of its dockside riverboat casino Horseshoe Southern Indiana. The relocation plan was to be discussed at the IGC’s meeting last week, but was pulled from the schedule at the last minute.
Centaur is also reportedly mulling litigation to ensure it’s not obligated to pay the fee.