Casino and betting operator Churchill Downs Incorporated (CDI) has agreed to pay up to $500m to acquire an Illinois casino property.
On Wednesday, CDI announced that it had signed a definitive purchase agreement to acquire “at least” a 50.1% stake in Midwest Gaming Holdings, the parent company of the Rivers Casino Des Plaines in Des Plaines, Illinois.
CDI will pay $291m for 100% of the Clairvest Group private equity outfit’s stake in Midwest Gaming, and has made an offer to purchase additional units of Midwest held by Rush Street Gaming affiliate High Plaines Gaming, and Casino Investors LLC, that will bring the aggregate cash consideration to $326m. Assuming the deal goes through, CDI and Rush Street will jointly control Rivers Des Plaines.
But wait, there’s more. The parties are also planning a complicated recapitalization transaction in which Midwest will use roughly $300m in proceeds from new credit facilities to purchase additional Midwest shares held by Rush Street and Casino Investors. Plus, if we’re reading correctly, one of the parties gets prima nocta rights with some Illinois farmer’s daughter.
Bottom line; CDI says it doesn’t plan to spend more than $500m and, once the dust clears, Rush Street expects to hold “largely the same ownership interest percentage in Midwest as it currently holds.” Assuming Illinois regulators understand the terms, the parties expect the deal close sometime in H1 2019.
CDI and Rush Street aren’t strangers to this type of deal, as CDI acquired the Riverwalk Casino in Vicksburg, Mississippi from Rush Street five years ago. CDI CEO Bill Carstanjen said he was “thrilled to partner” with Rush Street on “the crown jewel of Illinois gaming.”
CASINOS AND ONLINE RACE BETTING BUTTER CDI’S BREAD
Meanwhile, CDI turned in its third quarter earnings report on Wednesday, reporting revenue up 12.3% to $221.3m, adjusted earnings up nearly 7% to $62m and net income more than tripling to $56.3m, although this was primarily due to a tax benefit. (The numbers ignore contributiosn from CDI’s former social gaming unit Big Fish Casino, which was sold last November.)
CDI’s TwinSpires advance deposit wagering business reported revenue up 9% to $72.1m, easily eclipsing the $41m generated by CDI’s land-based race betting operations.
CDI’s casino segment had a good quarter, with revenue up one-fifth to $105m, primarily due to CDI acquiring the 50% of Maryland’s Ocean Downs Casino that it didn’t already own.
That transaction also saw CDI give up its 25% stake in Saratoga Casino Holdings (SCH) in exchange for a 15-year exclusive right to offer online gambling and sports betting through SCH properties in New York and Colorado (assuming the necessary legislation is passed).
CDI launched its new BetAmerica sports betting brand at its two Mississippi casinos (including Riverwalk) in August, and while the net returns of these sportsbooks are included in the casino numbers, CDI declined to specify how much business these books were doing.