CINCINNATI - Jack Entertainment Chairman Dan Gilbert could fetch up to $2.7 billion if he cashed in all his chips on casino investments in Cincinnati, Cleveland, Detroit and elsewhere.
But industry analyst Chad Beynon said Gilbert could also generate “$1.5 billion or so” by continuing to operate casinos and selling off real estate assets tied to gaming.
Beynon, who follows the gaming industry for Macquarie Capital, compiled the estimates at WCPO’s request after a Sept. 5 Bloomberg report that Gilbert is evaluating a potential sale. Bloomberg quoted "people familiar with his plans" as saying Gilbert 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 it had no information about a potential sale.
"Should any of Ohio’s casinos be sold in the future, once an agreement in principal has been reached the affected company will appear before the Commission at a public meeting to provide an update," said spokeswoman Jessica Franks. "Given the nature of the discussions, however, most of that update will likely take place in an executive session."
Beynon, who has followed the gambling industry for more than a decade, said Jack Entertainment would be attractive to Las Vegas-oriented gaming companies that view the Midwest as a feeder market.
“Ohio and Michigan, those are attractive markets,” Beynon said. “There is not additional competition in the near term. They’re very stable or growth markets and they don’t really have any destination property to send your best guest.”
In addition to Jack casinos in Cincinnati and Cleveland, Gilbert owns Thistledown Racino in Cleveland and Greektown Casino-Hotel in Detroit. He’s also a partner at Turfway Park in Florence and Horseshoe Baltimore Maryland Casino. Gilbert is the founder of Quicken Loans and owner of the NBA's Cleveland Cavaliers.
His privately held casino company doesn’t release financial details, but Beynon said the combined enterprise generates about $1 billion in annual revenue. Based on an industry-average profit margin of 25 percent, he said the properties are worth between $2.2 billion and $2.7 billion.
“Ohio’s had one of the best gaming growth rates in the country over the past couple years,” Beynon said. “It still looks like it’s a growing market, certainly not mature.”
The casino industry is in the middle of an acquisition binge, driven by rising expectations from a Supreme Court ruling that allows states to legalize sports betting and the creation of real estate investment trusts that help casino operators raise money for expansion.
Beynon said Caesar’s Entertainment Corp. is the most likely buyer, as it once managed Gilbert’s Cincinnati and Cleveland casinos and it purchased two Indiana racetrack casinos in July.
“The Jack assets would be bigger, but it fits what Caesars is looking for,” Beynon said. “So I’d say they’re number one” among contenders.
In addition to Caesars, Beynon thinks Las Vegas-based Boyd Gaming Corp. could make a run for Jack Entertainment. So could Scioto Downs owner Eldorado Resorts or Churchill Downs Inc., which owns the home of the Kentucky Derby and 50 percent of Miami Valley Gaming, along with several other racetrack and gaming properties.
Beynon said a sale might impact corporate jobs at Jack Entertainment but probably wouldn’t have a big impact on local jobs in casinos. He said a sale could be good for loyalty-card players because national companies tend to have more travel perks available than regional casino operators.
