The regulatory body of Michigan has given its final go-ahead to the purchase of Greektown Casino-Hotel, which is to take place later this week.
As was announced in November last year, the proposed acquisition deal for Greektown Casino-Hotel will go through. During the meeting held by the Michigan Gaming Control Board, the members of the board unanimously voted and gave an OK to the sale deal. As a result, the casino will have new ownership. Dan Gilbert’s company, Jack Entertainment, will sell its property to two firms, which have casino-related businesses: VICI Properties, which is an investment trust for real estate, and a casino operating firm, Penn National Gaming.
According to the CEO of the Penn National Gaming, Timothy Wilmott, who was present at the control board meeting, they will close the deal on Thursday. The fee for the transaction will be all cash. Wilmott stated that this (receiving the control board’s approval) was the last step in the process, as the Federal Trade Commission and the city of Detroit had already issued their approvals. Penn National Gaming has 41 properties to its name, making them the largest operator when it comes to regional-draw casinos in the whole country.
The way the deal is structured means that the Penn National Gaming will spend $300 million to be at the helm of the operations of the Greektown Casino-Hotel. Meanwhile, VICI Properties will acquire the casino’s real estate property, which they will lease to a subsidiary of Penn National’s. The property will cost them $700 million.
Future of the Casino
Despite many press reports last year that the Greektown Casino-Hotel had around $400 million in debt, Wilmott claims that the casino has been running in the green. Jack Entertainment changed the way the casino operated, as it had been losing money before Gilbert acquired it in 2013. Earlier, the casino spent two years bankrupted, from 2008 to 2010.
In Detroit, there are only two casinos with higher revenue than Greektown — MGM Grand Detroit (the market leader), as well as Motor City Casino Hotel. Wilmott sees room for improvement. They are the third most profitable casino in the city, but they are also the smallest of the three. Wilmott claims that this gives them an opportunity to increase their revenue. Penn National Gaming doesn’t have any plans at the moment to make any physical alterations to the casino. However, the casino will have a new general manager, John Drake, who will run the property.
Drake said he intends to learn about the business from team members who are already there. His wish is to learn about customers’ needs are and which amenities they are looking for. This is a prerequisite for any potential improvements.
The Penn National will monitor any possible changes in the state legislation regarding sports betting. Wilmott says that sports betting has shown to be a great amenity to casinos, as the company has operated casinos in states which allow it — West Virginia, Pennsylvania, and Mississippi.
Jack Entertainment is also looking to sell the Jack Cincinnati Casino and the Turfway Park horse track in Florence, Kentucky.