Caesars Entertainment, one of the biggest companies in the US gambling industry, has sold its land-based casino in Southern Indiana (Caesars South Indiana) to the Eastern Band of Cherokee Indians (EBCI). According to the deal, which was initially agreed to in January 2021, the tribal operator needed to pay $250 million in order to take control of the gambling facility, located in Elizabeth, Indiana.
Caesars and ECBI Connected in 1996
The purchase of Caesars Southern Indiana is not a new agreement that these two companies go into. Their relationship dates back to 1996 after they agreed to team up and open North Carolina’s very own Harrah’s Cherokee. Then, in 2015, Caesars and the EBCI opened Harrah’s Cherokee Valley River. The relationship between these two brands is now entering a long-term agreement with the purchase of the Indiana casino, since the Caesars Rewards loyalty program and the Caesars Band will continue to be used at this facility.
The chief executive of Caesars, Tom Reeg, commented on the latest developments and stated that he wanted to thank Southern Indiana’s team members for their continued success with the new leadership, and the hard work that they’ve put in so far.
The Sale Was the Key to the Caesars-Eldorado Merger
Caesars South Indiana sale is the result of the merger between Eldorado and Caesars. The deal, which was finalized in July 2020, ran into a few obstacles by the Indiana Gaming Commission. The commission ordered both of these parties to sell three casinos that were located in the state before they can complete the merge.
Additionally, Vici Properties, a company that spun off from Caesars four years ago, signed a new lease for rent payments of $32.5 million per year with the tribe. Vici Properties is a real estate investment trust that used to be part of the Caesars umbrella of companies.
This agreement will last for 15 years, but it comes with a total of four renewal options of up to five years. On an annual basis, the rent will increase by 1.5%. The increase will begin in the second year of this deal until the fifth year on the lease. After that, starting from the sixth lease year, the rent will either increase depending on the Consumer Price Index or by 2%. Whichever number is higher, that number will be applied.
Under Vici’s Regional Master Lease that it has with Caesars, the annual base rent payments will be reduced by a total of $32.5 million. Moreover, the three parties – Caesars, EBCI and Vici – agreed on a first refusal for Vici concerning the real property that is associated with the casino operator’s development in Danville, Virginia.