Gaming company Churchill Downs Incorporated (CDI) has moved on a flagship Illinois-based property, buying up the asset for a sum close to $500 million.
Churchill Downs Incorporated Expands
Betting and gambling operator Churchill Downs Incorporated (CDI) has been adding new assets. Most recently, CDI has struck a deal that allows is to acquire at least 50.1% in Midwest Gaming Holdings, giving it the controlling stake in the business.
The Midwest Gaming Holdings is the parent entity of the Rivers Casino Des Plaines based in the namesake area in Illinois. As a result of the negotiations, CDI is preparing to also run casino together with another entity.
As the details of the agreement stand, CDI will pay $291 million to completely acquire Clairvest Group’s equity stake in Midwest Gaming and will additionally have to snap up available assets from Rush Street Gaming.
If everything goes as planned, CDI will share control of the Rivers Casino Des Plaines property with Rush Street. More details have surfaced, though, as Midwest is preparing to use $300 million of ready cash to purchase more of its own shares held by Rush Street.
The complicated restructuring boils down to two very simple developments. First, CDI hopes to spend $500 so that it can buy a controlling stake whereas Rush Street will sell shares while keeping its ownership percentage in Midwest.
Churchill Downs is also trying to obtain another horse racing license in Oak Grove, Kentucky, with the decision being delayed in yet another narrow vote.
A Deal Possible Because of Financial Results
CDI has been showing signs of growth and good financial performance. The company held its earning call on Wednesday, citing 12.3% uptick in revenue, which amounted to $221.3 million.
More good results followed with adjusted earnings going up 7% as well and the net income increased three-fold finishing at $56.3 million, following tax reliefs. CDI continued to spearhead the development of its casino sector where revenue also went up 1/5.
Amid the strengthening financial results, CDI has decided to move in on acquiring control in new assets with the long-term in mind. As part of the earnings call, CDI also announced that shareholders are now eligible for $1.63 dividend.
The company’s stock also gained 2.4% which was an unusually high volume. This meant that at the end of trading on October 31, the stock hit $249.61.
Churchill Downs has participated in a number of mutually-beneficial agreements this year, including a partnership with iGaming flagship software provider NetEnt. With strong finances and an expanding casino opportunity across the United States, CDI is poised to establish itself as a leader, although the scope of its operations will need to be expanded.
A Deal and $500m Later
The Rivers Casino Des Plaines property is well-poised to improve upon its own finances, which is exactly why CDI is now driving forays in it. As mentioned, Rush Street own a number of affiliated properties, including Rivers Casino in Pittsburgh, SugarHouse Casino in Philadelphia, Rivers Casino in Des Plaines, Illinois and Rivers Casino and Resort in Schenectady, New York.
The latest deal offers the operator a rare opportunity to continue and see the financial growth of key asset while drawing successful investment from a respectable partner.