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Mike Johnson January 26, 2020 3 min read
Jack Entertainment Pays $65m to Lease Casinos from VICI Properties after Acquisition
Jack Entertainment has sold two Cleveland casinos to VICI Properties and paid almost $65 million to have them leased back from the company.
VICI Leases Newly-Acquired Properties Back to Previous Owner
On Friday, VICI Properties said that it had completed the acquisition of two casino properties in Ohio, spending $843.3 million to claim ownership of the facilities. Upon completing the move, VICI leased the properties back to the owners.
VICI is an investment trust with headquarters in New York, which emerged from Caesars Entertainment back in 2017 to create a potent investment vessel for the hospitality company.
Thanks to the latest agreement, the addition of the Jack Cleveland Casino and the Jack Thistledown racetrack casino have pushed the total properties owned by VICI to 29 across the country.
Jack Entertainment, the former owner now renting the casino, has agreed to a 15-year deal for the sum total of $65.9 million. The deal also features four renewal options, giving the two properties long-term prospects.
This is also part of Jack Entertainment’s strategy to boost profit by shedding properties and focusing solely on running them, rather than owning them. So far, Jack Entertainment has signed up with Penn National Gaming, Hard Rock International, Caesars and others.
VICI President John Payne has been very optimistic about the company’s operations in Ohio specifically where gambling, according to him, has been developing quite healthily.
Ohio’s Casinos Keep Posting Strong Results
As a testament’s to Mr. Payne’s good feeling about the industry, Ohio’s casino properties – 11 in total – managed to collect up to $1.94 billion in total gambling revenue in 2019. That constituted a decent uptick in the overall performance with 4.2% increase year-over-year (YOY).
Jack Cleveland came third in the overall standing, bagging some $221.1 million of the total revenue, behind the MGM Northfield with $253.6 million. The casino first opened operations in 2012 and is presently sprawling on 96,000 sq ft, offering some 120 table games as well as 1,300 gaming slot machines.
The property is linked up with the Ritz-Carlton as well as the Renaissance hotels, offering a total of some 640 rooms.
Jack Thistledown Racino’s is also one of the established casino properties in Ohio. The casino was set up back in 2013. It has slightly more gaming machines to offer, with 1,459 total such products to enjoy.
Meanwhile, VICI is now tasked with raising $2.5 billion necessitated by the company’s involvement in the super-merger between Eldorado Resorts and Caesars which has been cleared by regulators. The two gaming giants agreed to a $17.3 billion merger deal last year and have been subject to various regulatory approvals since.
VICI also acquired three Caesars properties and specifically from the Harrah’s franchise in Atlantic City as well as Laughlin in Nevada and New Orleans. Similar to the current arrangement with Jack Entertainment, VICI now leases back the properties to Eldorado for the combined annual rent of $154 million.