Indiana approves EBCI casino purchase
The Indiana Gaming Commission has approved a deal that would put an Indiana casino in the ownership of a company held by the Eastern Band of Cherokee Indians.
The Gaming Commission approved Caesars Entertainment ’s sale of Caesars Southern Indiana Casino & Hotel to EBCI Holdings LLC at an Aug. 18 business meeting, and closing is now expected to occur in September.
“We are delighted to move forward with Caesars and expand our already successful portfolio,” said R. Scott Barber, CEO of EBCI Holdings, the company that will own the casino. “Not only is it a beautiful, recently renovated property, but Caesars is also a storied brand in the southern Indiana community. We’re honored carry on that legacy as we continue to elevate Caesars’ world-class guest experience.”
In a narrow decision , the Cherokee Tribal Council voted on Dec. 17 to approve up to $280 million in cash and loans for the purchase of Caesars Southern Indiana, located in Elizabeth, Indiana, right across the river from Louisville, Kentucky. EBCI Holdings LLC, an entity wholly owned by the tribe, then agreed to purchase the casino operations for a base price of $250 million.
The decision was extremely controversial, both because of the decision itself and the circumstances under which Tribal Council made it. The meeting in which Tribal Council conducted its final deliberations and took a vote was announced only on Principal Chief Richard Sneed’s Facebook page at 8:27 p.m. the day before the 10 a.m. meeting. It was open only to tribal members, who had to access it via Microsoft Teams or Cherokee Cable.
Under the deal, the tribe will own the casino’s operations, but not the property — the initial lease payment for the 238-acre property is $32.5 million annually. The venture is expected to bring in $40 million each year in earnings before interest, taxes, depreciation and amortization. Due to Indiana state laws stipulating that the LLC overseeing the casino operation can remit only 25% of profits back to the tribe each year, the EBCI expects to receive $3 to $5 million annually.
Opponents of the deal say that’s not enough to justify the large up-front purchase price. Meanwhile, proponents point out that the LLC will retain the remaining 75% of the profits, which can then be used to purchase additional commercial gaming enterprises and further diversify the tribe’s business interests. Overall, the operation is expected to yield a return on investment of 19% to 23%.
To celebrate the new ownership, Caesars plans to host an opening event after the deal closes. Details will be announced later this fall.
Pursuant to the terms of the transaction documents, EBCI Holdings will continue to use Caesars’ branding for the casino and participate in the popular Caesars loyalty program, Caesars Rewards — the program is also used at EBCI casinos in Cherokee and Murphy. Additionally, subject to satisfying customary background check and hiring processes, current Caesars employees — nearly 900 people — will be able to keep their jobs at the Indiana casino.
Simultaneously with the deal closing, EBCI Holdings will enter into a triple-net lease with a subsidiary of VICI Properties Inc . for the real property associated with Caesars Southern Indiana. Initial total annual rent under the lease with VICI will be $32.5 million, and the lease will have an initial term of 15 years, with four five-year tenant renewal options. The tenant’s obligations under the lease will be guaranteed by the Eastern Band of Cherokee Indians.
EBCI Holdings was established earlier this year to diversify the EBCI’s ventures within the commercial gaming and hospitality industry. Caesars has managed the tribe’s two existing casinos in Western North Carolina, the first of which was established in 1997 , since they opened. Caesars Southern Indiana is EBCI Holdings’ first acquisition outside of North Carolina.