Caesars Entertainment Corp. are not happy with a $50m transfer fee applying to a possible casino acquisition in Indiana.
Caesars Entertainment Corp. is a known company of Las Vegas, that has their hand in many areas of gaming throughout the world. The company has been involved in a project in the state of Indiana, moving one casino from the river on to land. However, those plans may be dashed if the gaming regulator decides to implement a $50 million transfer fee based on the acquisition of Centaur Gaming LLC via Caesars.
A Little Backstory
In late 2017, Caesars announced they had agreed to purchase Centaur Gaming. Along with the purchase came two gaming venues of Indiana, the Grand Racing and Casino venue and the Hoosier Park Racing and Casino facility. The deal totaled $1.7 billion, paid in cash. Caesars already operates two venues in the state, the Horseshoe Hammond and the Horseshoe Southern Indiana.
The deal must be approved by the Indiana Gaming Commission as well as the state Horse Racing Commission after a review before the acquisition will be complete. Consideration should be provided by this May or June.
Transfer Fee Comes into Play
Yesterday, it was reported that Caesars along with Centaur Gaming and the state Gaming Commission are now debating a transfer fee. The debate stems around who should be paying the $50 million transfer fee, the new owner or the old owner.
Based on state law, the initial holder of the casino license is supposed to pay the $50 million fee to transfer the license when there is a controlling stake via the licensed properties being sold to another business. While this law is in place, there are exceptions. One example of this is that the fee is not required when a transfer is made after the initial license holder has filed for bankruptcy.
In the past, changes had been made to the ownership of the Indiana Grand and the Hoosier Park facilities without the initial license holder having to pay this fee. The transactions took place after bankruptcy filings had been made.
Both Centaur and Caesars are arguing that they should not have to pay the $50 million fee. They both argue the fee should not be paid as the transaction does not involve the initial license holder. Yet, the Indiana Gaming Commission disagrees after researching the matter themselves.
Deputy Director of the Commission, Jennifer Reske, commented on the matter by stating that the commissioners had not reviewed the acquisition and they will not be making a decision until the review. However, a review was completed involving the applicability of the fee in this case and the staff of the Commission feels that the fee applies. However, the staff decision could differ from the decision by the overall commission in the future.
Caesars has had plans to move the Horseshoe Southern Indiana casino to land, as gaming currently takes place on a riverboat. However, if the company is forced to pay the fee, the $90 million project may be put on hold.
A law from 2015 allows riverboat casinos to be moved to dry land based on certain conditions. Details for the move have been supported by the Gaming Commission, yet Caesars wants to find out about the possible fee to be paid for their new acquisition before moving forward. The plans may change or at least be delayed until the company learns more about what they will need to do to see the acquisition completed.