Eldorado Resorts agrees to sell two casinos in Pennsylvania and Mississippi

Eldorado Resorts (NASDAQ:ERI) announced Wednesday that it entered two separate agreements with a Kentucky-based company to sell two of its properties.

Churchill Downs (NASDAQ: CHDN) has agreed to acquire Presque Isle Downs & Casinos in Erie, Pennsylvania and Lady Luck Casino Vicksburg in Mississippi from Reno-based Eldorado Resorts for a total of $229.5 million.

As part of the agreement, Eldorado will sell Presque Isle Downs & Casinos for $178.9 million in cash considerations and Lady Luck Casino Vicksburg for $50.6 million in cash considerations.

“Our agreements to divest Presque Isle and Lady Luck Vicksburg are consistent with our strategy to maximize returns from our portfolio of regional gaming assets through investments in new properties as well as opportunistic divestitures,” said Gary Carano, Eldorado Resorts CEO. “The sale price represents an attractive multiple of these properties’ trailing twelve months cash flows.”

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The sale of the Lady Luck Casino Vicksburg is expected to close in the second quarter of this year. Eldorado expects the sale of Presque Isle Downs & Casinos to close in late 2018.

Churchill Downs described both properties as “appealing investments” and a perfect fit to its portfolio.

“Presque Isle will give us a foothold in Pennsylvania which has recently passed legislation authorizing real money online gaming,” said CEO Bill Carstanjen in a statement. “The Lady Luck Vicksburg is immediately adjacent to our Riverwalk facility and offers us operational efficiencies in a stable region.”

The agreement with Churchill Downs follows the termination in November of Eldorado Resorts’ sale of the Isle of Capris Casino Lake Charles in Lousiana for about $134 million to Laguna Development. The sale fell through after Laguna Development failed to obtain a gaming license from the Louisiana Gaming Control Board. Eldorado kept Laguna Development’s $20 million deposit under the terms of its agreement with the company.

The company says it also has identified cost reductions it could take with the Louisiana property to improve its operations. Eldorado originally gained ownership of the property when it acquired Isle of Capris Casinos and its 12 properties in 2017.

Eldorado, which saw its own portfolio grow to 20 properties in 10 states as it embarked on a significant expansion of its footprint outside of its Reno base, says it still plans to grow the company’s footprint despite its recent agreements to sell the two properties in Pennsylvania and Mississippi.

“We remain fully committed to expanding our platform into growth markets that we believe have the potential for high returns as well as deploying capital toward high return investments in our existing properties,” Carano said.