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Dan Gilbert, the billionaire founder of Quicken Loans, is looking to sell his interests in six Midwest casinos. According to Bloomberg News, one of the primary candidates to buy from Gilbert is casino giant Caesars Entertainment Corporation.
Gilbert wants to divest his stake in Jack Entertainment, which owns and/or operates racetracks and casinos in Michigan, Ohio, Kentucky, and Maryland.
Officially, Jack has declined to identify any of its potential bidders. However, Caesars has worked closely in partnership with the company in times past, and the casino giant would certainly have the wherewithal to make such a deal happen.
In fact, Caesars has indicated interest in the properties before. The casino titan wanted to purchase the casinos in association with Vici Properties, a real estate investment trust that Caesars spun off in 2017.
Does Gilbert’s exit have to do with sports betting?
Gilbert, whose net worth is nearly $8 billion, has not indicated any sort of motivation for the sale. However, it’s possible that the casinos are not meeting internal expectations.
For instance, both Jack casinos in Ohio are located in major cities with big populations. Despite their location, the properties routinely rank behind the other two standalone casinos in the Buckeye State.
But, Gilbert may also be worried about a coming conflict of interest. Ohio legislators have already filed bills to legalize sports betting in 2019. Gilbert’s other interests may present a logistical problem.
Gilbert is also the owner of the NBA’s Cleveland Cavaliers. Under the bylaws of many state commissions, a principal on a sports team cannot engage in sports betting very easily.
For instance, in New Jersey, players, coaches, trainers, and other associated personnel cannot bet on their particular sport. So, the Golden Nugget Atlantic City is unable to offer wagering on NBA games because owner Tilman Fertitta owns the Houston Rockets.
However, this exception was the result of negotiation on the part of Golden Nugget. There is no guarantee that Ohio’s Casino Control Commission would grant a similar exception to Gilbert.
That’s just sports betting in Ohio. Michigan appears to be moving forward with its own sports betting designs, and Gilbert would be similarly hamstrung there.
Gilbert may be striking while iron is hot
Occam’s Razor teaches that all things being equal, the simplest explanation is often the correct one. In that vein, it’s possible that Gilbert is selling the properties for the plainest of reasons: money.
The casino industry is undergoing a frenzy of purchases, mergers, and partnerships. The latest is the massive deal between William Hill and Eldorado Resorts, which just occurred on Sep. 4.
The hurry to purchase is part of the overall scramble to tap into new sports betting markets. Companies without a foothold in a new sports betting state are fearful of being on the outside looking in.
So, Gilbert may have decided to dangle his feet in the water, particularly for Caesars. Caesars does not own an Ohio casino and might be motivated to pay a premium for the opportunity.
Regardless, there is likely to be quite a bit of competition for casino real estate where sports betting is likely. Gilbert will probably be able to build himself a seat at Quicken Loans Arena out of the stacks of cash he’s about to pick up.
