Horseshoe Hammond Will Stay In The Caesars Family

Caesars Entertainment is retaining Horseshoe Hammond in its portfolio.

The company was being compelled to sell the casino by the end of the year by the Indiana Gaming Commission (IGC).

However, at its June 24 meeting, the IGC changed its direction and now, Caesars will remain in the Chicago area for many years.

Caesars stays near Chicago

Caesars originally had to sell Horseshoe Hammond due to its merger with Eldorado Resorts the previous year.

Every state in which the companies were operating had to approve when that merger was happening.

Caesars had to consent to selling three of its properties in the Hoosier State in order to secure approval from Indiana.

The IGC was worried that Caesars might begin to establish a monopoly in the gambling market of Indiana.

At the time of the merger, the company held control over approximately 60% of the gaming revenue. If Caesars were forced to sell three casinos, this figure would have decreased to around 40%.

Buyer for Horseshoe Hammond cannot be found by Caesars.

Caesars decided to sell Tropicana Evansville and Caesars Southern Indiana, both located outside of Hammond.

The sale of the Tropicana has already been finalized, and the sale of the Caesars Southern could potentially be official by this fall.

Caesars wasn’t as successful in their attempt to sell Horseshoe Hammond. The company initially had until Dec. 31, 2020 to sell the property.

Nonetheless, you cannot sell an item that nobody is interested in purchasing.

The IGC granted Caesars a year extension on the original deadline, as the company had difficulty finding a willing buyer.

Tom Reeg, the CEO, swiftly highlighted that the market in the Chicago area has created challenges.

Regrettably, the ambiguity concerning the situation in northern Indiana and the Chicago market remains unresolved. Illinois continues to procrastinate in awarding casinos to Chicago and the south suburbs.

Back in 2019, Illinois approved a gaming package that would establish six new casinos in the state. However, the Illinois Gaming Board has not yet issued any licenses.

Companies have been reluctant to invest in a Hammond purchase due to the prevailing uncertainty across the border. The prospect of the casino potentially facing heightened competition in the coming years discouraged companies from making a purchase.

Caesars requested the IGC to allow them to retain Horseshoe Hammond due to those struggles.

The changing conditions in Indiana could potentially ease the IGC’s initial monopoly worries.

Will Caesars dominate Indiana?

The decision to allow Caesars to retain Horseshoe Hammond was approved by the gaming commission, however, the vote was not unanimous.

Marc Fine, the Commissioner, contended that to prevent a monopoly, the IGC should adhere to its initial plan.

I believe our actions were appropriate. This operator is exceptional and they are destined to succeed and expand their market. If we fail to act currently, we’re essentially paving the way for a future of higher concentration than we desire.

Following the sales of the Tropicana and Caesars Southern, Caesars now holds ownership of three casinos in Indiana.

A corporation as large as Caesars may indeed expand its market share in the state, but the process may not be as straightforward.

Altering Factors for Caesars in Indiana

Firstly, the competition from Illinois poses a threat. In five years, due to the rapidly growing casino market nearby, Hammond may not retain its current value.

The market on the Indiana side of the border is also changing.

Just last month, Hard Rock Northern Indiana opened for business, with plans for its sister casino to be constructed in Terre Haute soon. Additionally, Four Winds is expanding its offerings by incorporating table games into its facility, thus becoming a fully operational casino.

The numbers game for Caesars is altered by the introduction of three new casinos in Indiana.

The IGC desired that a single company should not have more than a 40% share in the gaming revenue.

Caesars estimates that its market concentration will decrease to nearly 30% with the introduction of these new casinos.

Thus, even if the company increases its market share as Fine proposed, there could still be a 10% safety margin before Caesars reaches the IGC’s initial level of concern.

Naturally, this isn’t a precise science. The long-term outcome remains uncertain to everyone, so only time will reveal how this situation unfolds.

Ultimately, Caesars achieved its goal, allowing the IGC to now concentrate on resolving the issue with Hard Rock Casino.