What is Elgin getting in new owner of the Grand Victoria Casino?
What is Elgin getting with the impending new owner of the Grand Victoria Casino? And should the community be concerned that casino behemoth MGM Resorts International is exiting the risky Illinois market?
The short answer: It could actually end up being a good deal for everyone, experts say.
Eldorado Resorts, which announced plans Monday to buy the casino for $327.5 million, has been on a buying spree the last several years. Along with buying the Grand Victoria Casino, the Reno, Nevada-based company announced it's part of a $1.85 billion deal involving two other companies that will add the operating assets of seven casinos in six states to the Eldorado portfolio.
Eldorado has a reputation for bringing quality entertainment and dining to its acquisitions, gambling analyst Ken Adams said.
Company officials said the Grand Victoria has been well maintained, which will allow them to focus on the guest experience without the need to undertake capital investments.
“They are focused on restaurants and entertainment,” Adams said. “They do a really good job everywhere they go.”
Founder Don Carano opened the Eldorado Hotel Casino in Reno, Nevada in 1973, and, in the past 45 years, the company has continued to grow. It owns and operates 20 other properties in 10 states.
“That would indicate some financial stealth, and some very good operation skills,” Adams said.
Those skills will be needed for the Grand Victoria Casino to remain competitive in what's considered an unstable Illinois gambling environment. Among the risks are yearly attempts by state lawmakers to add casinos, especially in Chicago, and steady increases in video gambling terminals at bars, restaurants and truck stops.
However, MGM Resorts International leaving the Illinois market isn't necessarily cause for concern, experts say.
Clyde Barrow, a gambling expert and professor at University of Texas-Rio Grande Valley, said MGM and other casino giants have set sights on expanding internationally, leaving behind mid-size markets.
“They're thinking in terms of billions,” Barrow said. “Smaller companies can think of merely millions — if I can say that.”
This has led companies, such as Eldorado, to enter markets abandoned by larger operators.
Barrow and Adams agreed Eldorado's deal is likely a smart move, despite a steady decline in revenues at Grand Victoria Casino.
The casino, which opened in 1994, reported $168.8 million in revenues last year compared to its peak of $436.7 million in 2007, according to the Illinois Gaming Board. Part of that decrease can be attributed to the 2011 opening of Rivers Casino in Des Plaines and the growing video gambling industry. The casino did increase its revenues last year, however.
“(Eldorado) must've done their due diligence to pay that price for it,” Adams said. “They must see an upside in it.”