In a deal not far south of $1 billion, JACK Entertainment sold its Cleveland Casino and Thistledown Racino to VICI Properties, pending regulatory approval, according to a news release issued by JACK. VICI Properties is to acquire the two JACK Ohio casinos for $843 million.
The JACK Entertainment and VICI Properties deal is a sale-and-leaseback transaction that’s expected to be finalized at the beginning of 2020.
A press release by VICI provided details for the leaseback transaction, according to a report by CBS affiliate WOIO in Cleveland.
“Simultaneous with the closing of the transaction, the Company will enter into a master triple-net lease agreement with JACK Entertainment related to the assets," the VICI release said. "The master lease will have an initial total annual rent of $65.9 million, for an implied capitalization rate of 7.8%, and an initial term of 15 years with four 5-year tenant renewal options.”
VICI’s portfolio includes 24 gaming facilities with properties leased to major industry leaders, such as Caesars Entertainment Corporation and Hard Rock International.
JACK Cleveland Casino and JACK Thistledown Racino will continue to operate under the same leadership. The company’s Chairman of the Board is Dan Gilbert, Founder and Chairman of Quicken Loans and Rock Family of Companies, and Chairman of the Cleveland Cavaliers of the NBA.
JACK Cleveland Casino Opened in May 2012 and boasts over 1,230 table games and 1,300 gaming machines on 96,000 square feet of space. JACK Thistledown Racino launched in April 2013 and features 57,000 square feet of gaming space with nearly 1,500 gaming machines, in addition to thoroughbred racing.
“JACK Entertainment looks forward to continuing to operate JACK Cleveland Casino and JACK Thistledown Racino,” said Mark Dunkeson, Chief Executive Officer of JACK Entertainment, Business Wire documented.
“The Combined efforts of our gaming properties together with the Cleveland assets operated by our sister companies including the Cleveland Cavaliers, Avenue Shops at Tower City and the May Company Building, have created a strong connection to the city and allows us to remain heavily committed to the Cleveland area.”
Dunkeson added that they have invested more than $700 million into the two JACK Ohio casinos since 2012.
The VICI and JACK deal comes just weeks after JACK Entertainment announced another partnership. It was reported in September that JACK Entertainment and Kambi Group Plc., a leading sports betting provider, entered a long-term partnership that is focused on providing JACK Cleveland Casino and Thistledown Racino sportsbook services.
Sports betting has not yet been approved in Ohio and it’s uncertain on when it could launch, though proponents are aiming for some time in 2020.
Figures for casino revenue on Ohio have been encouraging for industry leaders. In the 2018-19 financial year, Ohio racinos drew more than $1 billion from video lottery terminals (VLTs) for the first time. And revenue at Ohio's racinos and casinos rose more than 4% from August 2018 to August 2019, according to a report from the Ohio Lottery Commission.