Casino M&A Interest Stays Strong Despite High Borrowing Costs
After talks at G2E in Las Vegas, a Stifel analyst says buyers still want regional casinos, even with expensive debt.
Illustration: BetWiseBrief
Key points
- A new Stifel report says interest in buying regional casinos is still strong, even with high borrowing costs.
- Analyst Jeffrey Stantial based the view on talks at the Global Gaming Expo (G2E) in Las Vegas last week.
- Century Casinos and Churchill Downs could benefit as they sell assets and pay down debt.
- Large online gambling deals look unlikely for now.
Deal appetite has not disappeared
Higher interest rates and a jumpy bond market make it more expensive to finance acquisitions, and many casino deals are paid for with borrowed money. Even so, a new note from Stifel analyst Jeffrey Stantial says casino consolidation is not slowing down.
After meeting with industry players at G2E in Las Vegas, Stantial wrote that the group left with the impression that there is still notable financial and private strategic interest in certain regional gaming assets. In plain terms, both investment funds and operating companies still want to buy regional casinos at the right price.
The big signal: Fertitta and Caesars
The clearest sign is Fertitta Entertainment's proposed $17.6 billion purchase of Caesars Entertainment. The deal depends on a large debt structure, and Fertitta is still working through its financing. If it closes, it shows lenders are willing to back big casino deals despite the rate environment.
A combined Fertitta and Caesars company could also lead to follow-on sales. Industry observers widely believe the new owner might sell some regional properties, either by choice to lighten its balance sheet or at the direction of antitrust regulators.
Who could benefit
Stantial pointed to Century Casinos and Churchill Downs as potential winners if buyers keep targeting regional properties. Last week, Century announced it is selling two gaming venues in Alberta, Canada, for $16.4 million. That may suggest it can sell other assets to reduce debt.
Churchill Downs has nine regional casinos on the market and is expected to sell them one by one or in small groups. Smaller deals are easier to finance, which can be an advantage when borrowing is expensive.
Online deals look quieter
Online sports betting and iGaming have long been a source of deal rumors, but Stantial does not expect big consolidation soon. Low share prices make it hard to use stock as payment, and large buyers have little appetite for mega-deals. Stantial says operators did show interest in small tuck-ins that improve odds and pricing or add ways to reach new customers. He also said legal uncertainty around prediction markets could slow the pace of deals.
Quick summary
| Topic | What the report says |
|---|---|
| Land-based / regional | Still strong interest from funds and strategic buyers |
| Main headwind | High borrowing costs and bond market volatility |
| Likely sellers | Century Casinos, Churchill Downs |
| Online / iGaming | Small tuck-ins only, few big deals expected |