Caesars Entertainment made a subtle transition in May that will be a very important element in its future strategies. The not-so-subtle opening of the Horseshoe Casino in Cleveland was preceded earlier in the week by the sale of Harrah’s St. Louis to Penn National Gaming.
The $350 million Horseshoe Casino Cleveland, Ohio’s first casino, opened on May 14 on the first four floors of the city’s historic 81-year-old Higbee Building. Casino and city officials expect it to attract 5 million visitors a year.
The Ohio Casino Control Commission gave Rock Ohio Caesars its license to operate. It has 2,100 slot machines, 63 gaming tables and 30 poker tables. The casino is a joint venture between a group led by Dan Gilbert, the owner of the NBA’s Cleveland Cavaliers and founder of Quicken Loans, and Caesars Entertainment, Inc.
According to Rock Gaming principals Nathan Forbes and Jeffrey Cohen, quoted by the Cleveland Plain Dealer, “We were passionate about preserving and enhancing the original Neoclassical and Art Deco style of this building inside and out. From Higbee’s entrances to its interior structural and decorative details, we challenged ourselves to maintain the timeless features of the building while completely reinventing its use.”
According to Cohen, converting the historic building into a casino brought the building closer to its original design, including the restoration of details on columns and uncovering of windows closed for many years. Forbes added, “With the addition of a few exterior enhancements, Higbee’s facelift has transformed her tired look into an entertainment destination.”
In Missouri, Penn National Gaming announced it will purchase Harrah’s St. Louis Casino in Maryland Heights from Caesars Entertainment for $610 million. The sale is expected to close by the end of the year, after which Harrah’s will become part of Penn’s “Hollywood” brand, which is used at its 11 other properties. Penn already owns a property in Kansas City, so acquiring the approval of the Missouri Gaming Commission may move faster than if it were new to the state.
Opened in 1997, Harrah’s ranks second in the St. Louis region by revenue; players spent $268.4 million there last year, down 1.2 percent from 2010, according to the Missouri Gaming Commission. In 2011, Missouri gaming revenues grew 1 percent to $1.81 billion and St. Louis market revenues increased 4.5 percent to $910.7 million.
The property employs 1,900 people, and features 109,000 square feet of gaming space with 2,600 slots and 85 table games, a 500-room hotel, nine dining and entertainment venues and a 4,600-car parking garage. It’s located directly off I-70 and adjacent to the Missouri River, 22 miles northwest of downtown St. Louis.
Harrah’s Chairman and CEO Gary Loveman said, “The sale of this property exemplifies our strategy to maximize returns from our mix of assets through investments in new markets as well as occasional divestitures. We are committed to expanding our distribution network into growth markets that have the potential for high returns.”
In an interview with the Las Vegas Review Journal, Loveman said that he’s trading an established market for new and potentially more lucrative markets, like Ohio, where Caesars will open two Horseshoe casinos this year.
“That market (St. Louis) is very heavily developed. There is tremendous capacity,” Loveman said. “So rather than be in a very heavily supplied and mature business like that, we can take that $610 million and redeploy to these high-growth emerging markets. I think that’s a pretty good trade, and that’s what justified the deal.”