Dan Gilbert said to be looking to cash out of casinos
Dan Gilbert, the billionaire entrepreneur who's a driving force in downtown Detroit's revival, is looking to exit the casino business, including his Greektown Casino-Hotel, according to a Bloomberg news report.
Representatives for Gilbert's Detroit-based Jack Entertainment LLC wouldn't verify the Bloomberg report that relied on anonymous sources.
"It is Jack Entertainment’s long-standing policy to not comment on rumors or speculation," Gilbert’s firm said in a statement. City of Detroit officials and the union representing casino workers also declined comment Thursday.
Any potential sale would likely mean the casino would continue to operate and wouldn't even shut for a single day, said gaming analyst Jake Miklojcik.
"That'd be like shutting a public utility — it's too important to Detroit in terms of jobs and tax revenue" said Miklojcik, president of Michigan Consultants in Lansing. Miklojcik served on the interim board that oversaw the transition of the Greektown Casino out of bankruptcy in 2010. Gilbert didn't own the casino hotel during its bankruptcy.
Jack Entertainment has interests in six casinos and racetracks, including Jack casinos in Ohio and the Greektown Casino-Hotel in Detroit, which Gilbert acquired in 2013. The properties may be sold separately. Gilbert is worth an estimated $7.8 billion, according to the Bloomberg Billionaires Index.
According to Bloomberg, Gilbert has already selected two banks, Deutsche Bank and Credit Suiss, to represent the gaming company in potential sales talks. Las Vegas-based Caesars Entertainment Corp. is among the possible bidders that have expressed interest in some properties, according to the report.
Caesars was Gilbert’s partner in the Cleveland and Cincinnati properties, which operated under the Horseshoe name until he bought out Caesars three years ago. Representatives for Caesars declined to comment. Caesars has a Windsor casino, hotel and concert venue that serves the Metro Detroit market.
The Greektown casino generates the least revenue among the three Detroit casinos, though it is vital to the city of Detroit's budget. Casino taxes are the city’s third-largest source of revenue behind income taxes and state revenue-sharing. Detroit’s three casinos’ combined June revenue of $119 million was up from the same month a year, according to the Michigan Gaming Control Board.
MGM Grand Detroit has 44 percent market share, MotorCity Casino Hotel has 33 percent and Greektown has 23 percent. Each casino has 100,000 square feet of gaming space, 400 hotel rooms, conference space and various restaurants.
The city’s general fund budget is approximately $1 billion annually and revenue from the three casinos is around $180 million a year. That means about 18 percent of the city’s revenues coming from the casinos.
Dan Gilbert, founder of Quicken Loans Inc., also has control of more than 90 downtown Detroit properties through his Bedrock Detroit firm.
He also owns the Cleveland Cavaliers basketball team and has major real estate investments in Ohio. Casinos have been part of his strategy to revive struggling downtowns in older U.S. cities. He backed a 2009 ballot measure to legalize casinos in Ohio and opened his first property in an historic building in downtown Cleveland three years later.
The gambling industry is in the midst of an acquisition wave, thanks in part to the emergence of casino-based real estate investment trusts that allow bidders to pay higher prices for properties. The U.S. Supreme Court’s legalization of sports wagering in May has added to their potential growth prospects.