MTR Gaming Group and Harrah’s closed their deal last week to acquire the Horseshoe Hotel & Casino from Becky Binion Behnen.
While MTR purchased the property for $20 million, Harrah’s will operate the hotel-casino for one year, with the option to run it for an additional two years.
"Binion’s is a Las Vegas landmark and is situated in what we consider to be the best location in downtown Las Vegas," said Edson R. (Ted) Arneault, president and CEO of MTR Gaming. "It will enable us to leverage our management team and provide critical mass within the Nevada market, thus improving overall financial performance."
Arneault added that the acquisition will immediately translate into increased cash flow and earnings per share for MTR, which also owns the Ramada Inn and Speedway Casino in North Las Vegas.
Under terms of the agreement, the purchase price of $20 million is subject to increase by $5 million if at the end of the management contract, Harrah’s achieves certain operational milestones.
In addition, Harrah’s receives the rights to the "Horseshoe" brand in Nevada as well as the name, "World Series of Poker," and MTR gains the rights to the "Binion’s" name.
"We are pleased to be working with Harrah’s, and are enthusiastic about re-opening the property on or about April 1 and hosting the 35th Annual World Series of Poker beginning April 22," Arneault said. "While our primary growth strategy continues to be building or acquiring other middle-market gaming and/or pari-mutuel businesses, we are very optimistic about the Binion’s opportunity and look forward to reporting on its developments."
While Harrah’s will be the day-to-day operator of the property, the operations and capital expenditures are subject to certain oversight and review by a joint committee of the two companies.
At the end of their joint operating agreement, MTR will take over operation of the property and probably re-name it "Binion’s."
Located in the heart of downtown Las Vegas, Binion’s Horseshoe generated over $70 million in revenues in 2003. The property has approximately 80,000 square feet of gaming space, 360 hotel rooms, restaurants, and a rooftop swimming pool.