CLEVELAND, Ohio – The downtown Cleveland casino and associated Racino in Thistledown are in a new phase with no Dan Gilbert, who led the Ohio gambling legalization campaign in 2009 and the state’s first downtown casino in 2012 Cleveland opened.
JACK Entertainment confirmed Wednesday that the management team had bought Gilbert’s ownership interest, a deal that was closed in December without any formal notice and so quietly that visitors would not have noticed a difference.
Business lately has largely mirrored that of the other casinos and racinos in the state – a sharp drop overall in 2020, the result of coronavirus-related closings and work time restrictions, but robust when fully open. The industry across the state saw record performances for months in 2020 when allowed to stay open 24/7 before and after full spring closings.
Matt Cullen, chairman of JACK Entertainment, said it has been “a really challenging year” since the virus broke out. But he added, “We did well in relative terms. … We have really adopted the COVID protocols. Since we reopened, we have been able to make people feel very safe. “
Cullen covered a number of topics during an interview with cleveland.com and The Plain Dealer about the casino, Racino and their continued operation under the JACK brand.
Who owns JACK Entertainment if Gilbert sells his stake?
Cullen said he is the main investor among “a significant group of investors” who have bought Gilbert’s ownership interest. This includes “about 15 or 20 top executives” who were there prior to the sale.
Cullen has been with Gilbert’s corporate family for more than a decade, leading the gambling side as well as other businesses such as real estate. Prior to that, he was general manager of economic and development services at General Motors.
How important would it be if Ohio ever legalized professional and college sports betting with neighboring states?
“I can’t say it’s a need, but it is definitely something that we’d love and our customers would like,” said Cullen of the potential of sports betting.
“We would like to be able to make it available to our customers. I know the state of Ohio is considering it. We will not comment on this process. But in other countries it was a big advantage. We know a lot of our customers would enjoy it. “
Separate proposals in the Ohio House and Ohio Senate have failed, despite Governor Mike DeWine when introducing his budget for 2019, said he expected state revenue from sports games at some point during the two-year budget.
Sports betting per se is not very big in the casino industry and makes up a small fraction of gaming revenue in Las Vegas. But it is considered a tie for the casinos to attract customers who end up spending money in other ways.
“Maybe they place a bet, go to dinner, and then come back to see the second half of the game and maybe play a slot machine,” said Cullen.
How about Thistledown?
Though North Randall’s JACK Thistledown Racino is much less than MGM Northfield Park Racino right next door in Summit County in terms of gaming revenue, it had the largest year-over-year increases among Ohio’s 11 casinos and racinos in each of the last two before the pandemic Years.
Gambling revenue withheld after winnings were paid out increased 10.4% in 2018 and 11.7% in 2019 to $ 142.5 million. In the first two months of 2020, before the pandemic broke out, revenue increased another 18.6%.
Cullen said he believes the gains are related to investments JACK has made and continues to make in the facility. Work is underway on a new outdoor deck for slot machines, a feature popular with gamblers who enjoy smoking but are not allowed to do so in Ohio’s casinos and racinos.
The original terrace, said Cullen, “was added afterwards. This is really built up very thoughtfully. “
Racinos like Thistledown and Northfield Park, unlike casinos that offer table games and a wider selection of slot machines, are only allowed to offer random slot machines called video lottery terminals. Downtown Cleveland Casino has some of the best table game revenues in Ohio.
How well does it work to be a gambling company with only two locations?
With two establishments – Thistledown Racino and Downtown Casino – JACK lacks the branding and connections of MGM, Las Vegas Sands, Casesar’s, and other big players in the industry.
But Cullen said he thinks it works for JACK because casinos have gotten more regional now that so many states have so many casinos and racinos.
“Regional gaming is just that; it’s regional. Your client comes from a relatively close range, ”said Cullen.
For JACK, this is the crowd in northeast Ohio who, prior to Ohio legalization, mostly traveled to Detroit, Pittsburgh, Erie, Pennsylvania or Chester, West Virginia for their “local” gambling trips.
The Cleveland Casino is historically the second largest of the four casinos in Ohio, behind Hollywood Columbus. Last year was different, falling back to third place when Hollywood Toledo saw a big boost when the Detroit casinos had extended closings.
Would JACK buy or be open to buying other casinos?
“We are focusing on the two properties,” said Cullen when asked about possible changes in ownership.
But when an opportunity arose, Cullen said, “Smart people listen to alternatives.” This could also be a buyer: “We want to grow these assets further and we may try to grow the company even further considering other assets.”
JACK Entertainment was recently involved in three major deals, including the sale of its Cincinnati and Detroit casinos:
* Former JACK’s Detroit Casino – the Greektown Casino Hotel – is now owned by VICI but operated as Greektown by Penn National after a $ 1 billion deal was announced in 2018 and closed in 2019.
* Former JACK’s Cincinnati casino is owned by VICI but is operated by Hard Rock International after a $ 745 million deal ($ 558 million from VICI, $ 187 million from Hard Rock) for the late 2019 Casino and Turfway Park was completed by JACK in Kentucky. The last deal included Churchill Downs, which ended with Turfway.
* And while JACK continues to operate the casino in Cleveland and Racino in Thistledown, it does so under a lease with VICI. VICI bought the properties to lease back to JACK as part of a $ 843 million deal that closed in January 2020.
Gilbert’s approach to the casino was a little different than many other casinos in that there was no concert hall or theater and instead focused on being part of the downtown area. Did it work out?
“I think it worked,” said Cullen. “The whole predicate was that we are part of the city center and not compete with the city center. Because of this, we don’t have many restaurants and night clubs. We have a robust approach to business where we offer comps, meals and surrounding restaurants.
“We initially got involved with it because we thought we could create vitality in the city center. I think it did and we will continue to work with businesses in the downtown area. I am optimistic about downtown Cleveland. I think it’s an enormous center for business and commerce. We know that the success of the casino depends on the success of the downtown area. “
What about the original plan to build a casino overlooking the Cuyahoga River behind the Terminal Tower complex?
Voters may remember the dazzling drawings of a casino overlooking the river south of Huron Avenue on display during Ohio’s 2009 campaign to legalize gambling. This was lifted in favor of a faster plan for moving into the Higbee building. billed as a temporary location at that time.
Over the years it has been temporarily switched to permanent, with the river location designated as the second phase. But the second phase never came about and there are no plans to change it.
“There won’t be a casino on this site,” said Cullen. “The casino in Cleveland is the one in the Higbee Building. Nothing changed about that. “
Rich Exner, data analysis editor for cleveland.com, writes about numbers on a variety of topics. Follow @RichExner on Twitter. Follow casino coverage at cleveland.com/casino.
Dan Gilbert sells Cleveland Casino interests; JACK Entertainment remains the operator
Racino business in Ohio is down 26% in 2020, a year of coronavirus disruption. Include taxes and fees of $ 165 million
Dan Gilbert’s $ 2.6 billion in JACK Entertainment Casino / Racino deals are in line with the industry trend
JACK Entertainment will sell the Cincinnati Casino. Keep Cleveland: What You Need To Know