Caesars: You only buy twice; To Russia with Ho; Land in (dis)trust

Do you already own stock in Caesars Entertainment? Congratulations. Thanks to the Nevada Gaming Control Board, you will have an opportunity to pay a second time for some of Caesars’ assets. Although it hopes to raise $1.2 billion from the public offering, Caesars has pledged so much dough against casino projects in Cleveland and Baltimore, and possible ones in Ontario and Florida, that the money’s as good as spent already. The spinoff will leave the parent company only $19.6 billion in debt, $500 million having been dumped off onto Caesars Growth Partners. As described earlier in these pages, the latter will own a grab-bag consisting of Caesars Interactive, Horseshoe Baltimore and Planet Hollywood. Growth Partners will skim, er, collect management fees from the two casinos. (Getting paid by assets that you own … that’s a mighty neat trick.)

Caesars stock jumped like a kangaroo on the news. But Motley Fool analystTravis Hoium panned this “dilutive offering.” The Street‘s Robert Weinstein also took a wait-and-see attitude, describing Caesars’ balance sheet as emulating “the joy of a seven rolled after establishing your number … Why raise capital to expand into new areas if you can’t produce a profit in your core market?” Today, Hoium came back for a second whack, describing CEO Gary Loveman‘s ploy as a “sucker’s bet … a sweetheart for private equity and a stinker for investors.” If John Q. Stockholder doesn’t buy into Growth Partners, he’s ceding an even larger stake to Texas Pacific Group and Apollo Management, Hoium argues. He even questions with Caesars Entertainment can survive with Caesars Interactive spun off in this fashion.

Man on the move. The most ubiquitous figure in gaming this year is inarguably Lawrence Ho. In addition to making a big move into the Philippines, he’s now committed $630 million toward a pair of casinos in Russia. One would be in Vladivostok and the other elsewhere in the Primorye. True, when one thinks of the glitz and romance of casino gambling, “Vladivostok” is not the word that springs to mind. It is, however, but a short drive from the border of China, and a couple of hours’ flight from Peking and Tokyo. It’s far closer to Peking than the latter is to Macao. Ho’s Melco Entertainment and affiliates will buy51% license-holder Oriental Regent Ltd. By Vegas standards, the casinos will be small: an aggregate of 210 tables, 1,300 slots and 319 hotel rooms. But you’ve got to start somewhere and, with casino gambling in Japan on indefinite hold, Ho’s made a bold and strategic move, striking deep into gambler-rich territory. S&G tips its fedora to him.

As I was saying, look for tribal gaming to become more aggressive in what’s pejoratively known as “reservation shopping.” Last week, it was the North Fork Rancheria of Mono Indians gaining an off-reservation foothold in California. This week, we have the Lower Brule Sioux Tribe seeking to move 15 miles off-rez and next to I-90 as it traverses South Dakota. In a (very small) concession to the Crow Creek Sioux Tribe, which operates a casino near the Lower Brule Tribe’s existing one, the Lode Star Casino (above) would be closed. So, the Crow Creek get the “convenience customers” while the Lower Brule lap up traffic from the interstate. I don’t see this going through without considerable inter-tribal acrimony.

Unlike his California counterpart, Jerry Brown, S.D. Gov. Dennis Daugaard is staying neutral for the moment. However, this may be a very, very rare scenario in which it was not the white man who spoke with the forked tongue. During its land-in-trust applications, the Lower Brule “asserted several times in … related documents during the 1990s that it would use the site for historic tourism purposes and didn’t plan a gambling casino there.” It was under a like understanding that then-Gov. Bill Janklow backed the application. According to the Rapid City Journal, the Lower Brule left themselves justthismuch wiggle room, though: “The tribe also stated, however, that it would follow federal Indian gaming laws if it did pursue a casino.” The casino-owning Shakopee Mdewakanton, over in Minnesota, will put up the money for the $53 million, mixed-Class II/Class III casino, if it gets built … which surely won’t happen without a fight.