Dan Gilbert, the owner of Jack Entertainment, found a couple of buyers for Greektown Casino-Hotel in Detroit, Michigan. The two buyers, Penn National Gaming and Vici Properties, have agreed to purchase the property in a deal valued at $1 billion.
Rumors of Gilbert trying to sell the casino began a few months ago. In reality, Gilbert entered into discussions with Penn National and Vici Properties about nine months ago.
Gilbert told the Detroit Free Press that he expects the deal to close in 2019. Obtaining approval from the Michigan Gaming Control Board should not pose any problems, even though there are “significant regulatory hurdles.”
About Greektown Casino
Greektown Casino-Hotel has 400 hotel rooms, a 100,000-square-foot gaming floor and 1,800 employees.
Gilbert acquired the casino in 2013 for approximately $600 million. Since the purchase, he has invested millions more in renovations and property improvements.
The casino mostly finds itself coming in third place in gaming revenue behind Detroit’s other commercial casinos: MGM Grand Detroit and MotorCity Casino Hotel.
Greektown brought in gaming revenue of $27 million in September and commanded 23 percent of the market. Additionally, the property earns substantial revenue from its three restaurants, three bars and five quick-serve food locations.
John Payne, president and chief operating officer of VICI Properties, spoke about the value of Greektown in a press release from the company announcing the deal.
“As the only casino located in Detroit’s historic Central Business District, Greektown, and its 30-story hotel tower, are ideally situated. Downtown Detroit is benefiting tremendously from billions of dollars of investment across the residential, commercial, entertainment and cultural infrastructure.
“The eight-acre property benefits from being in close proximity to the world-class sporting and entertainment venues, which are home to Detroit’s four major sports teams, as well as iconic locations, such as GM’s Renaissance Center and the Cobo Center.”
When the sale is complete, Vici Properties will lease the property to Penn National. The lease is for 15 years and $55.6 million.
Gilbert mentioned Penn National will keep the current employees at a similar compensation they are receiving now.
“Penn had been interested in the Greektown casino for years on and off,” Matt Cullen, CEO of Jack Entertainment, said to Crain’s Detroit Business. “We felt like we accomplished much of what we wanted to accomplish. We got a good price.”
Gilbert investing in Detroit
Gilbert was not only born in Detroit, but he stayed in the Wolverine State through college, including Wayne State University Law School in Midtown Detroit. He currently lives in Franklin about 30 minutes outside of the city.
Gilbert talked about his motivation behind Greektown’s purchase.
“We bought it as a defensive play more than anything else. Two and a half years before we bought it, it came out of bankruptcy under the bondholders, and they weren’t running it well. It would have been very bad for downtown if Greektown went under. If this thing was in the outskirts or in the suburbs, we wouldn’t have purchased it. We wanted good things to happen downtown, so we went ahead and purchased it. But (the casino) is probably a business that’s fully valued right now.”
Now that Gilbert has an extra billion dollars in his pocket, the rumor mill is at it again. Those speculating believe Gilbert has an interest in buying the Detroit Tigers.
Gilbert already owns one professional sports team, the NBA’s Cleveland Cavaliers. Major League Baseball rules, however, prohibit him from owning the Tigers because his company owns other casinos. Cullen emphasized that the selling of Greektown to clear the way to purchase the Tigers “just isn’t accurate.”
Specifically, Gilbert plans to use some of the proceeds to invest it back into his favorite city, Detroit.
“We’re going to focus on business development and technology, the start-up scene in Detroit and things like StockX and other exciting businesses that will create jobs and excitement and attract people to the city from all over.”