Dover Downs owner Bally’s engineers sale-leaseback of Delaware property’s real estate

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Dover Downs owner Bally’s Corporation has a lot on its plate these days, including a recent deal that unloads the Delaware casino’s real estate. 

Gaming and Leisure Properties is buying the real estate associated with Bally’s Dover Downs casino for $144 million. 

The company will lease the property back to Bally’s for $12 million per year, subject to an escalation clause. The site includes banquet-convention areas and a 500-room hotel, the largest in Delaware.

A leaseback was also part of Bally’s recent purchase of the Tropicana in Evansville, IN, for $140 million from Caesars Entertainment.

As part of the transaction, Gaming & Leisure Properties, Inc. acquired the real estate associated with the Tropicana Evansville for $340 million and will lease it back to Bally’s for $28 million a year.

The Evansville site comes with sports gaming, a couple of hotels, and meeting and convention space in the southern Indiana city.

Pennsylvania-based Gaming and Leisure Properties pioneered the concept when spun out of Dover Downs’s rival Penn National Gaming.  Penn National operates several Hollywood Casinos, including Perryville, MD, west of the Delaware line.

Penn National leased the Perryville site to Gaming and Leisure Properties but later bought back the casino to get into the online gaming business in Maryland.

Leasebacks have been popular with real estate investors since the deals provide a reliable source of income. However, the danger for real estate investors comes if a casino defaults on its payments. 

With casinos like Dover Downs weathering the pandemic, the real estate deals are expected to continue.

Bally’s is building a nationwide footprint with pending deals that include the  Jumer’s Casino & Hotel (Rock Island, IL) and the Tropicana Las Vegas and the construction of a  casino near the Nittany Mall in State College, PA.

When those deals are done, the company will own and manage 16 casinos in 11 states. 

The growth spurt got underway a couple of years ago with the purchase of Dover Downs. Owned by a publicly traded company that had been under the control of Rollins family interests, the Rhode Island company, then known as Twin River,  went public via the  Dover Downs corporate structure.

Before that time,  the company had casinos in Rhode Island and small gaming sites in Colorado. Rhode Island casinos were facing competition from nearby Boston and its Vegas-style Wynn casino.

Twin River later acquired the Bally’s name from Caesars as a way to build a national brand. It also snapped up the Bally’s casino in Atlantic City.

The Bally’s in Las Vegas and the Tropicana in Atlantic City remain under ownership by Caesars, which Reno-based Eldorado earlier acquired. Eldorado, which was smaller than Caesars,  sold off casinos to Bally’s to shore up its balance sheet. 

Bally’s has also moved aggressively into various types of online gaming with several deals. Its most high-profile partnership is with the National Hockey League.

One disappointment came when its proposal for a massive casino resort in Richmond, VA, was quickly rejected by the city.

Once the dust settles from dealmaking, the company is likely to rebrand many, if not most, of its properties and player’s cards to the Bally’s name.

 

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