Dan Gilbert has the right to cash in his casino chips, and the payout could be lucrative

September 12, 2018 12:00 AM
  • Howard Stutz, CDC Gaming Reports
September 12, 2018 12:00 AM
  • Howard Stutz, CDC Gaming Reports

As Ohio gaming regulators prepared to put the then-Horseshoe Casino Cleveland though its final test run before opening night six years ago, Dan Gilbert tried to blend in with the 1,600 employees.

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Dressed in a dark tailored suit and wearing a simple Horseshoe name badge, he may have looked like a pit boss, but Gilbert still stood out. As the person most responsible for Ohio finally getting casinos after a decade-long effort, Gilbert wasn’t low-profile.

He still isn’t.

The founder of online mortgage lender Quicken Loans, Gilbert, 56, has played a key role in the revitalization of two aging Midwestern cities.

He’s invested millions into downtown Detroit, which has spurred redevelopment and the opening of several new entertainment attractions and renewed excitement for the city’s future.

Gilbert has played a similar role in downtown Cleveland, where he owns the NBA’s Cleveland Cavaliers. Led by LeBron James, the team’s 2016 NBA title – the city’s first professional sports championship in 52 years – was a source of civic pride. The city has experienced a wave of redevelopment in the area surrounding the historic Higbee’s Department Store building, which houses the since-renamed Jack Casino Cleveland.

Through his Detroit-based Jack Entertainment – formerly Rock Gaming – Gilbert owns all or a portion of six casinos, including three in Ohio (Jack Casino Cleveland, Jack Casino Cincinnati, and Jack Casino at Thistledown Racetrack) and Greektown Casino – soon to be rebranded as part of the Jack Casino line – in Detroit.

Dan Gilbert, right, at his Nevada gaming licensing hearing with his attorney, Lloyd Levenson. (Photo via Las Vegas Review-Journal)

So, if Gilbert wants to sell his casino holdings, as reported a week ago by Bloomberg News, so be it. He’s earned the right to cash in, possibly by as much as $2 billion to $3 billion, if recent regional gaming industry acquisitions are used as a barometer.

Caesars Entertainment paid $1.7 billion for two Indiana racetracks this year. Eldorado Resorts and Gaming and Leisure Properties are paying $1.8 billion for seven Tropicana Entertainment casinos, and Penn National is buying 12 Pinnacle Entertainment casinos for $2.8 billion.

Gilbert’s Jack Entertainment also owns a racetrack in Kentucky and a portion of Horseshoe Casino Baltimore; Caesars owns most of Horseshoe Baltimore and operates the property.

Crain’s Business has reported that Gilbert might want to trade in the casino business to acquire the Detroit Tigers. Major League Baseball does not allow its owners to have casino interests.

Uncharacteristically, the usually outspoken Gilbert isn’t saying much. Jack Entertainment also declined comment to media outlets on the potential casino divestment.

Over all, Gilbert has seemed well-suited for gaming.

His efforts in the 2009 election – he and Penn National Gaming funded the successful $47 million pro-casino campaign – gave the state four full casinos and allowed slot machines at seven racetracks. Before Gilbert got involved, Ohio voters had rejected casinos four times.

Gilbert partnered with 20 percent-investor Caesars on the two casinos in Cleveland and Cincinnati and the slot casino at Thistledown. Horseshoe Cleveland opened in May 2012, with Horseshoe Cincinnati followed in March 2013; both were managed by the Las Vegas gaming giant.

Nevada gaming regulators licensed Gilbert in November 2013, when he took a small ownership stake in Caesars Interactive. Much of the hearing was spent on Gilbert answering questions about former UNLV basketball standout Anthony Bennett, whom the Cavaliers selected that year as the NBA’s surprise No. 1 draft pick.

He also discussed one blemish on his record – his connection with an illegal sports betting operation while enrolled as a student at Michigan State University. Gilbert said the case was dismissed and his record expunged after he took part in a court-ordered program.

Control board members chalked up the matter to a “youthful indiscretion.” Today, we might call it on the job training.

Two years later, Gilbert bought out Caesars’ stake in Ohio and rebranded the properties as Jack Casinos. Greektown was acquired in 2013.

Now, it seems, Gilbert is ready to cash in his gaming chips and move more heavily into sports ownership.

Following James’ departure to the Los Angeles Lakers, the Cavaliers are in a rebuilding mode. Unlike James’ first exodus from Cleveland in 2010 for the Miami Heat – when Gilbert penned an open letter calling James “narcissistic” – eight years later the owner was complimentary of the future Hall of Famer, saying the team would eventually retire his jersey.

If Gilbert is serious about selling, there won’t be a shortage of buyers. Caesars would make the most sense, given the company’s history in Ohio and its ownership of Horseshoe Baltimore. The three gaming industry real estate investment trusts – GLPI, VICI Properties and MGM Growth Properties – may also be interested.

While he’s earned the right to sell, I, for one, hope Dan Gilbert sticks around gaming for a few more years.

Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter