Caesars Interactive is being courted for a $4 billion takeover but a deal is not simply plain sailing for its embattled parent.
Caesars Entertainment is considering the sale of its digital division, Caesars Interactive Entertainment (CIE), according to Bloomberg Technologies.
Anonymous sources told Bloomberg Friday that the embattled casino giant had received multiple offers that would value the company at $4 billion. Meanwhile, the Wall Street Journal understands that Caesars has hired investment bank Raine Group LLC to evaluate the bids.
CIE CEO Mitch Garber, told WJS that there was no formal sales process and the offers may well lead to nothing, but he added, ‘We want to hear what people have to say, for sure.’
CIE has been the silver lining for Caesars, a company mired in industry-high debt and bankruptcy proceedings. It’s the only Caesars unit currently turning a profit and has come to dominate the social casino games market, thanks to the success of its Playtika mobile brand and games suites like Slotomania and Bingo Blitz.
$18 Billion Bankruptcy Case
It owns the profitable World Series of Poker, as well as WSOP.com, which offers real-money gaming in Nevada and New Jersey, although its social gaming business far outstrips its real-money ventures. Last year the company brought in revenues of $766.5 million and earnings of $282.7 million.
It might be tempting for a company with roughly $20 billion in debt to make a sale. A windfall of $4 billion might take some of the pressure off Caesars’ other units whose potential profitability is stymied by crippling repayments.
But it may not be quite that simple.
Caesars is trying https://myfreepokies.com to reorganize $18.4 billion of its debt load by putting its chief operating unit, Caesars Entertainment Operating Corp (CEOC), through chapter 11 bankruptcy.
But it is also being sued by CEOC’s lower tier creditors who accuse its reorganization plans of favoring the interests of its controlling private equity backers over theirs.
CIE Part of ‘Asset-Stripping’ Claims
Moreover, they accuse Caesars of fraudulently transferring valuable assets from CEOC to other operating units, leaving CEOC holding all the debt and with no means to repay it.
A recent court examiner’s report sided with the creditors and stated that potential damages for their claims could range from $3.6 billion to $5.1 billion.
The creditors allege that CEI is one of the assets transferred out of their grasp, which would make any deal for its sale extremely difficult while the legal action is unresolved.
For all its untainted success over the past few years, CEI could well find itself sucked into its parent’s messy bankruptcy proceedings, one way or another.
Draftstars Wants to Grab Australian DFS Audience, Hoping to Piggyback on Aussies’ Love of Sports Betting
Australian daily fantasy sports site Draftstars, a joint venture between online bookmaker CrownBet and sports channel conglomerate Fox Sports, recently announced that the new platform is undergoing a promotional marketing drive to tap into the emerging Aussie demographic.
Bringing DFS Down Under: Australia will be the target of a daily fantasy sports marketing onslaught with Draftstars, a new platform hoping to capitalize on the potentially highly lucrative fantasy sports market. (Image: FOX Sports)
Hosted by the turnkey daily fantasy software company DraftDay, Draftstars was launched in early 2016 and currently offers contests on the National Basketball Association (NBA) and Australian Football League (AFL). The site touts itself as the ‘Official Daily Fantasy Sports Partner of the ALF.’
Marketing to the Masses
This week, Draftstars said it is initiating a multichannel advertising push to grow its brand awareness through television, radio, digital, and social media.
‘We are confident we have the right marketing strategy,’ Draftstars CEO Matt Sanders told eGaming Review. According to Sanders, the goal of the PR blitz is to ‘educate Australian sports fans on what an exciting and engaging experience daily fantasy sports is.’
Draftstars is open to legal residents of Australia and New Zealand who are at least 18 years old. Though the Interactive Gambling Act passed by the Australian Parliament in 2001 banned Aussie-based companies from offering online gambling, DFS is (for now, at least) exempt, as there is a sports-betting carveout, under which umbrella daily fantasy now falls. The site is regulated by Australia’s Northern Territory.
Down Under with DFS
DFS, of course, has been wildly popular in the United States with FanDuel and DraftKings since the two market leaders respectively commenced operations in 2009 and 2012. The leading cause for the DFS rise in America is due to the federal ban on sports betting outside of Nevada, combined with a long history of office pool fantasy betting across the country.
Daily fantasy contests provide fans an alterative way to add excitement to watching sports.
Conversely, DFS hasn’t taken off the same way in other countries, due to the fact that sports betting is not only legal, but cherished. That’s certainly the case in Australia, where placing a wager on Australian football, cricket, and rugby is a national pastime for ‘punters.’
However, recent steps by parliament to restrict in-play betting and a potential revamping of online gaming laws has some companies preparing for new regulations and perhaps a loophole by way of DFS.
What’s in a Name?
The DFS market is quickly becoming crowded with a host of platforms that all sound and look alike.
Ready for a tongue twister?
With DraftKings, DraftDay, FantasyDraft, Draftpot, Draft Ops, AlphaDraft, and PokerStars’ StarsDraft, Draftstars is just the latest DFS provider in a long list of companies trying to capitalize off the ‘draft’ terminology.
According to the Australian Government, Aussies spent $19 billion on gambling in 2008-09, and during that same year, roughly 70 percent of all citizens participated in some form of gambling.
Las Vegas Culinary Union 226 Implies Jim Crow Laws Being Used in Red Rock and Station Casinos Dispute
Las Vegas Culinary Union Local 226 says the actions of the Clark County District Attorney’s office in relation to the distribution of flyers by two of the union’s Hispanic members inside the Red Rock Resort late last year are so egregious, they are reminiscent of the ‘Jim Crow’ laws enacted in the South after the Civil War to enforce racial segregation.
Culinary Union 226 members, seen here protesting in February outside Palace Station in Las Vegas, are fighting back against criminal charges from Station Casinos, stemming from distributing materials inside the Red Rock Resort last December. (Image: unitehere.org)
As reported by the Las Vegas Review-Journal’s David Ferrara this week (and oddly not covered by any other local Las Vegas news outlets that we could discern, including going unmentioned on the union’s own website at the time of this writing), on December 15, 2015, two union representatives surreptitiously entered the five-star Red Rock Casino Resort & Spa’s guest room floors. There they allegedly circulated flyers under customers’ doors that decried the actions of the hotel’s parent company, Station Casinos.
According to items reportedly obtained by Ferrara, the flyers warned guests that ‘Station Casinos, the owner of Red Rock Resort, is the worst labor law breaker in Nevada gaming.’
Las Vegas Metro Police Department cited the two infiltrators that evening, after hotel security took the pair to its offices and handcuffed them.
But this is no simple trespassing case.
Instead of filing only misdemeanor trespassing charges against the two, prosecutors for Clark County District Attorney Steven Wolfson added ‘vagrancy’ to the allegations. That led defense attorneys for the union to question whether the district attorney’s office was working for the people of Clark County, or for Station Casinos, said Ferrara.
‘This amended complaint . . . resurrects the Jim Crow vagrancy laws of a segregated and bigoted United States,’ union defense attorney Tom Pitaro wrote in legal documents that Ferrara apparently had access to.
Jim Crow laws refer to the ‘separate but equal’ segregation policies that were enforced following the United States’ Reconstruction period in the post-Civil War era in the South, which continued to be enforced until 1965. ‘Vagrancy’ was one criminal charge levied on many people of color for any number of vague transgressions, and has since been ruled largely unconstitutional by the US Supreme Court for its lack of clarity as to what, in fact, can be considered ‘vagrant’ behavior.
Prosecutions for such charges must now be tied to specific and observable acts, meaning that security camera footage of the two union members putting flyers under doors would likely fill the bill.
But in general, Las Vegas hotels do not put security cameras in guest hallways, reserving them instead for watching where their money goes in casinos. This practice has been called up as unsafe by hotel guests in Sin City in the past, but whether Red Rock has installed such cameras, which might support its vagrancy case, remains unclear.
State of the Union
Union lawyer Pitaro is no stranger to controversial high-profile cases. Practicing law in Las Vegas for more than 40 years, he gained national notoriety for representing O.J. Simpson in 2013.
And like the case against Simpson, the Culinary Union defense will certainly be challenging for the experienced attorney.
That’s because the duo doesn’t seem to have much legal foothold to disseminate union materials in the hotel, let alone on guest room floors.
A common defense against trespassing and vagrancy is claiming the defendant was exercising their First Amendment rights, but the First Amendment generally doesn’t apply to private property, which Red Rock Resorts is. A claim could even be made that guests might have felt threatened by the flyers, although there is no evidence one way or the other on whether this has been mentioned by any customers.
Casinos Call the Shots
Las Vegas has designated areas where citizens, groups, and unions can petition locals into backing their causes. However, regardless of merit, a group cannot freely walk into a private property to summon support without prior consent from the ownership.
That’s because casinos, not unions, possess the right to dictate who enters their premises.
Nonetheless, the Culinary Union argues that Station Casinos is engaged in an aggressive anti-union campaign.
‘Many of us have devoted over half of our lives working at Station Casinos,’ a Culinary Union pamphlet states. ‘We demand that Station Casinos Ownership and Management . . . agree to a fair process for us to decide whether to have union representation without management interference and intimidation.’
Station Casino employees are currently non-union, something the Culinary Union hopes to change.
Pennsylvania Online Gambling Legislation Poised for Budget Inclusion
State Rep. John Payne’s Pennsylvania online gambling bill might finally become law, one potential positive of the state’s mammoth budget shortfall. (Image: abc27.com)
Pennsylvania online gambling is being heralded as a potential saving grace for state lawmakers in Harrisburg looking to overcome a $1.8 billion budget deficit. While some in the state capital are advocating for a sales or income tax increase, House Republicans are looking to Internet casinos as one possible solution to bridge the gap.
‘It’s definitely on the table,’ Stephen Miskin, press secretary to State House Majority Leader Dave Reed (R-District 62), told LancasterOnline.com.
The State House and Senate are currently battling over the 2016-17 fiscal budget and determining the best way to increase spending per Governor Tom Wolf’s (D) plans.
The iGambling bill at question is State Rep. John Payne’s (R-District 106) HB 649, legislation that would overhaul the state’s current gambling laws to allow for the inclusion of Internet casinos.
HB 649 would license each Internet operator at a one-time cost of $8 million, plus an additional one-time $2 million fee to fund problem gambling initiatives. Licenses would be renewed to companies in good standing at an annual cost of $250,000.
Online casino companies would additionally pay a 14 percent tax on daily gross revenues.
Though the tariffs might seem exorbitant at first glance, it’s important to remember that Pennsylvania has some of the country’s highest tax rates on land-based casinos. The state has an effective tax rate of 55 percent on the commonwealth’s 13 brick-and-mortar casinos.
First introduced in February of 2015, Payne’s bill hasn’t made much progress outside the House Gaming Oversight Committee in which he chairs. Last November, the committee voted 18-8 in favor of HB 649, but the statute has since dragged its feet in the House chamber.