Off-Strip Vegas Casino Fetches $20M

LAS VEGAS-MTR Gaming Group Inc. of Chester, WV has acquired Binion’s Horseshoe Hotel & Casino Downtown from Harrah’s Entertainment and concurrently entered into a joint operating agreement with Harrah’s. The property, which generated $70 million (unaudited) in revenue in 2003, closed in January, displacing some 900 workers. The property will reopen April 1.

Binion’s Horseshoe Hotel & Casino has approximately 360 hotel rooms, 80,000 sf of gaming space, restaurants and a rooftop swimming pool. The purchase price was $20 million–subject to increase by $5 million if, at the termination of the JOA, Harrah’s has achieved certain operational milestones. Separately, MTR purchased for $1.8 million one of several parcels the property sits on that previously was ground leased for $232,500 per year.

The JOA will have an initial term of one year, which Harrah’s may extend up to three times for a total of two years. Under the agreement, MTR will receive $2.4 million for the initial one-year term. If Harrah’s extends for the second year, MTR will receive the greater of $4.8 million or 50% of EBITDA. If Harrah’s extends for another six months, MTR receives the greater of $2.7 million or 50% of EBITDA, and the same terms hold true if Harrah’s extends for the final six-month period.