Caesars Withdraws From Massachusetts Casino Venture After Probe
Partner Suffolk Downs asked Caesars to withdraw following an investigation by the state’s gaming commission, according to a statement yesterday from the horse-track operator, which didn’t didn’t specify the findings and said it was confident it would receive approval on its own.
The decision clouds Caesars’ prospects for expansion in the U.S., where it is the biggest operator of casinos. The company, which was purchased in a 2008 leveraged buyout by Apollo Global Management LLC (APO) and TPG Capital, has $23 billion in debt and has relied on partners such as Suffolk Downs to help fund new projects.
Massachusetts regulators cited in their report concerns about the company’s financial structure, according to a person with knowledge of the matter who wasn’t authorized to speak publicly.
Suffolk Downs, whose principal owners are Richard Fields, chairman of Coastal Development LLC, and Joe O’Donnell, founder of Boston Culinary Group Inc., is competing with two other operators for the sole casino resort license in the Boston area. The other applicants are Wynn Resorts Ltd. (WYNN) and Crossroads Massachusetts LLC, which is affiliated with Connecticut’s Foxwoods casino.
Voters in East Boston, where Suffolk Downs is located, are being asked to approve a host agreement in a Nov. 5 election. The state’s five-member commission is expected to pick a winner of the Boston-area license by April, according to its website.
Caesars fell 6.9 percent to $18.70 yesterday in New York. The shares have risen 170 percent this year, as the company restructured debt and offered stock in a subsidiary that has a stake in its online gambling business. In a statement, the Las Vegas-based company said it would focus on properties outside of Massachusetts.
“The commission is attempting to set standards of suitability that are arbitrary, unreasonable and inconsistent with those that exist in every other gaming jurisdiction,” Caesars said, without elaborating.
A spokeswoman for the Massachusetts commission didn’t immediately respond to telephone and e-mailed requests for comment outside of business hours.
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