TLDR A Stifel analyst says buyers still want regional casino assets despite rising borrowing costs. Ten-year Treasury yields recently hit 24-year highs, and the Fed may raise rates again this year. Fertitta Entertainment is on track to close its $17.6 billion purchase of Caesars Entertainment next year. Century Casinos is selling two Alberta venues, and Churchill Downs has nine regional casinos for sale. Large online gambling deals look unlikely for now, though small product deals may still happen.
Interest in buying regional casinos remains strong even as borrowing costs climb, according to a Stifel analyst. The view comes after talks with industry players at the Global Gaming Expo in Las Vegas last week.
Ten-year Treasury yields recently reached 24-year highs. The Federal Reserve is also likely to raise interest rates one more time before the end of the year.
Those higher costs could make it harder for companies to pay for casino mergers and acquisitions. Many casino deals are funded with borrowed money.
In a new report to clients, Stifel analyst Jeffrey Stantial said the mood at the expo reflected those concerns. Attendees saw the volatile bond market as a possible hurdle to more casino deals.
Still, Stantial said buyers have not walked away. He came away with the impression that both financial buyers and private strategic buyers still want to acquire certain regional gaming assets.
Caesars Deal Moves Forward
One positive sign for casino deals is the pending takeover of Caesars Entertainment. Fertitta Entertainment is on track to close its $17.6 billion purchase of the company next year.
The deal includes a large amount of debt financing. Caesars investors voted heavily in favor of the Fertitta offer.
The combined Caesars and Golden Nugget company could also gain from steady demand for regional casinos. Many expect it