Caesars Attempts to Sell Rio to PokerStars, Gets Shot Down

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According to a report from a respected financial magazine, Caesars Entertainment proposed a sale of one of its prime assets to an online poker site last month, but the offer was rejected.

Forbes Magazine’s Nathan Vardi reported this weekthat in February, Caesars Entertainment officials approached PokerStars‘ head honchos with what could have been a golden opportunity for the largest online poker site in the industry. The deal would have involved PokerStars purchasing the Rio All-Suite Hotel and Casino in Las Vegas. In a statement, PokerStars’ Eric Hollreiser confirmed the offer.

“Caesars approached PokerStars and offered to sell us certain assets, such as the Rio Casino in Las Vegas. Caesars suggested that this acquisition would give us a better relationship with Caesars and would help PokerStars gain a license in Nevada,” Vardi reported that Hollreiser said in the statement. “PokerStars declined the offer because we had no plans to acquire another casino in the near-term.”

This bombshell comes on the heels of Caesars attempting to restructure some of its debt. As reported on PocketFives last month, Caesars issued $1.5 billion in new debt through the sale of private secured notes in an attempt to cover Q4 2012 losses. Caesars has long-term debt that amounts to $20 billion, by far the highest in the casino industry. As far back as September of last year, financial analysts have suggested that Caesars could get out from under some of that debt through the sale of its more profitable arms.

The financial company Fitch Ratings suggested back then that Caesars should look at selling the WSOPand its online operation, Caesars Interactive Entertainment. The sale of these two entities would provide a much-needed boost of capital, Fitch declared, at a time when the company’s debts continue to mount. At that time, Caesars Entertainment officials refused to comment on the Fitch report and did not give any signs the gaming giant was considering a sale of any of its assets.

The failed Rio deal between Caesars and PokerStars only highlights the potential battle brewing between the online site and U.S. casino interests. PokerStars is deep in negotiations to purchase the Atlantic Club (pictured) in Atlantic City, looking to potentially gain access into the newly regulated New Jersey online gaming market. But, a surprising opponent has emerged regarding that purchase in the Garden State.

As PocketFives reported on Tuesday, the American Gaming Association (AGA), the lobbying arm of the U.S. casino industry, filed a brief with the New Jersey Casino Control Commission in opposition to PokerStars’ purchase of the Atlantic Club. Citing PokerStars’ settlement with the U.S. Government in 2012 on fraud and money laundering charges stemming from Black Friday, the AGA argued that PokerStars “was operated as a criminal enterprise for many years” and that the company lacks the proper “character, integrity, and honesty required by New Jersey law.”

In a statement, Vardi reported that PokerStars believed its application for a gaming license was a regulatory issue to be decided by the proper officials rather than one for partisan interests.

The discussion on the PocketFives forums regarding the further push of PokerStars into the industry has brought differing opinions. Many discussed a hypothetical purchase of Caesars’ WSOP brandby PokerStars. To that end, AhoosierA opined, “If this (the sale of the WSOP to PokerStars) were to happen, PokerStars would be an even more dominant company in the poker industry… PokerStars would have control over nearly every single high-profile poker tour.”

Pimpnuho wasn’t fond of the idea, stating, “I would like to see sites competing for our business in an open market and see the benefits that would come with it. Stars locking up all the premier assets… isn’t good for the players in the long-run.”

PocketFives Traininginstructor Gags30 noted, “Caesars is on a pretty steep downward spiral… The WSOP is something very lucrative/profitable they own. They certainly could be looking to sell.”

Is it possible we could see the sale of the venerable WSOP soon? And who would be that new owner if PokerStars were off the table? Finally, how far is PokerStars willing to go to get back into the U.S. market and, potentially, the live American poker industry?

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10 COMMENTS

  1. What I’m wondering is what happens to Vegas? I think most companies in Vegas are way upside down and barely treading water. So is Vegas going to bust? Because it seems weird that all these casinos are grabbing at the online market for a lifeline.

    • Lol at pokerstars lacking “character and integrity”

      haha. lot more integrity than the US DOJ

    • AGA is just trying to protect their future stake in on-line gaming by trying to push Stars out of the way. simple politics here. i agree with Pimpnuho let it be an open market were the sites have to give players better incentives (ex. higher rakeback, more live satties etc..) to play on a specific site. if one company like Stars owns more than all other companies it would be worse for players and better for the company.

    • Gags30: “The WSOP is something very lucrative/profitable they own. They certainly could be looking to sell.”Imagine that actually happening, I would be amazed of pokerstars poker power life and online. I think ps with be very interested if that was on the table of business. Has an amazing growing power.

    • I think Stars wants the Atlantic city deal and that’s it… They just got done settlling with the FEDS and buying Full Tilt.. Their approach to not bite off more than they can chew has proven to be a successful businees model, I don’t they’re going to change it up now!

    • In my opinion this was a Bait & Squish tactic compiled by Caesars Entertainment. Lure PokerStars into an agreement to purchase the Rio and WSOP brand, pending approval by gaming regulatory boards in Nevada. Nevada gaming boards knock down PokerStars purchase of Rio and WSOP brand, thus complicating their efforts to acquire the Atlantic Club casino in New Jersey on the basis that they were deemed unfit as a gaming establishment in the state of Nevada. It would have been a colossal win-win for Caesars but thankfully PokerStars didn’t take the bait. Think my theory is far-fetched? How surprised were YOU to read that Caesars even considered selling the Rio and WSOP brand to PokerStars back in February? As posted by me on in comments section of PokerNews stories in relation to PokerStars trying to enter Atlantic City: If the American Gaming Association is literally the lobbying mouthpiece of Caesars entertainment and the American Gaming Association tries to block the entry of PokerStars on the basis that they’re a criminal enterprise then WTF did Caesars try to sell the Rio and WSOP brand to criminals? All casino owners/gaming establishments in Atlantic City should disclose publicly, not via the AGA, as to whether or not they’re opposed to the PokerStars purchase of the Atlantic Club in Atlantic City!

    • Was reading that caesars was way broke, owing bj’s all over town..(I think vinnie and mario are skimmin again, but thats just me)