Industry Sports

Eldorado Seeing Stars, Announces 20-Year Online Gaming Agreement With PokerStars Parent Company

eldorado stars group agreement

A potential gaming superpower is forming, as Eldorado Resorts, owner of 28 land-based casino properties in 13 states, announced a partnership Monday with top online and mobile gaming company The Stars Group (TSG), best known as the parent company of PokerStars.

It’s a 20-year definitive agreement, providing TSG entry into the online gaming markets in any state in which Eldorado owns or operates (or will own or operate in the future) a casino property, while granting Eldorado a share of TSG’s revenue from those affiliated online operations.

In layman’s terms: The Stars Group gets a huge leg up as online sports betting and other forms of online gambling expand into new states, and Eldorado Resorts gets money.

New states for Stars

Eldorado has casino properties in Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, New Jersey, Ohio, Pennsylvania, and West Virginia. Nevada and New Jersey are the only states among those in which online gambling is currently operational — and Eldorado just moved into NJ last month by purchasing the Tropicana in Atlantic City.

Eldorado announced a partnership with British-based sports betting company William Hill on September 5, so it’s natural to wonder if these two partnerships are in conflict. As Eldorado explained in its Monday morning press release, “William Hill US remains Eldorado’s exclusive provider for land-based retail sports wagering and has consented to [Eldorado’s] agreement with TSG. William Hill US will share in the economics of The Stars Group transaction and will have access to Eldorado’s first and third skin for online sports betting in all states.”

As you can probably infer from that statement, TSG has an option on Eldorado’s second skin for online sports betting in each state. TSG also gets first-skin access in states in which Eldorado has more than one casino property. As for online casino and poker, TSG can access Eldorado’s third skin in each state.

“We are excited to announce this agreement with Eldorado, one of the fastest growing regional gaming companies in the United States,” Stars Group CEO Rafi Ashkenazi said. “This agreement establishes the foundation for our U.S. strategy as we tactically pursue access to other key states and opportunities with potential media partners.”

Added Eldorado Chairman and CEO Gary Carano, “The Stars Group is one of the world’s largest, most licensed, and most geographically and product diverse publicly listed online gaming companies. We are excited to work with The Stars Group to capitalize on their proven ability to leverage their products to gain share in the growing market for online gaming.”

Financial terms

For any verticals operated by TSG under Eldorado’s licenses, Eldorado will receive an undisclosed revenue share. Eldorado also receives a $25 million upfront equity interest in TSG, with an additional $5 million possible upon the exercise of the first option by TSG.

In addition to PokerStars, TSG’s portfolio include PokerStars Casino, the sports betting arm BetStars (which launched in New Jersey in September), Full Tilt, BetEast, and several gaming sites under the Sky brand.

While the state-by-state rollout of online gaming has inched along slowly for the past five-plus years, sports betting is moving at a rapid pace, with Rhode Island scheduled today to become the eighth state to offer regulated sports wagering.

A forward thinking deal

It’s plausible that we won’t see the fruits of the Eldorado and TSG partnership for some time. In New Jersey, TSG already has a strong presence, supporting an online poker room, online casino, and sports betting app under the Resorts AC license. At best, the Eldorado-owned Tropicana AC could conceivably double dip, offering its own TSG-powered products, as William Hill US does with Ocean Resort Casino and Monmouth Park. Whether or not this would be a worthwhile venture for Tropicana, which already supports two successful online casino sites, is highly questionable.

In Pennsylvania, Eldorado owns two properties — Presque Isle Downs and Lady Luck Nemacolin — so one might think there is at least a path for BetStars to offer online sports betting through an Eldorado casino, despite Pennsylvania’s one skin per license holder limitation. Not the case, as Churchill Downs will soon be closing on an acquisition deal for Presque Isle, leaving Eldorado with just Lady Luck. As per the rules of the arrangement, if Lady Luck does apply for and receive a sports betting license, William Hill US (and not Eldorado) would have access to its solitary skin.

Lady Luck did not apply for any online gambling licenses in Pennsylvania.

Furthermore, TSG is already aligned with Mt. Airy Casino in Pennsylvania to launch online gambling (including poker) and mobile sports betting through its license.

Given this, it appears the deal will be more impactful in states that have yet to legalize online sports betting, like Louisiana, where Eldorado owns two properties. Eldorado also has an existing presence in West Virginia and Mississippi — two states that have legal sports betting, but only at land-based venues (for now).

Photo by Anon Muenprom / Shutterstock.com

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