CHESTER - As MTR Gaming Group continues adjusting to new gambling markets, the company that operates Mountaineer Casino, Racetrack and Resort will merge with Eldorado Resorts.
The combination will create a regional gaming operator with annual net revenues of $832.6 million, according to company officials.
Also Monday, MTR named Joseph L. Billhimer as permanent president and chief operating officer, a role in which he had already been acting.
"Joe has been a major part of MTR Gaming's improved performance over the past few years, and as president and chief operating officer, we expect he will continue to provide significant contributions to the company going forward," said Steven M. Billick, chairman of the board of MTR Gaming.
As part of the merger of MTR and Eldorado, a cash election option will be offered at $5.15 per share for up to 5.8 million shares to MTR Gaming's current stockholders. The combined new company will remain publicly traded under the banner Eldorado Resorts Inc.
"This transaction provides MTR Gaming Group a great opportunity to offer our stockholders a choice to continue to be a part of our future success or to receive a significant cash premium to the current stock price," said Billhimer regarding the merger.
Gary Carano will be chief executive officer of the combined company. Officials expect the merger to be complete by mid-2014. "We are excited to announce this transformative transaction, which creates a new gaming platform with a diversified portfolio across the country," said Carano.
Billhimer recently said legalized gambling in Ohio has impacted profits at Mountaineer, which is the company's original facility. MTR also operates Presque Isle Downs and Casino near Erie, Pa.
From April through June, parent company MTR's revenue was up 11.1 percent compared to the same period in 2012. However, revenue at Mountaineer slumped 10.6 percent during this same time.
"The expansion of gaming in Ohio and other regional markets continues to cannibalize existing mature markets, including Western Pennsylvania and West Virginia ... " Billhimer recently said.
Companywide MTR earnings from April through June were $27.5 million, an increase of 34 percent from last year. Net income was $2.4 million. During the period, MTR saw revenues of $132.3 million, up from $119.1 million over the same time in 2012.
However, revenue at Mountaineer from April through June was $52.4 million, down from $58.4 million during the same three months in 2012. Slot machine revenue dropped by $4.6 million during this time, while table gambling revenue slumped by $1.4 million.
Increased competition from Ohio also causes problems for Wheeling Island Hotel-Casino-Racetrack. Officials there are anticipating a $1 million loss on table games this year, in addition to paying the $2.5 million annual fee required by the West Virginia Lottery Commission.