Look out for the 800-pound gorilla
Eldorado Resorts Inc. finally completed its $17.3 billion acquisition of larger gaming rival Caesars Entertainment Corp. on Monday, creating the largest casino company in the United States. The new combined company will keep the Caesars name, almost certainly because of its brand recognition, and will be called Caesars Entertainment Inc.
The new Caesars operates 55 casino properties in 16 states, including eight on the Las Vegas Strip and four in Atlantic City. The latter should soon be down to three, as the “old” Caesars has an agreement to sell Bally’s Atlantic City to Twin River Holdings for $25 million.
The company will also retain the Caesars Rewards loyalty program, creating a monster database with over 60 million members.
Tom Reeg, the CEO of Eldorado, will take the same position with the combined company. In the official announcement of the closure of the deal, Reeg said:
We are pleased to have completed this transformative merger, thus making us the premier leader in gaming and hospitality. We look forward to executing on the numerous opportunities ahead to create value for all stakeholders. Additionally, we are pleased to welcome all of our Team Members to the combined company, and we look forward to implementing all of the strategic initiatives that will position the company for continued growth.
Had to satisfy regulators
Eldorado and Caesars had to traverse a gauntlet of regulatory approval in recent weeks. They needed gaming regulators in every state in which they operate to give the merger the go-ahead, including most recently Indiana, Nevada, and New Jersey.
To satisfy antitrust concerns, the company will sell some of its properties. In Indiana, the new company would own five of the state’s 13 casinos. So that it will not completely dominate the market, Caesars will sell Horseshoe Hammond and Caesars Southern Indiana, both of which are “old” Caesars properties, as well as Tropicana Evansville, an Eldorado casino.
New Jersey’s approval was a slog, requiring about ten hours of hearings over the course of three days last week. The New Jersey Casino Control Commission did finally approve the merger on Friday by a 2-0 vote (there would normally be three votes, but one commissioner retired earlier this month), subject to 39 conditions. One such condition is that Caesars invest $400 million – kept in a trust – in its three remaining Atlantic City casinos – Tropicana (Eldorado), Harrah’s (Caesars), and Caesars – over the next three years. If the Bally’s deal with Twin River falls through, the company must put another $125 million into the trust for further investment.
There is also some speculation that Caesars might sell at least one of its Las Vegas casinos. Industry analysts think that Hard Rock International, owned by the Seminole Tribe of Florida, is an intriguing candidate as a buyer, especially since the company recently acquired the rights to the Hard Rock brand in Las Vegas.