New company must meet conditions
On Friday, the New Jersey Casino Control Commission approved the $17.3bn merger of Eldorado Resorts Inc. and Caesars Entertainment Corp., the last hurdle the two companies needed to clear to get to the point where they can finalize their deal.
Chairman James Plousis and Commissioner Alisa Cooper both voted in favor of Eldorado’s acquisition of its giant casino competitor. Former commissioner Sharon Anne Harrington retired earlier this month and therefore did not vote.
Plousis did express his concerns with the state of competition in Atlantic City if the new company was allowed to just do what it wanted, but because 39 conditions were imposed on the merger, he felt comfortable giving his approval.
“I am satisfied that (Eldorado and Caesars) has met its burden of establishing, by clear and convincing evidence, that it meets each qualification standard under the Casino Control Act,” he said.
Though it is Eldorado buying Caesars, the combined company will use the Caesars name and loyalty program, likely because of brand recognition. Eldorado senior management, however, will control company operations. Caesars CEO Tony Rodio will be a strategic advisor to Eldorado CEO Thomas Reeg and work on a capital expenditure program.
New casino behemoth
Eldorado is best known as a “regional” casino company, but will now – as Caesars – find itself in a dominant position in both Atlantic City and Las Vegas. It already operates Tropicana Atlantic City and Caesars operates Bally’s, Caesars, and Harrah’s. Bally’s, though, has been sold to Twin River Worldwide Holdings for $25 million.
Eldorado will take over some of the biggest names in Las Vegas, including the Flamingo, Caesars Palace, Paris, Bally’s, Planet Hollywood, The Linq, Cromwell, and the Rio, as well as the new Caesars Forum convention center.
There are some rumors that the new company might sell one of Caesars’ Las Vegas properties, but beyond that, nobody knows for sure. Brendan Bussmann, director of government affairs for Global Market Advisors LLC, told the Las Vegas Review-Journal to look out for tribes as potential buyers. He cited Hard Rock International, owned by the Seminole Tribe of Florida, as a possibility. In May, the company bought the rights to the Hard Rock brand in Las Vegas.
Bussmann also said that California’s San Manuel Band of Mission Indians is intriguing, as it is a sponsor of the Vegas Golden Knights and the Las Vegas Raiders and has “philanthropic ties” to the University of Nevada-Las Vegas.
Mandated investment in Atlantic City properties
One of the conditions of the merger’s approval is the requirement that $400 million be invested in the Caesars, Harrah’s, and Tropicana properties in Atlantic City. If the Bally’s sale fails to close, another $150 million will be tacked onto the total.
“….we know that Atlantic City and New Jersey have had some difficulties with a lack of investment from Caesars, chiefly in the past, and we understand why the conditions are there,” said Reeg. “We are absolutely committed to agreeing to the requirement.”
Former state attorney general John J. Farmer will serve as the trustee of the capital expenditures account setup for the $400 million investment.
Bob McDevitt, president of Unite Here Local 54, Atlantic City’s casino employee union, believes the merger is a good thing for the city. He praised Eldorado’s commitment to further investment and is excited about the potential for Bally’s, “a property that has been starved of resources for a decade,” under Twin River’s ownership.