Caesars-Eldorado Merger Deal Pending New Jersey’s Approval

Ariel View of Atlantic CityThe $17.3 billion merger between Caesars Entertainment Corp. and Eldorado Resorts Inc. is still dependent on approval from 14 state regulatory agencies and the Federal Trade Commission, including New Jersey.

So far, four state regulatory bodies have approved of the merger, including Pennsylvania, Louisiana, Iowa and Illinois.

The merger will grant Eldorado Resorts control of close to 60 casinos in the country. While no explicit deadline for New Jersey regulators to make an approval decision on the merger decision has been set, gaming operators expect a deal finalization within the first half of 2020.

One reason New Jersey could be delaying approval are concerns they’ve cited over the economic concentration the deal would cause in the state, and Atlantic City turning into something of a monopoly.

Dan Heneghan, former public information officer for the Casino Control Commission (now retired) and former casino beat reporter for The Press of Atlantic City, said state gaming regulators are “concerned about economic concentration in the casino industry for many of the same reasons that the (federal) Justice Department is concerned about monopolies in industry in general.”

“If you have a monopoly, or something close to a monopoly, there’s always the concern that the big player can effectively set prices,” Heneghan said.

Back in September, Caesars Entertainment and Eldorado Resorts presented a joint petition to NJ regulators, and stated their intentions of providing an economic analysis that would disprove their merger would cause an undue economic concentration.

New Jersey and Atlantic City Play Major Role in Deal

Since the newly formed company will control nearly half of the resort’s casinos (four out of the nine total casinos), New Jersey and AC will play a major role in the deal. Under its current designations, the company merger will employ 40% of casino industry workers in Atlantic City and represent almost 37% of their total gaming revenue.

Currently, Caesars Entertainment has three outstanding deed restrictions on former casino properties. Those include the former Atlantic Club Casino Hotel, the Claridge Hotel and the Showboat Hotel Atlantic City. These restrictions disallow them to operate as gaming parlors and adds some stress to the current deal.

The Attorney General’s Office, who advised that New Jersey gaming regulators would also be retaining an expert, said this in an email:

“As required by law, the Division is responsible for ensuring the honesty, integrity and financial stability of casino licensees. Part of this process is analyzing the economic impact of casino acquisitions such as the Eldorado / Caesars merger. As part of this process the Division has retained an economic expert to assist with the review of this merger.”

About the Caesars-Eldorado Merger Deal

Eldorado Resorts $17.3 billion acquisition of Caesars Entertainment is slated to become the world’s largest casino operator in terms of gaming assets. To acquire 51% of Caesars, Eldorado will pay $7.2 billion in cash and 77 million shares of stock, as well as taking on Caesars’ existing debt.

Upon regulatory approval, Caesars will merge with Eldorado subsidiary Colt Merger Sub Inc and a new, wholly owned Eldorado subsidiary will exist and operate under the Caesars name.

Three More States Approve Eldorado Resorts’ New Merger

Back in June, officials within Eldorado Resorts announced that the company had agreed to formally merge with Caesars Entertainment. It’s the largest merger between casino companies in history. This week, three more states officially approved Eldorado Resorts’ new merger.Eldorado Resorts Logo

The process to combine these two companies was expected to take a long time. A huge number of states need to give permission for the two operators to join forces. Today, we’re going to look at what still needs to happen for these companies to merge.

Let’s get started!

Why Did Eldorado Resorts Purchase Caesars Entertainment?

Eldorado Resorts is one of the biggest and most successful casino companies in the world right now. It was founded in 1973 in Reno, Nevada. Over the years, it’s expanded across the country. Eldorado Resorts now operates 23 properties across 11 different states.

Since 2013, this company has worked hard to acquire new properties. First, it agreed to merge with MTR Gaming Group. In 2015, the company purchased Circus Circus Reno and a 50% stake in Silver Legacy from MGM Resorts International for $73 million.

In 2017, Eldorado acquired the Isle of Capri Casinos for an astounding $1.7 billion. Over the next few years, this Reno-based casino operator continued to purchase properties. By March of 2019, rumors began to surface that Eldorado was going to purchase Caesars Entertainment.

The timing of this deal made sense. Caesars Entertainment had fallen into debt and was looking for a way to turn things around. By June, Eldorado revealed that it was purchasing the fellow Nevada-based company for an astounding $17 billion. The goal of this deal is to help Eldorado expand its presence across the country.

A deal of this magnitude can’t be completed in a day, though. A huge number of state gambling commissions need to ensure that this will not create a monopoly-like situation. Fortunately, this process of approval is moving along smoothly.

Three States Approve Eldorado Resorts’ New Merger

Ever since June, Eldorado Resorts has been seeking approval from various state gambling commissions. It’s already received approval from many major states yet there’s still a long way to go before this merger is finalized. This week, three additional states announced they have approved Eldorado Resorts’ new merger.

The commissions in Louisiana, Pennsylvania, and Illinois all gave this deal the green light. The Louisiana approval is particularly exciting, as the company will soon operate several new gambling venues in the state. There are still some important states that are holding out, though.

Approval in New Jersey will be extremely important. Officials within Atlantic City have raised concerns over the impact that this deal will have on other casinos in the city. With that being said, it seems unlikely that this state’s gambling commission will choose not to approve the new merger.

Nevada is another important state that has yet to formally approve this deal. Based on the way things are moving, the merger between Eldorado Resorts and Caesars Entertainment will be completed by mid-2020. The Federal Trade Commission still needs to agree to it, as well.

Eldorado Resorts’ new merger will create the single largest casino company in the United States. It will be extremely interesting to watch this deal progress over the next couple of months.

Major Las Vegas Property Sales Continue

There have certainly been some major changes to the US casino industry lately. Of course, not every company is looking to merge with others. Several huge casino operators have instead looked at property sales as a way to generate additional revenue.

This is especially true with MGM Resorts International. The Las Vegas-based company has recently sold several of its biggest and most profitable casino-resorts in Las Vegas. The first came back in October when MGM sold both The Bellagio and Circus Circus. The sale of The Bellagio earned the company more than $4 billion, making it the biggest in Las Vegas history.

A few months later, MGM Resorts announced that it was selling the Mandalay Bay Hotel-Casino.

Not all of these sales aren’t exactly what they appear, though. MGM has chosen to lease back several properties and retains control of its operations. It’s currently paying $245 million per year to keep operating The Bellagio.

Depending on how successful Eldorado Resorts’ new merger with Caesars Entertainment is, more companies may choose to take a similar approach. For now, several casino companies are simply choosing to part with their venues as a way to earn more revenue.

There is a lot happening in the US casino industry. Stay tuned for more updates over the next few months!