Indiana Regulators Will Talk Eldorado/Caesars Deal at July Meetings

Posted on: June 9, 2020, 02:18h. 

Last updated on: June 10, 2020, 10:56h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Regulators in Indiana will reportedly discuss Eldorado Resorts Inc.’s (NASDAQ:ERI) $17.3 billion proposed takeover of Caesars Entertainment (NASDAQ:CZR) in July, ending a months-long delay forced by the coronavirus in dealing with the transaction.

Indiana Regulators Talk Eldorado-Caesars Deal
In July, Indiana regulators will finally discuss the Eldorado/Caesars marriage. (Image: Reuters)

Originally reported by Dealreporter, news broke late Tuesday that the Indiana Gaming Commission (IGC) obtained an initial draft of an external analyst’s report on Eldorado’s planned acquisition of Caesars. The IGC is waiting on the final version of that document, which it expects to have over the next two weeks.

The commission will share the report with the Indiana Horse Racing Commission (IHRC), which is also required to weigh-in on the deal because Caesars operates the Hoosier Park and Indiana Grand racinos.

Neither the IGC nor IHRC websites currently have agendas or dates for the July meetings.

Tricky Timeline

Reno-based Eldorado already procured a slew of approvals for its purchase of Caesars from states in which the companies operate gaming properties. But Indiana, Nevada, and New Jersey are the notable exceptions. Regulators in those three states canceled or postponed meetings starting in March because of the coronavirus, eventually moving to electronic confabs. But even with the digital get-togethers, the transaction creating the largest domestic gaming company by number of venues is sitting on the back burner.

As Casino.org reported late last month, the New Jersey Casino Control Commission (CCC) won’t be discussing the deal when it meets tomorrow. The Nevada Gaming Control Board (NGCB) also meets on Wednesday, but isn’t expected to talk about the biggest takeover in industry history.

Ongoing approval delays deal a blow to ERI’s plans to close the purchase by the end of the second quarter, which is June 30. All the while the gaming company is dealing with a $2.3 million daily “ticking fee” because it couldn’t seal the deal within nine months of it being announced, though analysts don’t view that as punitive because those costs will be built into the back end of the transaction. ERI announced plans to acquire the Caesars Palace operator in June 2019.

Sizing up the Odds

Industry experts believe the purchase will ultimately be approved. Delays in Nevada aren’t tied to regulators’ concerns about concentration risk, because Eldorado is selling a Lake Tahoe property while Caesars sold one in Reno. Plus, ERI is pledging to sell one or two of Caesars’ Las Vegas Strip casinos.

In New Jersey, fears about concentration risk were likely allayed with Caesars’ recent announcement that it’s parting with Bally’s, meaning the combined company will control three Atlantic City venues, not four.

In Indiana, the new operator, which will keep the Caesars name, will control five venues. Previously, there was speculation that Hoosier State regulators were focusing not on that figure, but rather Eldorado’s perceived lack of experience in managing race tracks. However, the company can address that by highlighting prior ownership of related venues in in Pennsylvania and West Virginia. ERI also owns Scioto Downs in Columbus, Ohio.

The Federal Trade Commission (FTC) has yet to sign off on the deal.