New Jersey Regulators Quiz Eldorado Resorts About Caesars Deal as They Approve Tropicana License

Posted on: June 12, 2019, 07:50h. 

Last updated on: June 12, 2019, 07:50h.

Philip Conneller @casinoorgphilc Read More
Expertise: Gaming Business, Regulation, Tribal Gaming.

New Jersey’s Casino Control Commission approved licensing of Eldorado Resorts Tuesday, essentially finalizing the company’s acquisition of The Tropicana and its entry into the Atlantic Gaming market.

Eldorado Resorts
Eldorado Resorts took over the reins at the Tropicana Atlantic City last year following a complex seven-year deal struck with billionaire corporate Carl Icahn, who is now reportedly pushing for a Caesars-Eldorado merger. (Image: Eldorado Resorts)

But The Press of Atlantic City reports that a good part of the two-hour hearing was devoted to the rumors that Reno-based Eldorado is on the brink of a megadeal to merge with Caesars Entertainment.

The regulator’s pressing of Eldorado representatives on the subject was about more than just idle curiosity. Should the rumored deal go through, it would represent a possible antitrust problem, with a future Eldorado-Caesars combination holding four of Atlantic City’s nine casino licenses.

New Jersey’s Casino Control Act guards against one operator holding multiple licenses if it results in “undue economic concentration.” This is defined as “actual or potential domination of the casino gaming market in Atlantic City as to substantially impede or suppress competition among casino licensees or adversely impact the economic stability of the casino industry in Atlantic City.”

Quiet on Caesars

Caesars already owns and operates Caesars Atlantic City, Harrah’s, and Bally’s and it’s possible that a future, enlarged group might have to sell one of these properties to satisfy antitrust regulations.

Unfortunately for the control commission, Eldorado CEO Thomas Reeg was keeping tight-lipped about any possible deal.

I can’t comment on a particular (move),” he said, as reported by POAC. “I would say we have been an inquisitive company in the past. To the extent there are opportunities that make sense for our shareholders … we would take a hard look at those.”

Reeg added he understood there are a “host of concerns that other constituencies would have” about future M&A activity and Eldorado would “thoughtfully work through them.”

Eldorado has been in control of the Tropicana since October last year, after being granted a temporary license by the control commission a month prior. The decision at Tuesday’s hearing makes the arrangement more permanent.

Complex Deals

The company acquired the Trop’s ops as part of a complex seven-casino deal with Carl Icahn’s Icahn Enterprises. Icahn sold its subsidiary, Tropicana Entertainment, to Eldorado for $640 million, while its seven property assets were acquired for $1.21 billion by Gaming and Leisure Properties, a real estate investment trust created in 2013 as a spin off from Penn National Gaming.

Eldorado now leases the seven properties from GLPI.

Billionaire corporate raider Icahn has a knack for buying undervalued stock and effecting change within companies to drive up share prices – and he’s put the money he received from the sale of Tropicana Entertainment to good use.

Since the Eldorado deal, Icahn has been busily buying up small chunks of Caesars Entertainment to the point where he now holds almost 29 percent and is the largest shareholder in the casino giant.

Icahn is pushing for a sale or merger, and reports suggest that an agreement with Eldorado could be announced this month.