weather icon Clear

Eldorado’s $17.3B deal for Caesars could create largest casino company

Updated June 24, 2019 - 11:12 pm

A $17.3 billion megadeal is slated to create the largest casino company in the world by gaming assets.

Eldorado Resorts’ acquisition of larger Caesars Entertainment Corp., announced Monday, would form an industry giant with 60 domestic casino-resorts and gaming facilities across 16 states, excluding Nevada. The companies said the buyout would close next year.

The merged company would retain the better-known Caesars name and control more than 51,000 hotel rooms, around 4 million square feet of casino space, 71,000 slot machines, 4,000 table games and 300 food and beverage outlets.

The deal is expected to bring major changes to the Strip, where the merged company may try to sell properties, and the deal is expected to raise questions about sports betting, regulatory issues and the company’s possible future in Japan.

In Nevada, it’s possible the Strip could become divided among more operators.

Eldorado, a fast-growing regional casino operator whose lone Southern Nevada property had been the Tropicana Laughlin, is now positioned to take over several Caesars’ Strip properties.

“This is a very big deal because it will establish Eldorado’s presence in Las Vegas,” said Jennifer Roberts, associate director of the International Center for Gaming Regulation.

In Las Vegas, Caesars operates Caesars Palace, Harrah’s, the Flamingo, Bally’s, The Linq Hotel, The Cromwell, Paris Las Vegas, Planet Hollywood Resort and the Rio.

But how much of a Las Vegas presence is necessary?

Probably less than there is now, Eldorado CEO Thomas Reeg said in a conference call Monday.

“I think that there’s more Strip exposure than we would need to accomplish our goals with our regional database,” Reeg said. “So I would expect that we would be a seller of a Strip asset, but that decision has not been made.”

Reeg did not name any specific property that could go up for sale.

“The only property I would think is absolutely safe is Caesars itself,” said analyst Chris Grove, managing director of California-based Eilers & Krejcik Gaming. “I’d also be surprised if the Linq was put on the block. Outside of those two, it would not shock me to hear any and all of Las Vegas’ Caesars properties mentioned as potential targets for divestiture.”

Roberts also said she wouldn’t be surprised if there is restructuring and selling of some properties.

One of the most valuable assets in the transaction will be access by Eldorado to Caesars Rewards customers, the company’s loyalty card database. That could result in additional visitation for Las Vegas when current Eldorado customers move over to Caesars Rewards and have opportunities to find deals and discounts in Las Vegas.

Sports betting

The deal also may mean some “tricky questions” for the company in terms of sports betting, Grove said.

Reeg called sports betting in the combined company “the best” opportunity out there.

“Caesars has a plethora of sports partnerships, including league partnerships, team partnerships and ESPN,” he said. “We’ve seen them all fitting together.”

But it may be more difficult to get all the different partners, who are direct competitors, operating smoothly together, said Grove.

Several of Eldorado’s 26 properties in 12 states already operate sportsbooks, and many of Caesars’ venues also take sports bets, but they use different sportsbook operators.

“Eldorado already has deals in place with William Hill and the Stars Group, while Caesars brings an existing deal with DraftKings to the table,” Grove said. “Who gets priority? Who gets priority in certain markets? Who gets priority in retail versus online?”

The two companies have also demonstrated divergent attitudes toward online gaming, he said. While Caesars had made significant investments into the World Series of Poker online, WSOP.com, and online casinos in New Jersey and Pennsylvania, Eldorado has not made significant investments into online gaming.

“It’s easy to say, ‘We’re going to take advantage of every opportunity presented to us.’ But frankly, you have a company that has seemed to not have much faith in online gaming, and it’s hard to appreciate how that lack of faith is going to impact that combined company,” Grove said.

Still, the company is poised to be a “major force in regulated sports betting.”

Roberts agreed.

“For a company historically operating in smaller markets and now taking on new locations and the Caesars global brand as well as partnerships with the NFL and other significant alliances, this opens up a new presence for them in the gaming industry,” she said.

Regulatory issues

Both boards of directors have approved the deal, which now must be approved by shareholders of the two companies and by various regulatory bodies across the nation, including the Nevada Gaming Commission. The state Gaming Control Board, which will review the deal, has no timetable yet when the transaction would be placed on its calendar.

Because the merger would create an industry behemoth, there are “a lot of considerations that need to be looked at” for the deal to close, said former state Gaming Control Board Chairwoman Becky Harris.

Any antitrust issues would have to be signed off on at the federal level before the state could give the deal a green light, she said.

The Gaming Commission would scrutinize possible antitrust issues as well.

“The state has an interest in making sure that a monopoly is not unwittingly created,” Harris said, adding that a monopoly would have an outsized impact on other things like hotel room rates, entertainment and gaming.


Expanded international opportunities may be limited.

Caesars operates one property in South Africa and eight properties in England. It manages three properties in Egypt and one property in Canada, and soon it will manage a property in Dubai.

Caesars had been expected to vie for concessions to build two or three integrated resorts in Japan, in tight competition with other Las Vegas-based companies.

But on Monday, Reeg suggested that the merger could spell the end of Caesars’ bid to enter the Japanese market.

“The opportunity internationally is going to have to be, frankly, stupendous for us to be running in that direction. But no firm decisions have been made at this point,” he said.

Grove said it would make sense for the company to keep its focus on its “heart and soul,” which is the U.S. market, and not be distracted from that unless there is a tremendous opportunity with a clear path of success.

Japan is a “hotly contested market with a lot of very credible players,” he said.

Japanese governmental authorities have yet to conclude the process to bid for licensing.

Carl Icahn

The deal is a result of Carl Icahn’s prowess.

In February, the billionaire hedge fund activist confirmed that he had built up a nearly 10 percent stake in Caesars Entertainment Corp. In SEC documents, Icahn stated at the time that he was seeking board representation and encouraged the company to be sold.

By March, SEC documents show, he had increased his stake to 17.75 percent, becoming the largest shareholder.

Icahn negotiated with the company to appoint Icahn Enterprises CEO Keith Cozza, Icahn Enterprises board member James Nelson and Icahn Capital fund manager Courtney Mather to the 12-member board of directors, and he had considerable influence in selecting Tony Rodio as Caesars’ new CEO.

Icahn said Monday in a statement, “This merger is the quintessential example of how an activist shareholder, working collaboratively with the board, can greatly enhance value for all stockholders. … As a combined company, Caesars and Eldorado will be America’s pre-eminent gaming company. It is rare that you see a merger where, because of the great synergies, ‘one plus one equals five.’ I look forward to seeing our investment prosper.”

Shares of Caesars closed up 15.51 percent, or $1.45, Monday to $11.44. Shares of Eldorado Resorts closed down 10.64 percent, or $5.45, to $45.77.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.

A previous version of this incorrectly reported the number of states in which the merged company would have casino-resorts and gaming facilities.

Don't miss the big stories. Like us on Facebook.
Business Videos
Lihi Levin talks about a mobil app Dropit - VIDEO
Lihi Levin, regional manager at Dropit Shopping, talks about a mobil app Dropit. The app lets customers leave their shopping bags at a store then have them delivered the same day to their home or hotel so they can shop without carrying multiple bags all day. (Bizuayehu Tesfaye Las Vegas Review-Journal) @bizutesfaye
North Las Vegas company prepares for Mars - VIDEO
Robert Bigelow and his Bigelow Aerospace manufacturing facility played host to eight NASA astronauts and 60 engineers this week getting to know the company’s B330 autonomous, expandable space station. (Elizabeth Brumley/Las Vegas Review-Journal)
Las Vegas developer talks about a new apartment complex called “the yoU”
Frank Marretti lll, founder of G2 Capital Development, talks about his new apartment complex called “the yoU” near UNLV. (Bizuayehu Tesfaye/Las Vegas Review-Journal) @bizutesfaye
Steel cables will hoist roof at Allegiant Stadium - VIDEO
Stainless steel cables are being put into place at Allegiant Stadium to begin the process of putting the roof on the 65,000-seat stadium in Las Vegas. Stadium Chief Operating Officer Don Webb explains how the cables will be used to get the roof put on the future home of the Raiders and UNLV football. (Heidi Fang/Las Vegas Review-Journal)
The last remaining Sigma Derby game in Las Vegas
Derek Stevens, owner of the D Las Vegas, talks about the last remaining Sigma Derby horse racing game in Las Vegas inside his casino floor. (Erik Verduzco/Las Vegas Review-Journal)
Popeyes Spicy Chicken Sandwich Review
Janine Blake of Las Vegas gives her review of the new Popeyes Spicy Chicken Sandwich at the restaurant’s location on west Bonanza Road on Thursday, Aug. 22, 2019,
SuperZoo 2019 takes over Mandalay Bay in Las Vegas
SuperZoo 2019 show for pet retailers brought pet products of all description to the Mandalay Bay Convention Center in Las Vegas. (Heidi Knapp Rinella/Las Vegas Review-Journal)
MSG Sphere at The Venetian to cost $1.2B plus
Scheduled to open in 2021, it is expected to be busier than Madison Square Garden in New York. (Michael Quine/Las Vegas Review-Journal)
Favorite products from SuperZoo 2019
Some of the fun and interesting pet products on display at the SuperZoo in Las Vegas at the Mandalay Bay Convention Center. (L.E. Baskow/Las Vegas Review-Journal)
MAGIC Convention Day 3
The fashion trade show MAGIC, held Monday through Wednesday at the Las Vegas Convention Center. (Elizabeth Brumley/Las Vegas Review-Journal)
MAGIC Las Vegas - Day One
The biannual MAGIC convention show opened Monday at the Las Vegas Convention Center. (Elizabeth Brumley/Las Vegas Review-Journal)
Allegiant celebrates naming deal with tailgate party
Allegiant Air employees celebrate with a tailgate party after the company’s naming deal with the Raiders for the new Las Vegas stadium.
Nevada's sportsbook operators welcome competition
Sportsbook operators from near and far are looking to get into in the established Nevada market, experts say. (Las Vegas Review-Journal)
Get a first look of MSG Sphere construction in Las Vegas
Representatives of The Madison Square Garden Company give the first glimpse of progress Tuesday of the under-construction MSG Sphere — a first-of-its-kind performance venue with high-tech audio and visual capabilities.
There's a new place to play board games in Las Vegas
Matt Smiciklas, co-owner of Boarding School Games, talks about the new Las Vegas business that he co-owns with Emily Labejof. Dedicated tabletop gamers can choose from more than 500 games to play for free in-store. The doors open to the public Saturday, July 20, 2019. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Renovations at the STRAT
Analysts say the $140 million renovation project at The STRAT, formerly the known as the Stratosphere, could help the hotel-casino compete with the evolving north side of the Las Vegas Strip. (Bailey Schulz/Las Vegas Review-Journal)
SLS Las Vegas will become Sahara Las Vegas
Owner Alex Meruelo announced during a special event at the SLS Las Vegas that the hotel-casino will become Sahara Las Vegas in its next iteration. Meruelo said $150 million dollars will be spent to renovate the current property. (Heidi Fang/Las Vegas Review-Journal)
Aircraft hinge maker moves to "business friendly" Nevada
Doug Silva, president of Aircraft Hinge, Inc. in Las Vegas, makes every type of hinge for every type of airplane. Silva talks about his company and why he moved it to Nevada. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Daytime fireworks mark the opening of Encore Boston Harbor
The opening of the $2.6 billion Encore Boston Harbor in Everett, Mass. included a three-minute fireworks show launched by Fireworks by Grucci Sunday, June 23, 2019. (Rick Velotta/Las Vegas Review-Journal) @RickVelotta
Elaine Wynn talks about the opening of Encore Boston Harbor
Elaine Wynn, co-founder and largest shareholder of Wynn Resorts, talked during opening festivities of the $2.6 billion Encore Boston Harbor in Everett, Mass. Sunday, June 23, 2019. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
People line hours ahead of opening for Encore Boston Harbor
Guests arrive as much as 17 hours early for the 10 a.m. opening of the $2.6 billion, 671-room resort in Everett, Mass. Sunday, June 23, 2019. (K.M. Cannon/Las Vegas Review-Journal) @reviewjournal.com
Boyd Gaming Corp. names Thoman as new board member

A principal of the business advisory and consulting firm Thoman International, A. Randall “Randy” Thoman has more than 30 years of experience working with public companies, according to a statement from Boyd Gaming Corp.

Wynn Resorts to do away with valet parking fees

Wynn Resorts Ltd. will soon offer free valet parking at Wynn Las Vegas and Encore — a move experts say could help the company attract visitors within driving distance of Las Vegas.

New Jersey casinos woo bettors with new sportsbooks

Now in its second year of allowing sports betting, the state has seen sports wagering surpass expectations, and Atlantic City casinos are upping their game with new sportsbooks.