The casino operator received the necessary authorization by state casino regulators eight months after it completed the $1.85 billion acquisition of Tropicana AC’s parent company Tropicana Entertainment Inc. from New York activist investor Carl Icahn.
Local news outlet The Press of Atlantic City reported Tuesday that members of the Casino Control Commission approved Eldorado’s application for a permanent license after a two-hour hearing. The company has operated the Atlantic City casino resort with an interim license it received last September. Yesterday’s approval authorized Eldorado’s first foray into the Atlantic City casino market.
Tropicana is Atlantic City’s second largest casino in terms of gaming revenue generated, behind The Borgata Hotel Casino & Spa.
Of Eldorado’s entry in the local casino market, Casino Control Commission Chairman James Plousis said, as quoted by The Press of Atlantic City, that he expects Eldorado to “positively contribute to this market and support Atlantic City’s continued upward trajectory.”
The gaming official added that he looks forward to seeing the benefits the city and its gaming market will reap from Eldorado’s ability to grow Tropicana’s visitation through cross-marketing initiatives with its other gaming properties.
An Eldorado/Caesars Merger Could Hit a Regulatory Block
Casino commissioners addressed Tuesday recent media reports that Eldorado has entered the final stages of merger talks with rival gaming and hospitality operator Caesars Entertainment Corp. With Eldorado now being the owner of Tropicana AC and Caesars running three casinos in Atlantic City, their potential merger would mean that the combined property would hold four of the city’s nine gaming licenses.
This will challenge a provision in the New Jersey Casino Control Act, under which “no person shall be issued or be the holder of a casino license if the issuance or the holding results in undue economic concentration in Atlantic City casino operations by that person.”
The provision also clarifies that “undue economic concentration” means that:
a person would have such 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.
During Tuesday’s hearing, Commissioner Sharon Harrington asked Eldorado’s Chief Executive Thomas Reeg what the company plans in terms of future acquisitions were, particularly referencing to the Caesars reports. Mr. Reeg said that while he could not comment “on a particular [move],” Eldorado has been an “inquisitive company” and they “would take a hard look” at any “opportunities that make sense for our shareholders.”
The Eldorado CEO also added that the company would address any concerns that may arise from a potential deal in future.
According to media reports from last week, Eldorado and Caesars could announce their merger as early as this week. Here it is important to note that Mr. Icahn, Tropicana Entertainment’s former owner, is now Caesars’ largest stakeholder, holding 28.5% of company shares.
The billionaire investor has been pushing for the Las Vegas casino giant to sell itself or merge with another company as this would be the best path forward for Caesars.
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June 12, 2019