Eldorado-Caesars merger $17.3 billion

A year in the making, the $17.3 billion merger between Caesars Entertainment and Eldorado Resorts is on track to close by next week.

No problems are expected Wednesday before the New Jersey Gaming Commission after the Nevada Gaming Commission and the Indiana Gaming and Horse Racing Commissions signed off on the merger in the past week.

What started as a family-owned business founded in Reno in 1973 will now be a juggernaut in the industry with about 60 properties in 16 states once the dust clears.

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Eldorado will have its first footing in Las Vegas by adding Caesars’ eight Strip properties — Caesars Palace, Bally’s, Paris, Planet Hollywood, Harrah’s, Linq and Cromwell.

The Caesars’ footprint will expand to include Columbus, Ohio, South Florida, Denver and Houston markets via western Louisiana. 

Those markets will now feed additional players into Las Vegas through their properties.

It’s gaming’s biggest deal since private equity took over Harrah’s in 2007 and became Caesars Entertainment, only to lead to bankruptcy because of the debt.

So what will this merger mean to guests? It won’t be much at first other than noticing William Hill as the operator of the Caesars’ sports book in Las Vegas and across the country by early August.

Many gaming observers are optimistic that the companies will be better off together, although dealing with debt is always a concern. One member of the Federal Trade Commission said there would be no benefit to customers, workers, suppliers and competition with the merger.

Eldorado is known for its focus at property level and on its players while Caesars has been more of a corporate-driven, top-down focus that isn’t nimble to move quickly enough. Caesars, however, brings its brand and a database of players with its Total Rewards program and longevity in the industry to move things forward.

“You have a small family-owned business that started off in Reno and never thought it would be taking over the Caesars’ empire,” said Brendan Bussmann, a partner with Global Market Advisors. “That has kept their focus because they’re a small-knit group. I look at it as a positive for both Caesars and Eldorado to move forward and leverage the assets.”

Analysts said Eldorado will pare down the corporate structure of Caesars to find savings to cover the debt.

Josh Swissman, founding partner with The Strategy Organization, said it’s going to be a profound change since Caesars is a big corporate organization while Eldorado is a family-led business that grew up on the gaming floor instead of in the boardroom.

“They will be able to with their deep experience of being in the trenches be able to make those operating efficiencies happen,” he said. “But it will probably take them a couple of years to get there.”

Eldorado is required to sell three properties in Indiana by the end of the year, but one of the biggest changes in the landscape is if the merged companies jettison any properties on the Strip. Last year, Caesars sold the Rio, and there’s plenty of speculation that one of the Strip properties, with the exception of Caesars Palace, will be sold to deal with debt.

“I have heard a host of things from anywhere from Planet Hollywood to Bally’s to Cromwell, but I don’t believe rumors until they’re on the market,” Bussmann said.

Swissman said whatever operator Caesars-Eldorado sells, there’s a good chance it will be a single operator that’s new to the Strip rather than existing gaming companies in Las Vegas.

“That will bring a scrappy contender with more savvy and marketing sensibilities, and it will help keep MGM Resorts and some of the incumbents on their toes,” Swissman said. “I love competition because the person that benefits most is the guest and it does help accelerate innovation in the gaming space.”

With Eldorado in Las Vegas, Swissman said they will deploy battle-tested experts at casino marketing and intimacy of what it takes to motivate players.

“That will only increase the level of competitiveness on the Strip as well,” Swissman said. “I don’t mean people are going to start getting into incentive battles. I think with their keen sense of sensibilities they can market to players in a way Caesars didn’t as a corporate-led organization.”

What guests will feel ultimately is a sense of a family-led organization as opposed to how Caesars portrayed itself as a family giant, Swissman said. Expect to see property executives on the floor talking to customers on a regular basis as part of its reputation of an operation that spends more time on the gaming floor than boardroom.

“Eldorado likes to make it feel like it’s a family-run organization even though it’s the biggest company in the country when the deal is done,” Swissman said. “I think the way Eldorado was birthed and developed they’ll be able to do it, but they won’t be able to do it in six months. They will have a lot of other things on their hands.”

Swissman said he’s optimistic this version of a Caesars takeover will succeed compared to previous attempts, but added it’s not a gimme or layout by any stretch.

“That’s a lot of debt, even in good times, he said. “They’re going to have to work their butts off to make it happen. I applaud their moxy and wanting to see this transaction through with everything going on in the world.

“It’s a bold move. I think bold moves right now led by teams that have such great operating experience have a much higher likelihood of going through and working out than just a big company that is getting a facelift and has a lot of money to make transactions.”

About the Author

Buck Wargo

Buck Wargo is a former journalist with the Los Angeles Times and has been based in Las Vegas as a business, real estate and gaming reporter since 2005.

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