Eldorado’s $17.3B merger with Caesars nearing final approval

The proposed $17.3 billion merger between Eldorado Resort Inc. and Caesars Entertainment Corp.—which affects five Indiana casinos—could receive its final regulatory approval on Thursday.

Approval by the New Jersey Casino Control Commission could come Thursday, and would be the final hurdle in Eldorado’s bid to become what Commissioner Alisa Cooper called “the biggest gaming company in the world”—a casino giant controlling 52 properties in 16 U.S. states under the Caesars Entertainment brand. New Jersey gambling regulators began considering the merger on Wednesday.

The Indiana Horse Racing Commission signed off on the deal Monday, after the Indiana Gaming Commission approved the deal on Friday.

In June 2019, Reno-based Eldorado Resorts announced that it planned to buy Las Vegas-based Caesars Entertainment in a cash-and-stock deal valued at $17.3 billion.

In Indiana, Caesars owns four casino properties—Harrah’s Hoosier Park Racing & Casino in Anderson, Indiana Grand Racing & Casino in Shelbyville, Horseshoe Hammond in northwest Indiana and Horseshoe Southern Indiana Hotel and Casino in Elizabeth (near Louisville).

Eldorado owns one property in Indiana, the Tropicana Evansville.

As part of the approval from the Indiana Gaming Commission, Eldorado is required to divest three Indiana casino properties by the end of the year.

Without the required divestitures, the merger would give Eldorado five of 13 casino licenses in Indiana and a market concentration of 50% to 60% of state gaming revenues, presenting an “undo economic concentration” as outlined in state law.

Eldorado executives have said the company plans to sell Tropicana Evansville, Horseshoe Southern Indiana Hotel and Casino and possibly Horseshoe Hammond.

Tom Reeg, CEO of Eldorado, told the Indiana Horse Racing Commission this week that the horse-track racing casinos—Harrah’s Hoosier Park in Anderson and Indiana Grand in Shelbyville—would not be among the properties sold.

Reeg said the company is committing to investing a minimum of $25 million every 10 years into the horse racing tracks.

“These tracks are as good as any in the country,” Reeg said.

Indiana Horse Racing Commission staff and board members, along with several horsemen, had expressed concerns about the prospects of Eldorado owning racinos in Indiana, based on its track record with other horse racing properties it has previously or currently operates, including Scioto Downs in Columbus, Ohio.

A report from an independent consultant that the Indiana Horse Racing Commission paid to have completed noted complaints of poor maintenance of the other Eldorado horse tracks, issues with negotiating with the horsemen and staff cuts.

To address some of those concerns, Eldorado hired horse racing industry expert Joe Morris to fill the new role of senior vice president of racing and committed to maintaining staffing levels at the Indiana properties.

“Did we make some mistakes when we first got into racing a few years ago?” Anthony Carano, president and chief operating officer for Eldorado, said. “Absolutely.”

Under terms of the overall deal, Eldorado will buy Caesars stock at $12.30 per share, using $8.70 in cash and the remainder in Eldorado shares. Eldorado will own 56% of the merged company.

The company plans to continue operations and stock trades under the name Caesars Entertainment Inc.

Caesars emerged from bankruptcy protection in late 2017, and turned an Eldorado offer away in 2018. But the merger got a boost from billionaire financier Carl Icahn, who acquired a big block of Caesars shares and pushed for company changes. Icahn would own more than 10% of the combined company and would be the largest single shareholder.

Caesars acquired Indianapolis-based Centaur Gaming, which owned and operated the state’s two horse-racing track casinos, in 2018 as part of a $1.7 billion deal.

The Associated Press contributed to this report.

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