After months of planning and regulatory discussions, Eldorado Resorts officially acquired Caesars Entertainment on Monday.
The merger creates the biggest casino and resort company in the US. It also puts a large chunk of Atlantic City’s casinos under one umbrella.
The merger needed to overcome one final regulatory hurdle: the New Jersey Casino Control Commission. After three days of testimony, the CCC unanimously approved the Caesars-Eldorado merger on July 17.
“We are pleased to have completed this transformative merger, thus making us the premier leader in gaming and hospitality. We look forward to executing on the numerous opportunities ahead to create value for all stakeholders,” said Tom Reeg, CEO of Caesars Entertainment, in a press release announcing the merger.
Caesars-Eldorado merger and Atlantic City
The new Caesars Entertainment will operate four of AC’s nine casinos — Harrah’s, Caesars, Tropicana, and Bally’s. The latter was sold in April to Twin River Holdings, but the sale agreement is expected to close at the end of 2020.
The sale was a preemptive move by Caesars to offload one of its Atlantic City properties prior to the merger being approved.
Last week, during the three days of hearings, the Division of Gaming Enforcement and CCC raised multiple concerns about the lack of improvements made to the Caesars’ properties in Atlantic City.
To this end, the CCC added some mandatory conditions as part of the merger’s approval.
One requirement included putting improvements in place at each of the three casinos in AC over the next three years. Caesars agreed. As such, a $400 million capital expenditures trust account will be created.
Additionally, if the Bally’s property isn’t sold within a year, an extra $125 million will be added to that account.
The details of the requirements go even further than that. For instance, at least $150 million must be spent on improvements at Caesars Atlantic City over the next three years.
Investing and believing in AC
Eldorado and the new Caesars are also prohibited from closing any of the Caesars properties for five years after the merger is completed.
“We wouldn’t be doing this transaction if we weren’t believers in Atlantic City because it’s so important to Caesars as it sits today,” said Reeg to the commission last week.
“We understand that we acquire the positives and negatives of Caesars and we know that Atlantic City and New Jersey have had some difficulties with a lack of investment from Caesars, chiefly in the past, and we understand why the conditions are there.”
Representatives from Hard Rock Atlantic City and Ocean Casino Resort filed petitions with the CCC about the proposed merger’s impact on their businesses, but they were denied.
A fresh start for Caesars-Eldorado merger
A merger of such magnitude impacts not only casino employees but visitors and the city as well.
With Eldorado’s purchase of Caesars, it feels like a fresh start for all involved. The new Caesars establishes itself as a major player in Atlantic City in 2020 and beyond.
For state and local officials, Caesars will be under the ownership of a group that seems to have the best interests in mind for its properties and Atlantic City.
And while the concerns were duly noted, Caesars will not only bring added customer benefits from the merger but also a renewed focus to offer guests the best experience.
“We’re going to really lean on both the Caesars database and the Eldorado database, and get the best customers we can to come to Atlantic City,” said Brent Yunker, Caesars Entertainment’s CFO, said to The Press of Atlantic City.
“It’s obviously going to play out over a number of years because of this very unique scenario we’re in with COVID-19. But we’re going to try to do this as quickly as we possibly can but also as safely as we can.”
Atlantic City has had an eventful year
Ultimately, the merger is the latest big change for Atlantic City in a year chock full of ups and downs.
2020 started on a high note, but the momentum came to an abrupt stop in mid-March. That’s when all nine casinos shut their doors due to the coronavirus pandemic.
The executive order from Gov. Phil Murphy closed AC casinos for 100-plus days. Many casino employees were either furloughed or laid off as a result, with casinos depending strictly on the strength of NJ online gambling.
It wasn’t until late June that good news arrived. Caesars reopened its three casinos on July 3; Tropicana did so a day earlier.
The Caesars-Eldorado merger, however, was always on the backburner. The initial news of the acquisition reverberated throughout the gambling industry.
It is essentially what sparked the sale of Bally’s in April. And will ultimately lead to improvements at some of Atlantic City’s oldest casinos.
Changes are afoot once again in Atlantic City.