As Part of Deal to Acquire Caesars Entertainment, Eldorado Resorts May Close Bally’s Atlantic City
Posted on: June 26, 2019, 08:00h.
Last updated on: June 26, 2019, 08:00h.
The once iconic Bally’s in Atlantic City, New Jersey could become a casualty of Eldorado Resorts, Inc.’s (NASDAQ:ERI) $17.3 billion effort to merge with Caesars Entertainment Corp. (NASDAQ:CZR).
A combined Eldorado/Caesars will have four properties in Atlantic City: Eldorado’s Tropicana and Caesars’ Bally’s, Caesars and Harrah’s.
Unidentified sources told the New York Post that regulators in New Jersey could force Eldorado to divest one of those four Atlantic City casinos because the company would own four of the city’s nine gaming properties after bringing Caesars Entertainment into the fold.
A former New Jersey gaming official that was not identified told the Post Eldorado will try to consummate its combination with Las Vegas-based Caesars without parting with one of the Atlantic City casinos, but if push comes to shove, Eldorado will shutter Bally’s.
Even before its offer for Caesars was officially revealed Monday, Eldorado was selling some assets in markets where it and the operator of Caesars, Harrah’s and Horseshoe casinos both had footprints to potentially make room for the deal. On June 17, Eldorado announced the sale of two casinos in Missouri and one West Virginia to Century Casinos and VICI Properties Inc. (NYSE:VICI) for $385 million.
It was expected that more asset sales could come following news of the proposed merger and that has been the case. On Monday, Eldorado said it well sell the land and related real estate of Harrah’s New Orleans, Harrah’s Laughlin, and Harrah’s Atlantic City to VICI for $3.2 billion.
Even with the sale of those three venues to VICI, the combined Eldorado/Caesars would operate more than 70 casinos across the US.
Caesars has been considering shuttering Bally’s Atlantic City for some time, but the casino got a reprieve when the Revel Atlantic City closed in 2014. That eased some of the competitive pressure on the 40-year old Bally’s, according to the Post.
The venue has 185,000 square feet of gaming space across Bally’s and the Wild West casino with nearly 3,300 slot machines and 168 table games.
Bally’s, once one of the jewels of Atlantic City, has had a checkered history in recent years. In 2016, it was reported that managers at the property failed to tell guests the previous year that water tested from a VIP suite contained alarmingly high levels of lead.
MGM’s Borgata is the king of the Boardwalk and while data suggest Atlantic City tourism is up and operators there are winning more from gamblers, Bally’s continues to languish.
Seven of the city’s nine casinos were open for all of 2018 and Bally’s placed sixth among those seven in terms of gross gaming revenue (GGR), according to the Post. With new competitive threats emerging, including the Hard Rock, Bally’s slumped to ninth in terms of Atlantic City GGR last month. That represents a precipitous decline for a casino that was the city’s revenue leader.
Observers believe Caesars has not committed adequate resources to Bally’s and allowed the property to become outdated and unappealing to would-be guests. One customer quoted by the Post called Bally’s Atlantic City “Caesars’ stepchild.”