Indiana Gaming Commission Approves Eldorado Acquisition of Ceasars, Requests Three Casinos Sold
Posted on: July 11, 2020, 01:18h.
Last updated on: July 13, 2020, 09:48h.
On Friday, The Indiana Gaming Commission (IGC) unanimously approved Eldorado Resorts Inc.’s acquisition of Caesars Entertainment Corp.’s Indiana properties. But commissioners put in two requirements for what will become the new Caesars company.
First, the company must have agreements to sell three of its Indiana properties by the end of the year. Second, they must also agree to maintain employment levels at their remaining facilities for the next three years. On the latter requirement, IGC staff will work with Eldorado leaders to fine-tune the language to incorporate workers currently furloughed.
With Friday’s vote — once the $17.3 billion deal closes — the new company will control Horseshoe Hammond, Caesars Southern Indiana, and Tropicana Evansville. The IGC also approved the transfer of the Indiana Grand and Harrah’s Hoosier Park racinos. But those two acquisitions also require the approval of the Indiana Racing Commission (IRC).
Why must the new Caesars sell three properties?
Based on IGC numbers from January of the 13 licenses boats, the five in question held 45.5 percent of the 17,255 slots and 49.4 percent of the table games. From a revenue perspective from that month, the five casinos in January garnered $113.2 million of the $189.3 million raked by all licensed boats, accounting for nearly 60 percent of the total.
Eldorado shareholders will own about a 56 percent stake in the new company, according to Eldorado CEO Tom Reeg, who will also serve as the CEO for the new Caesars.
The IRC meets Monday to discuss that. Besides the IRC, the Eldorado-Caesars transaction awaits one more regulatory approval, and that’s in New Jersey, where the state’s Casino Control Commission meets on Wednesday.
Southern Indiana Casinos Likely to be Sold
Eldorado proposed to the commission to sell two properties, which it claimed would put it at about a 40 percent market share. That figure would be based on moving the Gary boats to a larger, inland facility and the construction of the recently approved casino in Terre Haute. That would put the new Caesars company with about a 40 percent market share.
When asked what properties the new Caesars may sell, Reeg said that would be contingent on the IRC approving the sale of Indiana Grand and Hoosier Park — a move that may not be a cinch. If the IRC approves the tracks, Reeg said Tropicana Evansville and Caesars Southern Indiana would be the casinos likely sold.
Part of the reason for that is the growing Chicago casino market, in which Horseshoe Hammond competes, Reeg said.
“That’s a very difficult asset to think about selling, and the current environment between the pandemic and the competitive situation, expanding in Illinois,” Reeg said. “I’m not optimistic about how that would go.”
However, when asked if they needed to sell a third property, Reeg said that Hammond would likely be put on the market. Eldorado officials said they envisioned being able to sell one property within six months, another within 12, and a third within 18.
IGC Commissioner Marc Fine feared what such a delay would mean for the casinos put on the market.
I’m fearful that the properties that are selected for divestiture will be neglected, and the sooner we are able to move in the direction we need to go for the benefit of the state, the sooner it needs to happen,” he said.
Fine said the IGC can come back if needed to extend the period.
Expansions Eyed at Tracks
Eldorado told IGC members they plan to invest up to $60 million in both racinos. A large part of that would go toward the expansion of table games at the Shelbyville and Anderson facilities.
The state legislature legalized table gaming at the racinos in last year’s expanded gaming bill. It became live on Jan. 1.
They’ve effectively opened all of the tables that they can fit into the properties,” Reeg said. “We have drawings and would be ready to begin expansions.”
One reason why the new Caesars may be inclined to keep both tracks and sell the rest of the properties is that the two tracks are the only casinos in the Indianapolis market, home to about 2.5 million people. There is no other casino, open or planned, within an hour of Indianapolis.
Hammond has competition from the plethora of casinos in northwest Indiana and Chicagoland. Caesars Southern Indiana is the only casino in the Louisville, Ky., market. But across the river, Louisville-based Churchill Downs has invested millions in building Derby City Gaming, a historical horse racing parlor. Churchill has more than 1,000 HHR machines at its facility and has approval to more than double that.
Similarly, officials at Ellis Park in Henderson, Ky., just south of Evansville, are looking to invest millions to expand its HHR gaming at the track.
That move may not be an easy sell for Reeg and the soon-to-be new Caesars team. IRC officials have expressed concerns about Eldorado’s involvement in racing. A consultant hired by the IRC spoke to horsemen who race at both Hoosier Park and ERI’s Scioto Downs, who said there’s a night-and-day difference between Hoosier Park and “run down” Scioto.
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