Indiana Racing Commission Approves ‘Guppy’ Eldorado Buying ‘Whale’ Caesars
Posted on: July 14, 2020, 12:00h.
Last updated on: July 14, 2020, 12:13h.
The Indiana Racing Commission (IRC) on Monday voted unanimously to allow Eldorado Resorts Inc. (ERI) to become the new owners of the state’s two racetracks, Indiana Grand and Harrah’s Hoosier Park. However, the gaming company must abide by a series of recommendations put forward by commission staff that had some concerns about the takeover.
Eldorado CEO Tom Reeg spoke to those concerns at Monday’s hearing and apparently alleviated many with the introduction of Joe Morris, the company’s senior vice president of racing. Morris, a longtime racing insider, joined Eldorado in February to head up its racing operations after overseeing The Stronach Group’s West Coast operations for nearly five years.
Commission staff painted a less than rosy picture of Eldorado’s racing operations in a 12-page report. In particular, the report stated that ERI was prone not to spend money on upgrading racing facilities since it merged with MTR Gaming six years ago.
Morris noted the report in his remarks. He agreed with it in that the company lacked “expertise in their management” of racetracks before his arrival. Shortly after the MTR merger, the track operator retired and was not sufficiently replaced, he added.
“The managers did lack authority,” Morris said. “They were mired in bureaucracy. It just took too long just to get a decision made.”
He pointed to an organizational chart showing the two Indiana track general managers reporting to him and him having a direct line report to ERI President and COO Anthony Carano as the solution to cut the red tape.
Horsemen: Two Tracks, One Owner Ideal
Hoosier Park and Indiana Grand are part of the $17.3 billion acquisition of Caesars Entertainment Corp. by the Reno-based gaming company, which will take on the Caesars’ name once the transaction closes. The IRC meeting was the penultimate regulatory hearing for the transaction as the New Jersey Casino Control Commission is scheduled to take it up on Wednesday.
In their comments to commission officials Monday, the horsemen made it clear they preferred one company owning the two tracks.
“The horsemen end up getting pitted against each other” when the tracks are owned by separate interests, said Brian Elmore, executive director of the Indiana Horsemen’s Benevolent and Protective Association.
They also indicated they view ERI’s hiring of Morris as a positive step towards a commitment to Indiana racing.
On Friday, when the Indiana Gaming Commission gave its approval for Eldorado to takeover the tracks as well as Caesars two casinos — Horseshoe Hammond and Caesars Southern Indiana — the IGC stipulated that Eldorado must have agreements in place to sell three of its Indiana properties by the end of the year.
On Friday, Reeg said the company would look to sell Horseshow, Caesars and Tropicana Evansville to meet the commission’s requirement. Reeg once again confirmed those decisions Monday.
By keeping the racinos, the new Caesars company under ERI leadership will invest $60 million in the tracks. Most of that will go toward expanding table game space at both locations. However, ERI officials pledged Monday to add $1 million dollars in purse money through 2022, at which point the increased table games would help drive even more money for racing.
‘A Guppy Swallowing a Whale’
Not everyone was sold on the Eldorado takeover, though.
Nat Hill IV said the horsemen’s associations cannot publicly speak out against a change in ownership because it could lead to repercussions, like having race entries denied, when the deal is approved.
Hill, a horsemen himself, said the reason why a regional gaming operator, is buying a global company like Caesars is because Carl Icahn, a Caesars board member, pushed for the sale.
Who agreed to buy the behemoth Caesars? Eldorado, in a deal that’s been described as a guppy swallowing a whale,” Hill said.
He fears that the new company led by ERI management will push for cost-cutting and that those efforts could affect the racing product at both tracks.
However, he said he realized a deal as big as the one between the two gaming companies would be too big to deny, and at that point, the goal is to get as many favorable conditions as possible. He added he hopes Eldorado proves him wrong.
“You can’t just put Eldorado on double secret probation, then walk away and congratulate yourself on a job well done,” he said. “If this deal is approved… your hard work as a commission has just begun.”