Casino Operators Enjoy and Dreams Merger Faces Prolonged Scrutiny

Posted on: June 16, 2022, 08:55h. 

Last updated on: June 16, 2022, 09:13h.

Latin American casino operators Enjoy and Dreams thought they had a plan that would be relatively simple to implement. They planned on merging to create one of the largest operations in the region. But the idea is turning out to be more difficult than they expected.

Viña del Mar
Viña del Mar, one of the casinos Enjoy owns in Chile. The casino operator has intentions of merging with Enjoy, but the process is taking longer than they expected. (Image: Pinterest)

After several months of analysis and zero updates, there is finally news regarding the attempted merger between Dreams and Enjoy. Chile’s National Economic Prosecutor’s Office (FNE, for its Spanish acronym) has decided to extend its investigation a little longer.

The combination of both companies could substantially reduce competition if the merger moves forward. The FNE began its investigation on May 3, with the aim of analyzing the effects on free competition. The agency is going to now launch “Phase 2” of its investigation.

Considerable Anti-Competition Risks

After the analysis in Phase 1, the FNE explained that, based on the background collected to date, the operation could generate some risks of a unilateral nature. This would harm consumers and other casino operators.

It asserted that there were coordinated risks among market operators. The new company would have the ability and incentives to reduce the competitive quality of gambling services.

The FNE decided to extend the analysis of the merger for up to 90 working days. Any third party having an interest in the plan, including suppliers, competitors, and consumers, can provide background information to the investigation within 20 working days of the publication of the extension on the website of the Prosecutor’s Office.

Taking Over LatAm

In January of this year, Dreams and Enjoy confirmed that they reached a profitable agreement for both parties. Dreams shareholders would have a 64% stake in the combined entity, while Enjoy shareholders would have the remaining 36%.

The deal, if it moves forward, would give rise to the country’s largest casino operator. It would operate 15 of the 26 casinos in Chile, and an additional 12 operations in Argentina, Colombia, Panama, Peru, and Uruguay.

In Chile, the company would operate casinos, hotels, event centers, and restaurants in the communes of Iquique, Antofagasta, Coquimbo, San Antonio, Rinconada de los Andes, Viña del Mar, Mostazal, Los Angeles, Temuco, Pucón, Valdivia, Puerto Varas, Castro, Coyhaique, and Punta Arenas.

The two would also control the Hotel Park Hyatt Mendoza in Argentina and its gaming casino. In addition, Uruguay’s Enjoy Punta del Este Casino & Resort would become part of the portfolio. In Peru, the new company would have eight casinos and their associated assets in Lima, Tacna, and Cusco, in addition to the online gambling operation

Ocean Casino of Punta Pacifica in Panama City, Panama, is on the list as well. In addition, the joint company would include Colombian casinos, one in Cartagena de Indias and two in Bogotá.

Enjoy and Dreams, which first announced the planned merger in January, anticipate significant cost efficiencies if authorities greenlight the merger. They will have new access to economies of scale, while reducing overall corporate costs. For now, they remain in a holding pattern pending the outcome of the FNE’s investigation.