The Caesars-Eldorado merger reaching the finish line is taking longer than planned.
This is the same deal initially targeted for a potential first-quarter completion. The COVID-19 pandemic shutting down the gambling industry is pushing the timeline back.
#NewCaesars in June
"The anticipated closing of the $17.3 billion deal has been pushed from April to June."
"Caesars-Eldorado merger moving forward" https://t.co/4Bmu6N3cFN
— Marc (@MeltzVegas) April 1, 2020
As far as Atlantic City is concerned, three casinos are in play:
Caesars Entertainment currently owns Bally’s.
This will soon change. The company has an agreement to sell the property to Twin River Holdings.
Approving the Caesars-Eldorado merger
Besides the Garden State, Nevada, Indiana and the Federal Trade Commission need to rubber-stamp the Caesars-Eldorado union.
In Atlantic City’s case, the merger means one-third of the nine casinos will fall under the same corporate umbrella.
Bally’s switching hands will help ease any concerns about Caesars’ potential of controlling over 40% of the market.
Rummy Pandit, executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism at Stockton University, spoke to Play NJ about the impact of the Bally’s sale.
“There has been some speculation that the Caesars-Eldorado merger would result in the sale of one of the four casinos in Atlantic City. The sale reduces the company’s holdings in Atlantic City, reducing concern over undue market concentration, and fosters healthy competition.”
Casino space at Caesars-Eldorado properties
Even with Bally’s out of the picture, the new Caesars will still control more than 400,000 square feet of Atlantic City gambling space.
This includes the Wild Wild West Casino, which is not part of the Bally’s deal.
Here is a breakdown of the totals:
- 6,200-plus slot machines
- Just under 100 poker tables
- About 370 table games
The Book at Bally’s, which is AC’s largest sportsbook, will remain under Caesars’ ownership once the sale is finalized. The massive space opened prior to the 2019 football season.
Call it holding on to a substantial $11 million capital improvement, which includes The Book at Harrah’s.
Pandit said Caesars keeping the Wild Wild West and The Book does not come as a surprise.
“Caesars has made a significant investment in these amenities which, unlike the gaming floor, bring greater variety to the Caesars product and enhance customer experience.”
How much will COVID-19 impact the deal?
The bigger issue right now is the fact that Atlantic City casinos are closed as a result of the coronavirus pandemic.
As of now, reopening by Memorial Day weekend looks unrealistic.
There is the possibility the merger could reach the finish line before some jurisdictions restart the economy.
No matter what date the lights are turned back on, there is a significant financial gap that will take months, possibly years to recoup.
Besides lost gambling revenue, the restaurants, hotel rooms, shops, and entertainment amenities are off-limits, too.
And, in Caesars-Eldorado’s case, there are multiple properties impacted.
At least, in the beginning, none are expected to be operating at full capacity.
So will this be too big of a hurdle for one operator to overcome?
“Individual properties’ ability to absorb the impact, react, adapt and recover from COVID-19 related closure will depend on the choices and actions taken by their leadership as well as the resilience built into their respective operating and financial plans,” said Pandit.
“Larger companies may have the advantage of spreading out the impact of a financial downturn across multiple properties, while smaller companies may be more agile in finding financial solutions or limiting their expenses.”
What happens to Bally’s?
The future of Bally’s AC could be one of the more intriguing topics once the ink is dry.
The 40-year-old property will still be connected to Caesars via the Wild Wild West annex. More importantly, the Rhode Island-based Twin River is entering the NJ gambling market.
Purchasing a property for a bargain-basement price of $25 million leaves the door open for significant capital investment. Buying a property and not making significant upgrades is a wasted investment.
It wasn’t all that long ago when Hard Rock Atlantic City made a significant investment transforming the former Trump Taj Mahal.
And the Ocean Casino Resort team continues to “right the ship” of the former Revel.
Pandit said it will be interesting to see what Twin River does with Bally’s.
“There is certainly an opportunity to re-envision the property and bring in new amenities and customer experiences,” said Pandit.
“Given their increasing importance in the New Jersey gaming industry, sports betting and online gambling will likely be a significant part of Twin River’s plans for the property. But to differentiate their operations from others in the market, Twin River may look to invest in customer experiences and innovative gaming products.”
Caesars-Eldorado waiting game
Like the return of pro sports, when the official merger-completion date will be announced remains a mystery.
Obviously, New Jersey regulators signing off on the deal needs to come first.
Whether or not the date is before Caesars, Harrah’s and Tropicana welcome customers back to Atlantic City is to be determined.
The word “closed” is one that is rarely used in the 24/7 casino industry.
Closing on the Caesars-Eldorado merger, on the other hand, is something expected to happen real soon.