Update: The state Division of Gaming Enforcement recommended that Caesars remove all existing deed restrictions on its former Atlantic City properties including Showboat, The Claridge Hotel and the former Atlantic Club. However, the Casino Control Commission excluded that condition from the final approval.
With an unemotional “yes” on Friday morning, New Jersey regulators signaled the creation of the largest gambling company in the United States. The NJ Division of Gaming Enforcement’s Casino Control Commission unanimously approved the conditional Eldorado acquisition of Caesars in its meeting.
The ramifications of the transaction, which could close as soon as Friday, will touch Atlantic City. The DGE prescribed some of that impact itself.
Inside the decision to approve the Eldorado acquisition of Caesars
Over three days, the two members of the commission heard testimony from many stakeholders. That included several Eldorado and Caesars executives.
Among the primary concerns for the commission was Caesars, which the new joint company will bear the branding of, hasn’t invested in its Atlantic City properties in the past. Eldorado CEO Thomas Reeg addressed those specifically, doubling down on Eldorado’s commitment to Caesars.
“We wouldn’t be doing this transaction if we weren’t believers in Atlantic City, because it’s so important to Caesars as it sits today,” he said. “We understand that we acquire the positives and negatives of Caesars and we know that Atlantic City and New Jersey have had some difficulties with a lack of investment from Caesars, chiefly in the past, and we understand why the conditions are there.”
The requirements Reeg referred to were stated in a DGE report that the Commission used as a baseline. The study looked at the environmental and fiscal impact of the proposed merger and made several recommendations for conditional approval. Those now include:
- Removal of existing deed restrictions on three Caesars assets: Showboat Hotel Atlantic City, The Claridge hotel and the former Atlantic Club Casino Hotel
- Completing the sale of Bally’s Atlantic City within a three-year period
- Capital investments of $400 million for the Atlantic City properties the new Caesars will maintain within the next three years
- Assurances that Caesars will not close any Atlantic City properties for five years after the transaction closes
The approval’s many conditions will now be something that is on Caesars execs to satisfy and the DGE to enforce. As that plays out, it will mean some changes for casino patrons in Atlantic City.
What the merger means for Atlantic City gamblers
On the meeting’s second day, the newsworthy item wasn’t the testimony, but rather testimony that didn’t take place. Hard Rock Atlantic City and Ocean Casino filed petitions to join the fray.
Both wanted to express their concerns about the effect the sale would have on their businesses. The commission denied those petitions, however.
With Caesars spending $400 million to improve its Atlantic City holdings, the cost of competing in the market goes up. Eldorado CFO Brett Yunker said the company plans to reinvest 5% of its annual revenue into its Atlantic City properties as well. Other operators will have to spend to keep up as well.
Because Eldorado executives will largely retain their roles in the new company, a new approach to management may be visible. Eldorado has a reputation for letting local managers have more control over their operations.
Current Caesars customers should not worry about their rewards program points, however. Eldorado has already announced it plans to maintain that program.
While the exact specifications of improvements to Caesars, Harrah’s and Tropicana are unknown at this time, that scope may focus on renovations. Caesars has recently engaged in that activity at all three of those properties on the hotel side.
If the Eldorado acquisition does result in a “spending spree” by all operators to show off the greatest and latest, the winners in that situation may be casino patrons. New amenities and refreshed spaces should enhance those experiences.