Another Atlantic City casino is set to change hands in the coming months.
This morning, Carl Icahn announced that he’s selling off Tropicana Entertainment to a pair of gaming heavyweights.
The agreement includes the sale of Tropicana Atlantic City, along with six other properties. Gaming and Leisure Properties will acquire the real estate, while Eldorado Resorts will take control of hotel and gaming operations.
Having purchased the group for $200 million, Icahn is poised to collect a fine return from the $1.85 billion deal. The valuation also highlights a remarkable turnaround for Tropicana, which was mired in bankruptcy proceedings eight years ago.
Icahn Enterprises expects the transaction to close during the second half of 2018.
Meet the buyers
The two buyers have become big movers in the land-based casino industry. And it appears they have online gambling in their sights, too.
GLPI has nearly 40 properties in its portfolio, but it only operates two of them itself. For tax purposes, it is technically a “real estate investment trust.” Most of its casinos and racinos are leased to parent company Penn National, including two in Pennsylvania. Those two properties will provide a gateway into PA online casinos when the industry launches (likely this year).
There’s a new partner lined up for the Tropicana purchase, though. Eldorado will take over operations for these seven properties once the real-estate parties finalize their transaction. The deal does not include Tropicana Aruba, which Icahn will also dispossess as a condition of the sale. It does, however, include the property in NJ, where iGaming thrives.
Eldorado is a publicly-traded gaming company based in Nevada. It currently operates 20 properties across the country, including two of its own in PA. It’s suddenly become a major player in the virtual space, taking positions in three of the four states with legal iGaming.
Under the agreement, the two groups will enter New Jersey as partners, almost certainly planning to explore online casinos and sports betting.
Meet the seller
Icahn is a polarizing figure, viewed as a white knight by some and a nuisance by others.
Donning his suit of armor, Icahn has rescued two Atlantic City casinos from bankruptcy over the last decade. The billionaire developer purchased Tropicana Entertainment in 2010, scooping up its Atlantic City casino as part of the deal. Tropicana had lost its NJ gaming license in 2007 and was unable to recover from the shuttering of its flagship property.
In 2014, Icahn came to the salvation of Trump Taj Mahal, acquiring the bankrupt property for $290 million. That investment turned out to be a poor one, though. Within two years, Icahn announced his intentions to close the property, citing a $100 million loss since opening. A contentious standoff with the local workers’ union had strained both the business and the relationship with state officials.
Icahn made good on his word in October 2016, closing the doors for the last time. After vowing to leave the building vacant, however, he managed to secure a willing buyer to help cut his losses. Hard Rock purchased the property for just $50 million with plans to reopen it this summer under its own brand.
On the other hand, the Tropicana has become one of the shore’s biggest success stories under Icahn’s guidance. Since emerging from bankruptcy less than a decade ago, it’s climbed into the top three on the list of Atlantic City casino revenue. It earns close to $30 million in an average month, trailing only Borgata and Harrah’s. Tropicana is also one of the freshest properties on the Boardwalk, having just been partially renovated in 2016.