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FTC approves Eldorado-Caesars merger


The Federal Trade Commission (FTC) has approved the merger between Eldorado Resorts and Caesars Entertainment, after requiring Eldorado to sell two properties to Twin River Worldwide Holdings in markets where the deal was deemed uncompetitive.

The required sales – of the Eldorado Shreveport Resort and Casino in Louisiana and the Mont Bleu Casino Resort & Spa in Lake Tahoe, Nevada for a purchase price of $155m – were agreed in April.

Eldorado agreed to acquire Caesars for $17.3bn – $7.2bn in cash, and approximately 77m Eldorado common shares – in June 2019, with shareholders of both operators approving the deal in November. 

However, the deal faced a complaint under the Clayton Antitrust Act, arguing that the proposed acquisition would harm competition for casino services in a number of regions.

In particular, concerns were raised over the South Lake Tahoe market on the California-Nevada border, the Bossier City/Shreveport market in Louisiana and the Kansas City market in Missouri and Kansas.

The complainant said the merger would reduce the number of active operators in the South Lake Tahoe market from three to two and in the other two markets from five to four.

“The ultimate effect of the acquisition would be to increase the likelihood that prices of casino services will increase, and that the quality associated with casino services will decrease, in the relevant geographic markets,” the complainant explained.

They added that the entry of new operators into each market “is unlikely to occur in a timely manner because of, among other things, the time and cost associated with acquiring the necessary state, county, and city approvals”.

The Commission agreed with this assessment in those three markets and so made its approval conditional on Eldorado selling Eldorado Casino Shreveport in Louisiana, and the MontBleu Resort in Lake Tahoe. Eldorado had already agreed to sell the Isle of Capri Casino in Kansas City to Twin River.

“This remedy would preserve the status quo in the South Lake Tahoe area casino services market, maintaining three independent casino operators and resulting in no change in market concentration,” the Commission said of the MontBleu divestment, making similar comments on the Shreveport deal.

Three Commission members voted to order Eldorado to sell the properties and one against, while one did not vote. The dissenting member of the Commission, Rohit Chopra, agreed that the selected markets would lack competition, but said the decision to divest the properties to Twin River was overly complex, particularly as Twin River had “ no guarantee of obtaining a license”.

“I am concerned that the Commission is rolling the dice with this complex settlement that will clearly not lead to an immediate restoration of lost competition,” Chopra said. “It is also clear that we must revamp our approach when it comes to vetting proposed divestiture buyers.”

The decision will now face a 30-day period where it is open to public comment.

The merger has already been approved by regulators in Missouri, Mississippi and Louisiana, but will still need to be approved by the Nevada Gaming Control Board, Nevada Gaming Commission, New Jersey Casino Control Commission, Indiana Gaming Commission and Indiana Horse Racing Commission to come into effect.

Tom Reeg, Chief Executive Officer of Eldorado Resorts, welcomed the approval.

“We are delighted to announce the FTC’s approval of our planned merger with Caesars, which is expected to create the largest owner and operator of US gaming assets,” Reeg said. “We look forward to completing the Merger, subject to receipt of the remaining consents and approvals from regulators in Nevada, New Jersey and Indiana.”

Eldorado also sold three casinos in Mississippi, Missouri and Pennsylvania to Century Casinos in anticipation of the deal, while Caesars sold the Rio All-Suite Hotel & Casino in Las Vegas.

The MontBleu resort was initially going to be sold to Maverick Gaming before Eldorado agreed to sell the property to Twin River instead.

This weekend, Caesars also announced that it will reopen its Bally’s, Caesars, and Harrah’s-branded casinos in Atlantic City on 3 July. Governor Phil Murphy has announced that casinos in the state will be permitted to reopen at limited capacity from July 2, after more than three months closed as a results of the novel coronavirus (Covid-19) pandemic.