Shareholders paved the way on Friday for Eldorado Resorts to purchase Las Vegas staple Caesars Entertainment, but Eldorado-owned Isle of Capri-Boonville doesn’t expect major changes.
Executives expect the $17.3 billion cash-and-stock purchase to close in the first half of next year, as long as the companies can get regulatory approval. Shareholders from both companies approved the deal in separate votes, with over 99 percent of the shares of each company that voted on Friday affirming the deal, according to a news release from Eldorado.
The company would own 60 properties across 16 states and take the iconic Caesar’s name, which Eldorado CEO Thomas Reeg called “the iconic brand” in the casino industry in a June conference call. Reeg said the merger will combine the companies’ strengths: Eldorado’s decentralized operations and Caesar’s presence on the Las Vegas Strip and its rewards program.
The companies also expect $500 million in “synergies” between the two companies over the first year, Reeg said — business-speak for combining redundant parts of the merging companies, reducing the need for staff and cutting costs as a result.
Andy Hays, director of marketing for the Isle of Capri-Boonville, said they don’t anticipate the merger will result in any changes at the Boonville casino. Hays said they don’t have any details at this point about what “synergies” between Eldorado and Caesars could mean at the property.
Employing about 400 people, the Isle of Capri Casino opened in Boonville in 2001 and is a factor in why taxable retail sales in Cooper County have increased by 17 percent since 2000, outpacing others in Mid-Missouri, according to previous Daily News reporting.
Caesars CEO Tony Rodio said in August that he had already found ways to reduce corporate costs within Caesars. After the companies combine, there will be more opportunities to eliminate “duplicative” positions, Rodio said. Rodio previously headed Tropicana, and was a part of Eldorados takeover of that company last year.
Eldorado has been aggressively expanding in recent years. It bought Isle of Capri in 2017 for $1.7 billion, taking control of its 13 casinos, including properties in Boonville, Kansas City, Cape Girardeau and Caruthersville. Last year, Eldorado bought Tropicana Entertainment’s seven casinos from Carl Icahn for $1.85 billion, including Lumiere Place in St. Louis and the Tropicana Atlantic City in New Jersey.
The companies sparked antitrust concerns when they announced the proposed deal in June, as the combined company would have owned six of the 13 licensed casinos in Missouri. Since then, Eldorado has sold off three of its five Missouri casinos. It announced sales of Isle of Capri-Cape Girardeau and Lady Luck in Caruthersville to Colorado-based Century Casinos, and Isle of Capri-Kansas City to Rhode Island-based Twin River.
That leaves Isle of Capri-Boonville and Lumiere in St. Louis as the company’s only assets in Missouri, while Caesars owns Harrah’s North Kansas City. The Missouri Gaming Commission will have to approve the change in ownership for those three casinos.
The companies have already filed a petition for the change in ownership, which the commission has been investigating, its legal counsel Ed Grewatch said. Staff will present a report of their findings to the commission, and the companies will present their case for the commission to approve the sale. The commission hasn’t yet determined which meeting it will discuss the sale during, Grewach said.
The companies have to prove to the commission that: the sale is in the state’s best interest, doesn’t hurt public safety or morals, doesn’t hurt competition, and doesn’t hurt the company’s finances or ability to hold a gaming license, according to state regulations. Grewatch said it’s up to the commission to determine if Eldorado selling off the majority of its casinos in the state is enough to ensure competition.
Antitrust issues will likely be crucial to regulators in New Jersey, where Eldorado and Caesars would combine to own 4 of 9 casinos in Atlantic City. The New Jersey Gaming Control Commission still has to approve the deal, and New Jersey Senate President Steve Sweeney criticized the deal in a news release for putting a “national conglomerate” in control of too much of Atlantic City’s gaming industry.
Eldorado will likely sell more assets for antitrust reasons, Reeg said in an August conference call with investors. Reeg didn’t give any indication which properties the company could sell, but called possible sales “relatively narrow and modest.”
Reeg did say Eldorado is “strongly considering” selling one of its assets on the Las Vegas Strip, but that wouldn’t happen until after the Caesars deal closes. The combined companies will own nine properties on the strip, including Bally’s, Planet Hollywood, Harrah’s and Caesars Palace.
Across Missouri, casino admissions have dropped almost 15 percent since 2015, but total adjusted gross revenue has still increased 3 percent, an analysis of monthly reports from the Missouri Gaming Commission shows. At the same time, Boonville has seen admissions drop almost 22 percent, and revenue decline over 3 percent.
Other Eldorado-owned casinos in the state have been sliding, as well. The Isle of Capri-Cape Girardeau casino has lost almost 24 percent of its admissions and 2 percent of its revenue over the past 5 years. It’s even worse in Kansas City, where the Isle of Capri casino has lost almost 29 percent of its admissions and more than 14 percent of its revenue.
Lumiere Place is doing the best of the Eldorado casinos, growing admissions by 2 percent and revenue by more than 19 percent. Harrah’s North Kansas City, which Eldorado will add to its portfolio with the Caesar’s deal, has been holding steady, with revenue growing almost 2 percent despite a nearly 10 percent drop in admissions over the past 5 years.
Sports betting could give the casinos a boost if the Missouri General Assembly approves legalizing it this year. Eldorado is already partnering with William Hill to provide sports betting at its casinos in states where it’s legal. Over the last three months, the company has established sports betting operations in six of its casinos in Iowa, Indiana and Mississippi. Reeg said in June that the combined company would have as good an opportunity in sports betting as anyone.
“Caesars has a plethora of sport’s partnerships, including league partnerships, team partnerships, ESPN, and we see them all fitting together,” he said.
Those states were some of the earliest to legalize sports betting after the U.S. Supreme Court ruled in May 2018 that a federal ban on sports betting was unconstitutional. Missouri lawmakers haven’t legalized sports betting in the state, though it’s been the subject of debate in Jefferson City since the federal ban was lifted.