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FTC, Nevada and Indiana Green-Light Caesars Takeover by Eldorado Resorts
By Jeff Osienya Jul 13, 2020 LegalityAfter months of waiting the Eldorado-Caesars merger has been rubber-stamped by the FTC and the regulatory bodies in Nevada and Indiana. The new company will however have to divest to prevent a market monopoly.Gaming regulators in Nevada and Indiana have finally given a thumbs up to the $17.3 billion acquisition deal between Eldorado Resorts Inc and Caesars Entertainment Corp. The Nevada Gaming Commission and Nevada Gaming Control Board held a meeting on Wednesday, 8th July and Reno-based Eldorado’s pitch to acquire Caesars received unanimous approval from the regulatory bodies. Come Friday, the 10th of July, Eldorado released a briefing indicating that the Indiana Gaming Commission and the Indiana Horse Racing Commission also okayed their merger acquisition deal with Caesars after stakeholder meetings.
Following the approval from the Silver State and Hoosier State, the deal for the formation of the largest casino operation in the world is now in the hands of The Garden State’s horse racing and gaming board, the New Jersey Casino Control Commission. Moreover, prior to the Nevada and Indiana approvals, the Federal Trade Commission (FTC) had also given the acquisition deal its blessing last month, on 26th June, rekindling the acquisition approval campaign after pandemic holdups. However, all the bodies involved tabled some conditions that Eldorado had to agree to before they gave the go-ahead.
Property Divestment in Louisiana, Missouri, and Mississippi
Before the FTC gave Eldorado its consent, the deal was faced with a complaint per the Clayton Antitrust Act, arguing that there was potential to harm the interest of fair competition of the casino industry in selected regions. The said complaint was raised over the Kansas City region in Missouri and Kansas, Louisiana’s Bossier City/Shreveport, and the South Lake Tahoe region on the border of California and Nevada.
Concerns were raised over the fact that this merger would end up reducing the number of active operators in the said regions, thereby opening up the chance for increased prices in casino services and even watering down the quality of the services. A chance for a monopolized market was further reiterated by the complaint because the entry of other casino operators in the affected markets is unlikely in the near future because of how costly and time-consuming it is to set up shop in the jurisdictions.
As such the FTC only permitted the merger deal after Eldorado accepted to sell its properties in the said regions within 60 days of completion of the merger, to prevent market concentration by a single entity. Eldorado on its part acted almost immediately by agreeing to the divestment of its properties in the regions as required by the FTC before receiving the merger sanction.
Thus, Eldorado’s Missouri and Mississippi properties, the Lady Luck Vicksburg and Isle of Capri Casino in Kansas City will now be sold to Twin River Holdings in a combined $230 million deal. For Nevada and Louisiana, Eldorado’s The MontBleu Resort in Lake Tahoe, and Casino Shreveport in Louisiana will be sold to Twin River Worldwide Holdings again, in another $155 million deal.
More Property Divestment in Indiana and the Vegas Strip
Like the FTC, Indiana’s regulatory bodies also raised concerns over the fact that the merger would end up giving Eldorado a monopolistic edge, with up to 60% control over the state’s gaming revenue. While Eldorado on its own currently owns the Tropicana Evansville in Indiana, Caesars owns the Indiana Grand Racing & Casino in Shelbyville, Harrah’s Hoosier Park Racing & Casino in Anderson, Caesars Southern Indiana Casino in Elizabeth and the Horseshoe Hammond Casino in Hammond. After the merger, all these properties would fall under the same umbrella!
Eldorado agreed to the divestment of at least two of the properties in question after Indiana’s regulators okayed the merger so that the combined company would only control less than 40% of the casino properties in the market. Thomas Reeg, the Eldorado CEO told the Hoosier State’s commission that the Elizabeth and Evansville casinos would be sold, and perhaps even the Hammond property.
Coming to Nevada on the other hand, the merger acquisition would mean that Eldorado would run a total of 8 Sin City properties. For the sake of fair competition, the company agreed that it will part with one of its Las Vegas Strip properties within the first 12 to 24 months after the tie-up is completed.
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