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The biggest gambling company in the United States is now in place with the New Jersey Division of Gaming Enforcement’s Casino Control Commission unanimously approving the long-awaited merger between Eldorado Resorts and Caesars Entertainment.
In a hearing that ran over three days, two members of the Casino Control Commission listened to testimony given from several stakeholders including executives from both Eldorado and Caesars.
One sticking point for the commission was Caesars’ lack of investment in Atlantic City properties. Eldorado CEO Thomas Reeg addressed that point directly.
“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 NJ Division of Gaming Enforcement (DGE) report used by the commission had various requirements that Reeg eluded to. The report delved into the impact, both environmentally and financially, of the merger between the two gaming giants and recommended several additional conditions:
- Doing away with Caesars’ assets deed restrictions on the Showboat Hotel Atlantic City, The Claridge, and the former Atlantic Club Casino Hotel property.
- Within three years, the sale of the Bally’s Atlantic City has to be completed.
- $400 million in capital investments for properties in Atlantic City that the new company will have to maintain for three years.
- Caesars will have to ensure that it will not close any properties in Atlantic City for five years from when the deal with Eldorado is finalized.
Many in the Atlantic City casino industry are less than pleased with the DGE’s decision to approve the Eldorado-Caesars merger. Hard Rock Atlantic City and Ocean Casino Resort filed petitions in order to have their say about the deal, but both were denied by the commission.
Caesars having to shell out $400 million for property improvements has significantly raised the competing cost in the NJ casino industry. Brett Yunker, the CFO of Eldorado, stated that his company was planing to reinvest 5% of revenue into its properties in Atlantic City. Other casino operators will have to dig into their pocketbooks to keep up.
The specific improvements to Caesars, Harrah’s and Tropicana are unknown at this time, but it is likely they will undergo major renovations. Caesars has already commenced hotel improvements on all three properties.
Eldorado has already stated that the Caesars Rewards Program will stay in place, so current Caesars players will retain all their points.