Last updated: September 11, 2023
The world’s largest casino company is on the books. New Jersey gambling regulators approved the sale of Caesars Entertainment to Eldorado Resorts for $17.3 billion. The sale concerned the regulators, however. If they approved the merger, Eldorado would own nearly half of all the casinos in Atlantic City.
Atlantic City casinos have been suffering from the same pitfalls as the other brick-and-mortar casinos worldwide. No one wants to gamble at a casino in the middle of a pandemic. New Jersey is hoping the merger between Eldorado and Caesars will help infuse new capital into its struggling casinos.
Caesars Entertainment, which owns 34 casinos worldwide, has been in trouble for years. Mismanagement of assets and explosive growth drove the company into financial trouble in 2007. Caesars only emerged from bankruptcy in 2017. Investors hoped that Caesars would bounce back from mismanagement after the bankruptcy. The pandemic put a lid on Caesars’ chances to continue to thrive. There was simply too much bloat and waste for the company to continue.
Caesars’ best-known property is the world-famous Caesars Palace in Las Vegas. Luminaries, such as Frank Sinatra and Muhammad Ali, appeared there.
In contrast to Caesars, which had been in business since 1937, Eldorado Corp. began in 1973. The Carano family opened a small hotel and casino in Reno. Eldorado remained a small regional company, with holdings mostly in the West, until 2015, when it began to expand. Eldorado began buying properties and gaming companies in the Midwest and South.
Eldorado’s business plan was financial thriftiness and operating within a budget. Because one family owned the majority of Eldorado’s stock, management was small and insular. This put it in direct contrast with the bloat from Caesars Entertainment. Caesars Entertainment operated well over budget for years. The company bought properties for too much money and paid large salaries to its management team.
Eldorado made an offer in mid-2019 to buy Caesars Entertainment. As part of the deal, Eldorado would change its name to Caesars Entertainment. Eldorado sold some of its casinos in the Midwest. That way, it wouldn’t be in trouble with antitrust laws in Missouri or Illinois. The Federal Trade Commission approved the merger in June. New Jersey signed off in July.
New Jersey regulators questioned the merger because it would give the company four casinos in Atlantic City. Caesars owns Caesars Palace Atlantic City, the Tropicana Atlantic City, Harrah’s Atlantic City, and Bally’s Atlantic City. Currently, nine casinos are operating in Atlantic City, and they have suffered from the economic downturn brought by the pandemic. In fact, the casinos in Atlantic City lost two-thirds of their revenue during mandated COVID-19 closures.
Now that the New Jersey Commission approved the merger, the Atlantic City casinos will continue to operate under their names. Analysts expect that the Caesars brand will become less bloated as the new executives trim the company’s books. The largest single shareholder in the new company is Carl Icahn, who owns about 14 percent of the combined company. He will have three seats on the new board. Eldorado will buy Caesars stock for $12.30 per share in a split cash and stock deal.
