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Gaming Boards Back Eldorado-Caesars Deal

Nevada gaming regulators have approved Eldorado Resorts Inc.’s $17.3 billion acquisition of Caesars Entertainment Corp., putting the final approval of the gaming industry’s largest deal in the hands of gaming and horse-racing boards in Indiana and New Jersey.

The Nevada Gaming Commission on Wednesday unanimously approved Reno-based Eldorado’s bid to acquire Caesars and build the world’s largest casino operation.

“I’m very pleased,” Eldorado CEO Thomas Reeg said after four hours of hearings.

“I never would have thought I would be standing with a mask talking to you guys,” he told reporters. “This was an extraordinary process to go through and it’s gratifying to be getting toward the end of it.”

Reeg praised the board, commission and staff “doing all of the work through a lot of adversity.”

But the deal still isn’t done.

Indiana meets soon

The Indiana Gaming Commission meets on Friday, the Indiana Horse Racing Commission on Monday and the New Jersey Casino Control Commission on Wednesday to discuss the deal.

The horse-racing board, which reportedly has 22 recommendations relating to the deal, may represent the biggest roadblock. Reeg said he hasn’t thoroughly reviewed the recommendations.

Media reports indicate the Horse Racing Commission isn’t happy with Eldorado’s lack of experience operating race tracks, citing concerns about operations in Columbus, Ohio. Eldorado operates tracks in Pennsylvania and West Virginia.

Asked what was going to happen in Indiana, Reeg said: “The hearing is Monday. We’ll find out the answer then.”

Nevada regulators held back-to-back hearings, the bulk of which consisted of the state Gaming Control Board’s three hours of intense questioning on a variety of topics.

Eldorado executives steered through a variety of potential issues, including weathering a heavy debt load, building the company’s diversity program, navigating operations through the coronavirus pandemic and continuing to divest properties to comply with Federal Trade Commission requirements. The Gaming Commission’s decision really wasn’t in doubt once the Control Board went through the details. Commissioners had fewer questions because they were listening in during the Control Board testimony.

New details

Through the testimony, several new details were revealed:

Caesars CEO Tony Rodio will stay on with the company as a consultant to Reeg. After the meeting, Reeg said Rodio will assist in the company’s newly won casino development project in Danville, Virginia, a potential expansion program in New Orleans and plans in Atlantic City, where Rodio has deep business roots.

¦ Jan Jones Blackhurst, a likely member of the new Caesars board of directors, will focus on diversity programs, including efforts to recruit more women to executive positions. Reeg personally reached out to Blackhurst two months ago to begin work on the new program, which is expected to have a goal of filling half the executive positions in the company with women by 2030. She said the plan is in very early stages.

¦ Company officials believe the synergies of blending the two companies will be greater than initially expected. Reeg said there would be an additional $500 million in annual savings on top of the $400 million a year expected. He said $300 million would be realized as soon as the deal closes.

¦ The new management will seize upon a strategy Caesars has been famous for: effectively using the company’s various brands. Reeg said to expect more use of the Caesars name once the deal is completed. It also means Horseshoe, Harrah’s and World Series of Poker will remain in play under the new management.

Regulators had little trouble approving the individual licenses of prospective officers because they have been so familiar to them.

The Carano family is a Northern Nevada institution with connections to the wine business and the McDonald Carano law firm. Family patriarch Don Carano, who died in 2017, founded ElDorado hotel-casino in Reno 47 years ago.

Carano wanted live meeting

Chairman Gary Carano asked that Nevada’s consideration of the deal be in an in-person meeting instead of online. At Wednesday’s dual hearings, Chairwoman Sandra Morgan and member Philip Katsaros participated in the Sawyer Building hearing room in Las Vegas, where seats were widely separated and all participants wore masks except when socially distanced. Member Terry Johnson participated remotely.

All members of the commission, which has four members instead of five because former Chairman Tony Alamo, who left the board in April, has yet to be replaced, were present in Las Vegas.

Commissioner Deborah Fuetsch, a commission representative from Northern Nevada, made the final motion to approve the deal on behalf of the state.

Going into the deal, Eldorado had 23 properties in 11 states with 23,900 slot machines, 660 table games and 11,300 hotel rooms. Caesars had 53 properties in 14 states with 38,000 slot machines, 2,700 table games and 36,000 hotel rooms.

The biggest sticking point for approval was the new company’s $13 billion in debt once the deal closes. But executives convinced the boards that deal synergies and Las Vegas’ history of bouncing back from adversity would work in the company’s favor. They said they also have the ability to sell off assets. Debt repayments don’t begin for another four years.

One of the conditions imposed by the FTC in its approval of the deal was for Eldorado to divest casino properties in South Lake Tahoe, Louisiana and Kansas City, Missouri. Eldorado already has moved on deals, including selling the Montbleu Casino Resort Spa near South Lake Tahoe and the Eldorado Shreveport Casino Resort to Rhode Island-based Twin River Worldwide Holding Inc., in April for a total of $155 million.

The FTC said Eldorado is selling its Isle of Capri casino in Kansas City. Under the proposed settlement, if the Isle of Capri sale is not complete within 60 days after the proposed acquisition of Caesars closes, the commission may, at its discretion, require Eldorado to divest the casino to a commission-approved buyer within 12 months.

FTC dissent

One of the five FTC commissioners, Rohit Chopra, opposed the deal, calling on the other casinos to be divested before commission authorization.

When the deal was announced, Eldorado was pricing its shares at $12.75 each and of that, Eldorado would pay $8.40 per share in cash with the rest of the payment made in the form of stock in Eldorado.

Since June 2019, Eldorado shares have been on a wild ride. They hit a 52-week low of $6.02 a share on March 18 — the day Gov. Steve Sisolak closed the state’s casinos for what would be 78 days. Stock is now north of $38 a share.

Eldorado stock climbed in Wednesday trading. Shares closed up $1.72, 4.5 percent, then went up another 45 cents, 0.4 percent more in after-hours trading to end at $39.90 a share in volume about half the normal daily average.

Caesars stock went up 20 cents, 1.7 percent, then 22 cents, 1.8 percent, after hours to end at $12.34 a share. Volume was about 75 percent above average.

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