The headlines concerning the corporate parent of the Las Vegas Strip’s Caesars Palace haven’t been the most auspicious or promising during the last decade.
Now, a once-small, family-owned, single-casino operation from Reno, Nevada is looking to create a new destiny for one of the most storied names in gaming.
Eldorado Resorts took on the Caesars Entertainment signature Monday, completing a year-long merger process that carried a $17.3 billion price tag and created the largest casino company in the U.S., with 55 gaming properties in 16 states. The former Eldorado now controls Caesars’ properties in the United Kingdom, Egypt, and Canada.
“There is a lot of equity in the Caesars name, especially Caesars Palace,” said UNLV gaming historian David Schwartz. “The property is one of the most recognizable names in gaming. To the investment community, Caesars Entertainment is known as a gaming company.”
The last time Caesars Entertainment was sold – in 2005, to Harrah’s Entertainment for $9 billion – it took the buyer five years to make the switch. Five years later, Caesars filed a Chapter 11 bankruptcy reorganization that took 30 months to complete. In late 2018, corporate raider Carl Icahn swooped in, acquired nearly 20% of the casino giant, and forced a sale.
Caesars Palace Las Vegas
“New Caesars,” as Eldorado’s management team refers to the merged company, operates some of the best-known names in gaming – the flagship Caesars Palace in Las Vegas, Caesars Atlantic City, and the Harrah’s and Horseshoe casino brands across the U.S.
Schwartz said the image of Caesars Palace as a gaming powerhouse supersedes corporate ownership that has changed hands six times in the past two decades. He is the author of Grandissimo: The First Emperor of Las Vegas, which told the story of Caesars Palace developer Jay Sarno, who used loans from the Teamsters’ Pension Fund to build the Strip resort in the 1960s.
SunTrust Robinson gaming analyst Barry Jonas agreed.
“It makes sense to keep the Caesars name, given the nationwide reach and rich history it conveys to both a land-based and an increasingly online audience,” he said.
Eldorado was established in 1973 by Reno attorney Don Carano, who, in addition to founding the casino company, also developed the Ferrari-Carano Vineyards in California and the Nevada-based McDonald Carano law firm. He died in 2017. The company, through both organic growth and acquisition, had grown into a company with 26 properties in 12 states before the Caesars deal.
Gary Carano, Don Carano’s son, served as CEO of Eldorado until last year when he became executive director of Eldorado’s board. He is now executive chairman of the newly merged Caesars board. His son, Anthony Carano, who has held senior management positions since 2014 with Eldorado, is now president and chief operating officer of Caesars. There are nine Carano family members involved in the company.
Reno news and political commentator Sam Shad said that many in northern Nevada might not understand why the Eldorado corporate name is going away, though it will remain attached to one of the company’s three casinos in the city.
“In a way, it’s history repeating itself,” Shad said of the transition from Harrah’s to Caesars. “I am proud of Gary and family, taking the Eldorado brand to the highest of heights. It’s going to be their greatest challenge, blending two very different cultures.”
More news coming
The merger may be done on paper, but there are several changes that are still to take place.
Twin River Worldwide Holdings is acquiring Eldorado Shreveport and the operations of MontBleu Resort Casino in Lake Tahoe for a combined $155 million. The company is also buying Bally’s Atlantic City for $25 million.
Indiana gaming regulators are requiring Caesars to sell three of its five casinos in the state by end of the year – most likely Hammond Horseshoe, Caesars Southern Indiana in Elizabeth, and Tropicana Evansville.
Caesars CEO Tom Reeg, who has been Eldorado’s CEO since January 2019, has said that the company will sell at least one and possibly two of its eight Las Vegas properties.
“We’ll see some select asset sales post-deal close, some per regulatory requirement, some select pruning of smaller assets (Louisiana Downs and Harrah’s Metropolis in Illinois), and the sale of a Strip asset,” Jonas said. “As we’ve seen before, we expect a large portion of revenues from the assets sold to be shifted to other Caesars properties with its powerful rewards program.”
The former Eldorado had nearly $3 billion in debt on its books at the end of March. That figure jumps to almost $13 billion with the merger closing.
However, the roughly $12 billion in long-term casino lease payments Caesars owes to real estate investment trusts Gaming and Leisure Properties and VICI Properties company increases the company’s total debt load to some $25 billion. Analysts said the investment community and common accounting principles count leases as debt.
Caesars CFO Brent Yunker – formerly Eldorado’s CFO – has said that the proceeds from “asset sales” will help pay down debt.
Other deals
VICI, the real estate investment trust created out of the Caesars bankruptcy, completed its end of the merger Monday afternoon, acquiring three Caesars properties under the Harrah’s brand in Atlantic City, Laughlin, Nevada and New Orleans for a combined $1.8 billion. VICI will lease the operations back to Eldorado for a total annual rent of $154 million.
Also, William Hill US CEO Joe Asher said his company will assume operations of 11 Nevada sportsbooks formerly operated by Caesars, including Caesars Palace, in a few weeks. The company will assume the operations for seven of Caesars’ sportsbooks on other states.
The former Eldorado has a partnership agreement with the American subsidiary of the UK-based sports betting giant William Hill. In 2019, Eldorado gained a 20% ownership stake in the business in exchange for a 25-year deal to operate sports betting in the company’s casinos where the activity is legal.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
