Eldorado, Caesars provide a financial picture as companies await last approval Howard Stutz, CDC Gaming Reports · July 16, 2020 at 7:00 am Eldorado Resorts and Caesars Entertainment, on the cusp of becoming the gaming industry’s largest casino operator, provided investors with a brief financial picture of its operating results for May and June through two securities filings on Wednesday. With the $17.3 billion deal needing just the approval of gaming regulators in New Jersey, the companies could see the transaction close as soon as Friday or early next week. Reno-based Eldorado is the acquiring company, and its top executives are meeting with New Jersey regulators Wednesday and Thursday in Atlantic City. In separate filings with the SEC, Eldorado and Caesars provided a financial glimpse of their resorts, all of which closed in mid-March due to the coronavirus pandemic. “Net-net, we are encouraged by the second quarter performance and believe it fits with our thesis of higher margins and reasonable demand,” Deutsche Bank gaming analyst Carlo Santarelli told investors. For Eldorado, net revenues at its regional properties in nine states declined approximately 9% for days they were operating in May through June 30 compared to the same time period a year ago. The company’s destination market casinos – primarily its three resorts in Reno – saw revenues decline approximately 42% for the same time frame. For Caesars, its regional casinos in six states saw revenues increase between 9% and 11% during the May/June time frame. Revenues at the company’s destination casinos – Harrah’s New Orleans and the company’s Nevada properties in Las Vegas, Laughlin, and Lake Tahoe – declined between 43% and 45%. In Las Vegas, Caesars had reopened five of its nine properties. SunTrust Robinson gaming analyst Barry Jonas told investors a relatively timely recovery in the regional markets is expected. The comeback for Las Vegas Strip casinos will not be as swift. “Consistent with our prior research, we continue to see a number of structural challenges for the Strip, and we continue to favor regional gaming in the near-term,” Jonas said. Analysts said the investment community is beginning to view Eldorado and Caesars as a combined company, one which will operate roughly 60 properties in 16 states. The merged company will take on the Caesars name, and Eldorado’s management team, led by CEO Tom Reeg, will oversee the operation. The deal was announced over a year ago, but the COVID-19 casino closures slowed the deal’s completion. Following Federal Trade Commission approval at the end of June, gaming regulators in Nevada and Indiana have both signed off on the deal in the past seven days. As part of the Indiana approval, Eldorado is expected to sell three casinos in the state by the end of the year. Casino sales are currently a required part of the Eldorado-Caesars merger going forward. Eldorado is selling Eldorado Shreveport in Louisiana and the operations of MontBleu Resort Casino in Lake Tahoe, Nevada to Rhode Island-based Twin River Worldwide Holdings for a combined $155 million. The transaction will satisfy anti-trust concerns in the two markets raised by the Federal Trade Commission when it signed off on the merger last month. Twin River is also acquiring Bally’s Atlantic City from Caesars for $25 million. Eldorado also plans to sell one of the eight resorts on the Las Vegas Strip currently owned by Caesars. In New Jersey, Eldorado operates Tropicana Atlantic City, while Caesars operates Caesars Atlantic City, Harrah’s Atlantic City, and, currently, Bally’s Atlantic City. In Nevada, sports betting operator William Hill US will take over all of the Caesars-operated sportsbooks, including those at Caesars Palace and Harrah’s Las Vegas. Eldorado also has a partnership agreement in place with the American subsidiary of the UK-based sports betting giant. In 2019, Eldorado gained a 20% ownership stake in William Hill US in exchange for a 25-year deal for William Hill US to operate sports betting in the company’s casinos where the activity is legal. “We continue to view catalysts around sports betting, be it deal structuring and or partnerships, as the next major catalysts for the venture that drive shares higher from current levels,” Santarelli said. Shares of Eldorado closed at $42.03 Wednesday on the Nasdaq, up $1.92 or 4.79%. Caesars shares closed at $12.47, up 27 cents or 2.17%. Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at email@example.com. Follow @howardstutz on Twitter.