The executive director of the Indiana Horse Racing Commission said it was “impossible” to offer an “enthusiastic or unqualified recommendation” for Eldorado Resorts’ $17.3 billion acquisition of Caesars Entertainment, according to a report filed Tuesday.
Deena Pitman, in an investigative report that was shortened for public consumption, said the commission’s staff was “deeply concerned that Reno-based Eldorado is not truly interested in becoming a true horse racing partner” with the state, “as evidenced by its lackluster efforts at other racetracks that it owns or has previously owned.”
Pitman listed 22 conditions – financial and operational – that Eldorado needs to agree to if the commission approves the Caesars’ buyout. An Eldorado spokesman did not return an email request for comment.
The Indiana Horse Racing Commission is expected to consider the Eldorado-Caesars merger on Monday, following Friday’s hearing by the Indiana Gaming Control Board.
Eldorado, which already owns Tropicana Evansville in Indiana, is acquiring four casinos in the state that are currently operated by Caesars, including two with horse racing tracks – Harrah’s Hoosier Park Racing & Casino in Anderson, and Indiana Grand Racing & Casino in Shelby. The other two properties, Horseshoe Hammond and Horseshoe Southern Indiana in Elizabeth, don’t feature racing.
Eldorado executives have told gaming analysts the company would likely sell two of the five Indiana casinos the company would control post-merger, but have not specified which properties.
In the report, Pitman told the commission that any conditions imposed on Eldorado Resorts “must allow for meaningful accountability to ensure that the commitments that Eldorado has made are not eroded due to outside challenges or circumstances, or general reluctance to spend additional money on racing.”
Indiana is one of three states where gaming regulators still need to sign off on the merger, in which Eldorado is the acquiring company in a transaction that will create a regional gaming giant with nearly 60 properties in 16 states. Eldorado’s management will control the merged operation, with CEO Tom Reeg overseeing the combined company that will retain the Caesars’ name.
Nevada gaming regulators will consider the matter in a special hearing on Wednesday. New Jersey regulators have a hearing scheduled for July 15, but an agenda for that meeting hasn’t been posted.
On June 26 – 367 days after the deal was first announced – the Federal Trade Commission conditionally signed off on the merger pending the sale of two Eldorado-operated casinos in Lake Tahoe, Nevada, and Shreveport, Louisiana, which would clear up antitrust issues.
The Indiana Horse Racing Commission hired an outside horse racing expert, F. Douglas Reed, to investigate Eldorado’s horse racing history. The company currently owns two racetracks attached to casinos – Pompano Park in Florida and Scioto Downs in Ohio. Eldorado had owned the Mountaineer Racetrack and Casino in West Virginia since 2014 but the track was sold last year to Century Casinos.
“Eldorado has limited racing experience and lacks a deep bench of racing expertise to pull from when adding the existing properties in Indiana,” Reed said in his findings.
In the report, Reed found several issues with Eldorado’s management at all three racetracks, including concerns about the facilities, issues with horsemen, and lack of capital expenditures. At Pompano Park, Reed noted that Eldorado “was aggressively seeking to ‘decouple’ racing from the casino by replacing the pari-mutuel license with a Jai Alai license.”
Eldorado had owned Presque Isle Downs & Casino in Pennsylvania but sold the property to Churchill Downs in 2018. The track was not included in the report.
Pitman did say said Eldorado officials have made commitments to growing the racing industry in Indiana.
Shares of Eldorado closed at $38.03 on the Nasdaq Tuesday, down $1.50 or 3.79%. Caesars shares closed at $11.92 on the Nasdaq, down 17 cents or 1.41%.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
