Indiana Gaming Commission Approves Eldorado Caesars Merger

Eldorado Resorts announced at a meeting Friday, July 10, it has obtained the approval from the Indiana Gaming Commission regarding the ongoing merger with Caesars Entertainment, subject to applicable conditions.

The approval of the Indiana Gaming Commission left Eldorado needing to get the go-ahead from only two other regulatory bodies, the Indiana Horse Racing Commission and the New Jersey Casino Control Commission, before officially completing the $17.3 billion merger deal that would create the largest casino operator in the US.

Two Casinos May be Sold in Indiana

The combined business entity will own 5 casino properties in Indiana, as Caesars entered the merger owning Hoosier Park Racing & Casino in Anderson, Indiana Grand Racing & Casino in Shelbyville, Horseshoe Hammond in Hammond, and Horseshoe Southern Indiana Hotel & Casino in Elizabeth, while the Reno-based Eldorado has only one property, Tropicana in Evansville.

Eldorado management already expressed intent to part with up to 2 of these gaming properties, but only after the merger is finalized. As per the merger agreement, Eldorado management will remain in place after the combination is complete.

Strip Property Divestment Possible

Last week, the Eldorado/Caesars combination gained the approval from the Nevada Gaming Control Board, as well as the Nevada Gaming Commission. In Nevada, out of the 8 Las Vegas Strip properties, the new company will divest one within the first 12 to 24 months after the completion of the tie-up.

Prior to gaining the approvals from Nevada, Eldorado gained a conditional approval of the deal from the Federal Trade Commission (FTC). The FTC required casino operator Eldorado Resorts to divest casino-related assets in Lake Tahoe, Nevada and Shreveport, Louisiana, as the merger would likely be anticompetitive in these markets, a concern that has already been addressed by Eldorado having a $155 million deal in place with Twin River Worldwide Holdings.

Regarding the state of competition in Missouri and Mississippi, the FTC requested the sale of Isle of Capri in Kansas City and the Lady Luck Vicksburg in Vicksburg, within 60 days of completing the merger with Caesars. Eldorado addressed this issue almost immediately entering into a $230 million combined sale deal for the two casino properties with Twin River Holdings.

There is another issue regarding the Eldorado/Caesars combination that almost is brushed aside as insignificant, but it may turn out to be the elephant in the room. The combined business will have $13 billion of debt, on top of the $12 billion of lease, making the total amount of obligations to $25 billion.

In June, Moody’s Investors Service downgraded Eldorado Resorts’ Corporate Family Rating to B2 from B1 and Probability of Default Rating to B2-PD from B1-PD. The rating agency also downgraded Caesars’ Corporate Family Rating to B2 from B1 and Probability of Default Rating to B2-PD from B1-PD.