The announcement Monday of a completed merger between Eldorado Resorts and Caesars Entertainment includes major implications for three Indiana casinos.
Those casinos – Horseshoe Hammond, Caesars Southern Indiana in Elizabeth, and Tropicana Evansville – will begin the selling process in 2020.
The upcoming sales are part of a divestment arrangement. Indiana officials, whose approvals were part of a long line of needed consent, required the arrangement.
The merger was OK’d by the Indiana Gaming Commission (IGC) on July 10. The Indiana Horse Racing Commission approved it on July 13.
Now, those sales will soon be reality, and with them comes uncertainty about the future of Indiana’s gaming industry.
Eldorado and Caesars will create ‘premier leader in gaming’
The closure of the deal was all but guaranteed after the New Jersey Casino Control Commission approved the $17.3 billion merger on Friday.
The agreement was finalized on Monday. The new company will maintain the Caesars name to capitalize on its brand.
“We are pleased to have completed this transformative merger, thus making us the premier leader in gaming and hospitality. We look forward to executing on the numerous opportunities ahead to create value for all stakeholders,” said Tom Reeg, CEO of Caesars Entertainment, Inc., in Monday’s announcement.
“Additionally, we are pleased to welcome all of our team members to the combined company, and we look forward to implementing all of the strategic initiatives that will position the company for continued growth.”
Efforts to reach Eldorado officials for further comment were unsuccessful.
Eldorado’s acquisition of Caesars will create a behemoth gaming company spread across 16 states and dozens of casino sites.
Merger means casino sales in Indiana
In Indiana, the merger includes the transfer of licenses from Caesars to Eldorado for Indiana’s two racinos: Hoosier Park and Indiana Grand. The Indianapolis sites will stay in the control of the new company.
The racinos were lauded by state officials, who insisted on protecting them from substantive change.
Questions have emerged about the condition of racinos previously acquired by Eldorado. One investigator cited run-down racetrack facilities controlled by Eldorado in other states.
But the biggest question for Hoosiers has been about market share.
Control of the three casinos in the state would have put more than half of Indiana gaming revenues in the new company’s hands.
Hammond, for instance, is Indiana’s highest-grossing casino and a top Midwest gaming location, considering its location near downtown Chicago.
Therefore, a divestiture was required by state officials. IGC documents point to concerns about “undue economic concentration; corporate control; Eldorado’s rapid corporate growth.”
Reeg initially told investors that the company planned to keep the Hammond site and the racinos following the merger, according to the NWI Times.
However, he agreed to sell the Hammond site following the IGC’s order.
Conditions for the sale may be complicated by COVID-19 and a growing market near Chicago, that includes the relocation of Lake Michigan casinos to inside Gary, Indiana.
Workforce questions also remain due to the upcoming sales’ timing in the midst of a pandemic. Hammond alone employed around 2,000 people at the outset of 2020.
Questions have also swirled about the Caesars loyalty program, although Monday’s announcement cited “more benefits” for current rewards members.
State regulators noted concerns about experience and diversity in Eldorado’s key management and “casino performance and employment levels following previous acquisitions.”
The commission ultimately granted approval following a series of gestures and promises made by Eldorado leaders.
Eldorado promises a strong performance in Indiana
In response to concerns, Eldorado gave multiple assurances.
Those include promising a “hands on” management team and “a strong balance sheet and a geographically diverse business able to operate in any economic environment.”
Importantly, the company also assured the IGC it would empower and increase autonomy for local teams, like those in Indiana.
Monday’s media release, meanwhile, points to “an even greater emphasis on diversity and inclusion programs, and gender equity initiatives.”
Reeg and company officials have also committed to a $60 million expansion effort at Indiana Grand and Hoosier Park, along with a 10-year, $25 million maintenance fund.
They will maintain and possibly expand stalls. Racing management will remain employed.
“We know that racing is why you have the casino opportunities that you have in these two properties, and our pledge to you is to drive that racing business to another level,” said Reeg.
“You’re already at a really high level. We’ll work to take it even higher.”