Nevada casino operator Eldorado Resorts, which runs the Belle of Baton Rouge, is buying Caesars Entertainment Corp., which operates the Harrah's land-based casino in New Orleans, but expects to retain the Caesars brand after the deal is done by mid-2020.
Eldorado Resorts, based in Reno, Nevada expects to close on its $17.3 billion acquisition of Las Vegas-based Caesars after routine regulatory review. The move would make the combined companies own 60 casinos across 16 states, including six in Louisiana.
Eldorado also owns Isle of Capri Casino Hotel in Lake Charles and El Dorado Resort and Casino in Shreveport. Caesars' other properties in the state are Harrah's Louisiana Downs in Bossier City and Horseshoe Bossier City.
The deal might not have a big impact on the casino market in Baton Rouge, but in Shreveport that could be different considering the combined entity would own multiple casinos in the same market. The Belle of Baton Rouge ownership was in early talks about what it would take to move the casino from the riverboat to land.
"This is going to be a moving target for a while. The devil is going to be in the details,” said Ronnie Jones, chairman of the Louisiana Gaming Control Board.
There are no state regulations which would impede the sale of existing casino operations, but the Federal Trade Commission may step in to make adjustments, Jones said. In October 2018, Penn National Gaming and Pinnacle Entertainment were forced to divest casino-related assets in St. Louis, Cincinnati and Kansas City, Missouri, as part of Penn National's $2.8 billion deal to acquire Pinnacle.
There was no word about how it may impact previously planned investment in New Orleans, though Jones said it wouldn't be impacted considering Harrah's in New Orleans was identified as a top property in the portfolio.
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The deal comes at time when revenue generated at casinos across Louisiana were mostly down.
The Belle of Baton Rouge, the city's oldest casino, generated only $2.6 million as of May, down from $4.9 million in May 2018. In general, the Baton Rouge casino market has not grown year-over-year revenue since August 2017.
Likewise, in Shreveport-Bossier City, where Harrah's Louisiana Downs track operates, was down 2.2% to $57.5 million as of May.
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Revenue at Harrah's in New Orleans was down nearly 2% in May and generated $26.4 million, compared to $26.9 million one year ago.
The companies expect to save $500 million in the first 12 months after the deal closes as they integrate operations.
Some plans to reduce expenses include a decentralized management, streamlined marketing expenses, combining software and information technology infrastructure, and lowering insurance premiums and property costs, according to an investor presentation.
VICI Properties, a real estate investment trust for Caesars properties, and Eldorado are expected to sign a deal where VICI will acquire real estate which includes Harrah's New Orleans for $1.8 billion. Then the Harrah's operations will pay a total of $154 million in annual rent to VICI.
The combined entities will have more than 65 million rewards customers and will control more than 40,000 hotel rooms across the country.
Eldorado Resorts declined further comment about its plans in Louisiana and is expected to offer more information to investors Tuesday in a conference call.
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Eldorado is anticipated to pay $8.40 per share in cash and 0.0899 shares of Eldorado stock for each Caesars share, or $12.75 per share. The transaction values Caesars at about $8.6 billion, and Eldorado would pick up about $8.8 billion of the casino's debt.
Winnings by Baton Rouge’s three riverboat casinos continued year-to-year declines in May, bringing in 14% less than the year before.