Regulators in Indiana have finally approved the Eldorado-Caesars merger.
The Indiana Gaming Commission (IGC) gave the $17.3 billion merger its blessing during its July 10 meeting. The Indiana Horse Racing Commission (IHRC) followed up by approving the merger at its meeting on July 13.
The new post-merger company will be run by Eldorado’s executives, but will keep the “Caesars Entertainment” name and branding.
The merger recently got the thumbs up from regulators in Nevada and the Federal Trade Commission.
Now that Indiana has come to terms on the merger, New Jersey regulators are the only hurdle left for the merger to clear.
New Jersey could give its approval at a meeting on July 15. Assuming that happens, Eldorado CEO Tom Reeg says that the merger could be set in stone by early next week.
Although the IGC and IHRC eventually approved the merger, it still faced its fair share of obstacles getting past regulators in the Hoosier State.
Horse Racing Commission had concerns
The IHRC’s concerns were about Harrah’s Hoosier Park in Anderson, Indiana, and Shelbyville’s Indiana Grand.
The commission considers the two racinos to be in excellent condition, and doesn’t want that to change post-merger. Centaur Holdings set the bar high for both racetracks before it sold them to Caesars back in 2017.
Reeg says that he understands that Indiana’s racetracks are some of the best in the country, and that he’s committed to holding them to the highest possible standard after the merger.
“We understand that this commission, if they give us the opportunity to own these tracks, will need to hold our feet to the fire,” Reed stated.
A week before its July 13 meeting, the IHRC announced that it had some major concerns about the merger.
The commission argued that Eldorado had neglected the racetracks that it purchased in the past.
Since Reeg and company knew about the IHRC’s concerns heading into the meeting, they came in with a heavyweight plan to put the commission’s members at ease. That plan included a slew of new ideas such as:
- A $60 million commitment to expand Indiana Grand and Hoosier Park
- A $25 million commitment every 10 years to maintain racetracks
- $1 million added to racing purses from 2020-2022 to jump-start interest
- $250,000 in donations to community organizations and charities in Shelbyville and Anderson
Eldorado executives admitted that they could have done a better job of maintaining their other racetracks. They urged the commission to focus on the present, rather than the company’s past failures.
Caesars and Eldorado agree to new terms
The horse racing commission was impressed with the new plan that Eldorado announced at the meeting.
In addition to those new commitments, the company agreed to a list of 22 exhaustive requirements from the IHRC.
Most of those requirements are financial, but they also include things like annual racing operations plans and cooperation with the Horsemen’s Association.
Eldorado’s executives were eager to get the merger cleared, so they came into the meeting prepared to go above and beyond what the IHRC was asking.
One of those new steps for Eldorado was hiring Joe Morris as its senior vice president of racing.
Morris said that communication has been missing from the racing side of the company. He believes that improving that will go a long way toward keeping Eldorado from repeating its past mistakes.
“You can’t run a racetrack remote. You’ve got to be there day-day talking with your horsemen, talking with your customers, owners, drivers and your employees to make this work.”
The IHRC agreed, and with its conditions met, approved the merger.
However, the new Caesars will also have to jump through some hoops that the gaming commission agreed to.
IGC doesn’t want an Indiana casino monopoly
The IGC unanimously approved the merger at its July 10 meeting.
However, that approval came with a few conditions.
To start, the new Caesars will have to keep its employment levels the same for at least three years after the merger. Those levels include any employees who are currently on furlough.
With so much employment uncertainty coming from the COVID-19 pandemic, the IGC wanted to make sure that casino and racetrack workers didn’t draw the short straw.
Furthermore, the IGC has concerns about one company dominating the gambling industry in the state.
Without any changes, the new Caesars would control about 60% of Indiana’s casino market.
The company had already offered to sell two different casinos to help drop that number down to about 40%. Reeg identified those two as Tropicana Evansville and Caesars Southern Indiana.
Selling two casinos would put the new company close to the pre-merger market share that Caesars has in Indiana right now.
The IGC didn’t think that went far enough.
It’s not that the commission has a problem with a 40% market share. But with all of the money that the new Caesars plans to invest in its Indiana properties, the IGC believes that after two or three years, Caesars could grow to dominate 60% of the market.
So to help offset that future growth, one of the IGC’s conditions was that Caesars sell off a third casino in the state.
Horseshoe Hammond up for sale
Reeg mentioned that Horseshoe Hammond would likely be the third Indiana casino that the company will sell.
That’s an interesting choice, considering that Hammond is the most profitable retail casino in the state.
Basically, Caesars doesn’t want to compete with Illinois.
Now that Indiana’s western neighbor has legal sports betting, it will be harder for Hammond to maintain its dominance over the area. The casino is only 20 minutes from downtown Chicago.
Sports betting is only one piece of the pie, but with a handful of competing casinos on the Illinois side of the border, Caesars would rather just dip out of the area entirely.
Reeg asked for an 18-month timeline for the sale process of the three casinos. The goal would be to have the casinos sold by January 2022.
However, the commission felt that was too long. Now, Caesars will have until December 31, 2020 to get the ball rolling.
Commissioner Marc Fine voiced his concerns about how those three casinos would be maintained during the selling process.
“We can always come in at a later date and extend those periods of time. I do not, in any way, want to see a property sitting out there for 18 months knowing it’s just on the vine. It seems too long a period for me.”
Fine lives in Evansville, where Tropicana Casino is currently located.
With the Tropicana being sold post-merger, it makes sense that Fine wouldn’t want the casino to be neglected. Obviously, if Caesars is selling the property, it wouldn’t receive much attention during those sale months.
The rest of the IGC’s members agreed with Fine, and after some deliberation, they settled on that December 2020 timeline.
With Indiana’s regulators finally approving the merger, Caesars will have a strong foothold in Indiana’s market for years to come.