Eldorado, Caesars deal could give rise to new issues in Atlantic City

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The $17.3bn merger between Eldorado Resorts and Caesars Entertainment could give rise to a raft of new issues in Atlantic City at a time when the market is still adjusting to its most recent entrants.

The agreed merger between Eldorado and Caesars could bring issues already being seen in Vegas to the Atlantic City market.

The combined company will control four of the city’s nine properties and 37 percent of total gaming revenue. The deal still requires shareholder and regulatory approval for it to close. The companies are confident this will come to fruition some time in 2020.

One unified company controlling such a large proportion of a market will clearly have an impact on the overall landscape. Leveraging the portfolio to drive down costs will be the most natural outcome.

Eldorado CEO Thomas Reeg stated the company will seek $500m in “synergies,” which to you and me means ‘saving money’.

“With all these properties in the same market, under one ownership, you’re going to have similar issues that they have in Las Vegas, although on a different scale,” Michael Pollock, MD of Spectrum Gaming Group told the Press of Atlantic City.

“They’re going to be looking for ways to develop a regional strategy, and that’s going to encompass everything from cost-savings and consolidation to marketing,” he added.

Bob Ambrose, an industry consultant and adjunct professor of casino management at Fairleigh Dickinson University further commented.

“Time and time again when these companies come in and they take over, that they look for ways to cut.

“It’s just the nature of the beast that they look for this generic term called efficiencies.”

 


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