Eldorado’s clearance sale; Atlantic City takes the lead

Eldorado Resorts may be getting closer to a Caesars Entertainment acquisition (accounts differ) but it’s already clearing the decks for a big expenditure. It just offloaded three casinos to—irony alert—Caesars’ Vici Properties for $385 million. The trio is Mountaineer Casino in West Virginia, which never seems to stop changing hands, Isle of Capri Cape Girardeau and Lady Luck Caruthersville … in other words, the low-hanging fruit of the Eldorado orchard. This lessens competition with Harrah’s Metropolis and reduces Eldorado’s potential exposure in the Show-Me State, going from a possible market share of 33% to 28%, which might be enough to make the Federal Trade Commission happy. Operation of the properties goes over to Century Casinos (no, I’ve never heard of them before), which paid $107 million for that prerogative.

The cash-flow multiple of the sale was an industry-average 7.5X, so Eldorado obviously wasn’t doing a deal out of desperation. JP Morgan analyst Joseph Greff tips several more Eldorado properties as potential divestitures (primarily for low cash flow), namely Montbleu on Lake Tahoe, Tropicana Laughlin, Isle of Capri Lula in Mississippi, Lady Luck Vicksburg, Tropicana Greenville and/or Belle of Baton Rouge. That latter is so snake-bitten by the smoking ban that Eldorado will be lucky to find takers for it.

Surprisingly, Eldorado is only just now being approved as the new owner of Tropicana Atlantic City. The New Jersey Casino Control Commission obviously doesn’t do anything in a hurry. Of course, the impending Caesars deal would raise the question of “undue economic concentration,” since the merged companies would control 41% of market share, which demands a strong appetite for risk in the volatile Boardwalk market (especially at Caesars Atlantic City). While bottom-feeding Bally’s practically has a “for sale” sign on it, would unloading it be sufficient to lower Eldorado’s oceanside risk profile?

Speaking of Atlantic City (and Bally’s), New Jersey became the first state in the nation to mandate “panic buttons” for hotel workers. The impetus behind the law was an incident last year at Bally’s in which an employee was pushed by a guest into closet, then sexually assaulted. “Sometimes it’s a long floor of rooms and you may be the only one working there,” said Tropicana Atlantic City housekeeper Dasha Parikh, while Unite-Here Local 54‘s Ben Albert said “The housekeepers were enraged after that” assault at Bally’s. As far as Big Gaming states are concerned, only Illinois and Florida are looking into such laws at the moment. For shame. This should be a much wider movement. (Some gaming companies in Nevada have had to take the lead.)

* Penn National Gaming won the footrace to have the first satellite casino approved in Pennsylvania. Its Hollywood Casino Morgantown will have 750 slots and 35 tables.

* Could the good, old sports book be on the way out even before it has a chance to spread across this great land of ours? CEOs of online gaming providers are laying out a scenario whereby 90% of all sports bets are made with mobile devices in 10 years, maybe even sooner. One contrarian was David Cordish, who warned, “It costs a lot to market to that customer, and you’re not the only one. What we should be doing is building real facilities that attract the guest. It’s a fun event.”

* June is waning fast but if you rack up $25 in points, the casino will reward you with a $50 Chevron or Walmart gift certificate. This is a break with South Point tradition, which rewarded play with more (free) play but we applaud the initiative.