On Monday, October the 1st, Eldorado Resorts released news that is has successfully acquired Tropicana for $1.85 billion.
Tropicana Entertainment Inc. became a subsidiary of the leading casino operator, adding 7 new properties in six states to the Eldorado portfolio, including the Tropicana Casino and Resort in Atlantic City, New Jersey.
With this purchase, Eldorado stepped foot for the first time in New Jersey and did not hide its ambitions for the NJ sports betting market, which was just legalized in June.
The list of properties includes:
- Tropicana Laughlin Hotel and Casino – Nevada
- MontBleu Casino Resort & Spa in South Lake Tahoe – Nevada
- Tropicana Evansville – Indiana
- Belle of Baton Rouge Casino & Hotel – Louisiana
- Trop Casino Greenville – Mississippi
- Lumière Place – Missouri
- Tropicana Casino and Resort, Atlantic City – New Jersey
All assets combined, Eldorado Resorts is looking at an annual revenue of $2.7 billion – a staggering figure even for such a large organization.
More about the deal
Mid-April, a tweet by Carl Icahn – Tropicana’s owner at the time – announced the deal with Eldorado Resorts to the public.
The deal dictated that the real estate of the 7 properties will be obtained by Gaming and Leisure Properties Inc. The hotels and all gaming operations will become part of Eldorado Resorts.
Tropicana which has suffered from severe financial strain and was near bankruptcy 8 years ago is optimistic about the future under the new ownership.
Eldorado Resorts has big plans for their new assets. Gary Carno, CEO and Chairman of Eldorado expressed his enthusiasm and eagerness to implement new improvements to the properties.
Carno believes that improvements to customer experience and the quality of service will result in an overall increase of profit margins. Despite the eye-watering price check on Tropicana, Eldorado CEO mentioned they are gearing up to launch large-scale promotions and marketing operations for the newly acquired casinos.
Gary Carno shared that similar strategic acquisitions have enabled Eldorado to expand rapidly, get access to new states and markets and diversify their profit sources across their portfolio.
Carno mentioned that sports betting is a new and exciting market for Eldorado Resorts which will create even more possibilities. Sportsbetting is a new thing in New Jersey and players are still riding the hype train, which is very profitable for NJ sportsbook operators.
Tom Reeg, President and CFO of Eldorado Resorts was also quoted in the press release:
“With the acquisition of seven Tropicana properties, Eldorado enters two new gaming jurisdictions and adds financial and geographic diversity to our operating base. ”
Eldorado takes aim at NJ sports betting
Tropicana Casino and Resort, Atlantic City is a major addition to the Eldorado family. New Jersey legalized sports betting and the property will become the central piece in Eldorado’s plans to enter this new market.
NJ sports betting stretches outside the state borders. Since New York is still working on it’s legislation for sports betting, NY players need to go to casinos in New Jersey.
Meadowlands Racetrack is just across the bridge and definitely the hottest spot for NY players. However, Atlantic City is just a 2-hour drive and easily within reach of New York sports betters.
This makes Tropicana Casino and Resort a lucrative location for New Jersey and neighboring New York and Pennsylvania.
Eldorado president and CFO – Tom Reeg is hopeful that sports betting will bring new customers that wouldn’t normally go to a casino. Sports betting is becoming more popular with new states clearing out the way for legalizing sportsbooks.
Early August, Reeg revealed in front of investors his plans for making a move on the NJ sports betting scene. His vision is that sports betting will not only provide additional profit but also funnel players into the groups’ entertainment and leisure properties – hotels, restaurants and the casinos.
In Monday’s press release Reeg also added that the team had discovered a potential to generate cross sales of up to $40 million when the company’s new sportsbook goes live.
This proves that sports betting is going to be an important channel in the Eldorado’s efforts to retain customers and cycle them within their properties.
But while plans are being made, Eldorado still does not have a sportsbook live and taking wagers. Their competitors have made significant headway but it’s not too late to join the market.
Tropicana to unveil new sportsbook within weeks
Tropicana Casino and Resort, Atlantic City is already working on launching a new sportsbook on its premises.
A few weeks ago, Eldorado signed a crucial deal with British bookmaker William Hill who will become Eldorado’s exclusive partner in providing sports betting services and online gaming to its properties.
The deal included 5 properties that will be unveiling William Hill sportsbooks in the coming weeks:
- Tropicana in Atlantic City, New Jersey;
- Mountaineer Casino Racetrack and Resort, West Virginia
- Lady Luck Casino in Vicksburg, Mississippi
- Isle of Capri in Lula , Mississippi
- Tropicana Casino in Greenville, Mississippi
William Hill already operates sportsbooks in all three Eldorado casinos in Nevada, so the two companies have already established a reliable and profitable partnership.
Steve Callender, general manager of Tropicana Atlantic City, expressed his hopes for the new sportsbook: “We pride ourselves on creating unique and exciting experiences for our guests at Tropicana Atlantic City, and our sports betting offering will meet those expectations.”
Earlier in September, Callender shared some details about the William Hill sportsbook, noting it will be hosted in a brand new venue specifically created for the purposes.
The NJ Casino Control Commission gave permission to Eldorado to own and operate Tropicana AC on September 12th.
With that Eldorado overcame the last big hurdle before entering the sports betting scene.