A potential casino juggernaut was formed Monday when Eldorado Resorts announced it is buying Caesars in a cash-and-stock deal valued at $17.3 billion.
The acquisition will put about 60 casino-resorts in 16 states under a single name, Caesars, creating the largest gambling operator in the United States. The deal — following pressure from activist investor Carl Icahn — is targeted to close in the first half of 2020 if approved by gambling regulators and shareholders.
In Atlantic City, Caesars Entertainment Corp. owns Caesars Atlantic City, Harrah’s Resort Atlantic City and Bally’s Atlantic City, while Eldorado owns Tropicana Atlantic City. Caesars also has restrictive covenants that prevent gambling operations at two former casinos, Showboat and Atlantic Club. Additionally, Icahn still owns the shuttered Trump Plaza on the Boardwalk.
The merger still needs regulatory approval in several jurisdictions, including New Jersey. The state Casino Control Commission will have to make a determination whether the deal presents an “undue economic concentration” in the market and gives too much control to a single operator, as stated in the law regulating gaming in New Jersey.
The deal would open the doors of the Las Vegas Strip market to Eldorado.
“We are incredibly excited. This is an iconic brand,” Eldorado CEO Tom Reeg said referring to Caesars Entertainment during a conference call. “It’s really a level of property and brand that we have not had the great fortune to control and now we will.”
Eldorado will 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 will pick up about $8.8 billion of the casino operator’s debt.
Shareholders of Eldorado Resorts Inc. will hold about 51% of the company’s outstanding stock, with Caesars Entertainment shareholders holding the remaining 49%.
The company will be led by Reeg, along with Eldorado Chairman Gary Carano. It will be headquartered in Reno, Nevada, where Eldorado is based, and have a significant corporate presence in Las Vegas, where Caesars is based.
The deal was months in the making.
Icahn earlier this year revealed he had amassed an enormous stake in Caesars Entertainment and pushed for fundamental changes at the company, including board representation and a say in the replacement of the then-CEO. He argued that the company’s stock was undervalued and the best way to boost it would be to sell the company.
Caesars Entertainment Corp., which operates more than 30 casinos in the U.S., emerged from bankruptcy protection in late 2017, but it’s been struggling since.
Icahn in April appointed Caesars Entertainment’s current CEO, Tony Rodio, who had the same role at the billionaire’s Tropicana Entertainment, which was sold to Eldorado in 2018. He also got to pick board members.
“While I criticized the Caesars Board when I took a major position several months ago, I would now like to do something that I rarely do, which is to praise a board of directors for acting responsibly and decisively in negotiating and approving this transformational transaction,” Icahn said in a prepared statement Monday. “As a combined company, Caesars and Eldorado will be America’s preeminent gaming company.”
The bankruptcy reorganization led to the creation of the real estate investment trust VICI Properties Inc. It owns the buildings and land of more than 20 casino-resorts, including Caesars Palace on the Las Vegas Strip, and leases the operations back to casino operators.
Eldorado said Monday that it also reached an agreement with VICI Properties Inc. in which VICI will acquire the real estate associated with Harrah’s Resort Atlantic City, Harrah’s Laughlin Hotel and Casino located about 100 miles south of Las Vegas, and Harrah’s New Orleans Hotel and Casino for approximately $1.8 billion.
Other terms of the deal include VICI being given right of first refusals for whole asset sale or sale-leaseback transactions on two Las Vegas Strip properties and the Horseshoe Casino Baltimore.
Reeg told analysts and investors the company expects to sell some properties that may allow it to avoid federal anti-trust issues. It is also evaluating whether to sell properties on the Strip.
“As I sit here today, I tell you, I think that there’s more Strip exposure than we would need to accomplish our goals with our regional database,” he said. “So, I would expect that we would be a seller of a Strip asset, but that decision has not been made.”
Caesars’ stock jumped 16% Monday, while shares of Eldorado fell 10%.
Press of Atlantic City Staff Writer David Danzis contributed to this report.
Atlantic City will remain a limited tourist destination unless Atlantic City International Airport brings in more passenger flights and expands into other aspects of aviation, state Senate President Steve Sweeney said.
“You can fly into Las Vegas and be in a casino in 20 minutes after getting your bags,” Sweeney said. “Atlantic City is always going to be a regional gaming facility until we find a way to utilize that airport.”
And the Port Authority of New York and New Jersey has the best shot at bringing in more passenger flights, as well as maintenance and other operations, the Democrat from Gloucester County told the editorial board of The Press of Atlantic City recently.
“One of our big pushes — I really want the Port Authority of New York and New Jersey to buy, not to (just) operate, the Atlantic City airport,” Sweeney said. “That would be critically important to the economics of this region.”
He said the Port Authority has created a task force to study the issue.
But the South Jersey Transportation Authority, which owns and operates the airport along with the Atlantic City Expressway, “has had no discussion with the Port Authority regarding a potential sale of Atlantic City International Airport,” said SJTA communications manager Mark Amorosi.
“The Port Authority is committed to exploring the potential acquisition or operation of an air terminal outside of the Port District in New Jersey,” wrote Chairman Kevin O’Toole in a March 21 letter to U.S. Reps. Donald Norcross, D-1st; Jeff Van Drew, D-2nd; and Andy Kim, D-3rd.
O’Toole said he has directed staff “to immediately undertake a study utilizing industry-leading consultants to consider the impact that the Port Authority could have in taking over an airport in New Jersey, including the Atlantic City International Airport.”
ACY is the most underutilized airport on the East Coast, Sweeney said, while the Port Authority’s major airports in North Jersey and New York City have a space problem, as do other surrounding air facilities such as Philadelphia International Airport.
“They are getting crushed in Philly, they are crushed in Newark, and we have all this space here,” said Sweeney, who said the Port Authority has hired a firm to evaluate the possibility of buying ACY. “The Port Authority is the largest airport operator in the world. ... Who better to come down here and make an investment?”
That could include an investment in building a connector to allow the Atlantic City Rail Line to stop at the airport, he said.
The airport had 484,512 scheduled air passengers use the facility in the first five months of this year, up 5.1% over the same five months last year, according to its May 2019 statistical summary.
Another 35,887 came in by charter plane from January through May, which is down 13.9 percent from the same months last year.
Total traffic in the five-month period was 520,309, up 3.5 percent over last year.
Sweeney began suggesting the takeover earlier this year, and other political leaders, such as Van Drew and Atlantic County Executive Dennis Levinson, said they were on board with the idea if it results in more flights and better use of the large, underutilized airport in Egg Harbor Township.
Sweeney said Newark is running out of space for aircraft maintenance, and suggested it could be moved to ACY.
No new legislation would be required, as a 2007 law allows the Port Authority to take over one airport in each state that is outside its geographical jurisdiction. It bought Stewart International Airport in Orange County, New York, but has yet to purchase a New Jersey airport out of its geographic base.
The Port Authority owns and runs Newark Liberty International Airport, John F. Kennedy International Airport in Queens, New York City, the busiest air passenger entry point to North America; LaGuardia International Airport, also in Queens; as well as Teterboro Airport in Bergen County and Stewart.
The last time the Port Authority was involved in ACY, however, problems ensued.
The SJTA paid it $500,000 a year to provide general management services from 2013 to the end of 2017, but it did not result in greater use of the airport. That agreement ended by mutual decision in December 2017, according to that year’s SJTA annual report.
The Port Authority brought United Airlines flights to Atlantic City in 2013, but the airline stopped service after just seven months amid controversies regarding its operations in Newark that resulted in criminal charges.
At the time the Port Authority under former Gov. Chris Christie was also dealing with the Bridgegate scandal, in which some of its employees were embroiled.
Christie ally and former Port Authority Chairman David Samson, whose law firm Wolff & Samson (now Chiesa Shahinian & Giantomasi) represented the SJTA, pleaded guilty to using his chairmanship to withhold approval of United Airlines getting a wide-body hangar at Newark airport, to force the airline to run a money-losing route from Newark to Columbia, South Carolina, near his vacation home. Samson was sentenced to house arrest, community service and a $100,000 fine in 2016.
Called the “chairman’s flight,” United discontinued it after Samson resigned in 2014. That is also the year the Atlantic City flights stopped.
“We got suckered by United when they came and did those flights,” said Sweeney. “Then we found out why and what happened.”
ATLANTIC CITY — The state Senate unanimously approved a bill last week that would allow alcohol to be consumed from open containers on the beach, Boardwalk and other designated areas within the Tourism District.
With the state Legislature about to break for the summer and ongoing budget negotiations preoccupying lawmakers, the bill is unlikely to go into effect this year.
The effort has the support of city government, the Police Department, business leaders and local alcohol regulators, but people strolling the Boardwalk on Monday had mixed reactions to the proposal.
Many were unaware of the effort to allow open containers because they already assumed it was permitted.
“We were walking around (this weekend) with beer and no one said anything or stopped us,” said Vinny DiMateo, of Hempstead, New York.
In New Jersey, there is technically no law that explicitly prohibits public consumption of alcohol, but municipalities must adopt an ordinance designating where it would be permitted. The bill in the legislature would designate the Casino Reinvestment Development Authority, which has land-use and zoning jurisdiction over the city’s Tourism District, as the agency responsible for crafting Atlantic City’s defined area of permitted consumption.
Joe and Amber Weaver, of Greensburg, Pennsylvania, were not in favor of allowing open alcohol consumption on the Boardwalk. The couple was visiting Atlantic City for the first time with their two young daughters and said the idea of people openly drinking on the Boardwalk would be a reason not to return.
“I think for people with kids, it would probably be a deterrent for most,” Amber Weaver said. “I don’t think we would come back if there’s open drinking.”
Silvio Ortega, of Branchburg in Somerset County, was also opposed to the idea because of his children.
“I don’t want my kids seeing that,” he said, while listing off behaviors such as public urination, vulgarity, lewdness and littering. “If they actually want to make Atlantic City a place for families, this is a terrible idea.”
Others thought that while a few bad actors were likely, the majority of adults would be able to consume alcohol in public without any issue.
“Why can’t I take a walk at night on the Boardwalk with a beer or something?” asked William Howell, of East Orange in Essex County. “The trouble-makers are going to cause trouble whether or not it’s legal. So, I don’t see it as a big deal.”
Christina Vargo, of Bucks County, Pennsylvania, said she supported the idea of allowing open containers because it would free up people to move between casinos and other bars along the Boardwalk without fear of breaking the law.
“Atlantic City is a place for grown ups to do grown up things,” she said. “My friends and I, we like to bar-hop when we go out, so I think it’s a good idea.”
Atlantic County’s state legislators — Republican Sen. Chris Brown and Democratic Assemblymen Vince Mazzeo and John Armato — are sponsors of the companion bills in their respective legislative chambers. The three lawmakers have all said the idea is a way to spur business and visitation to the city.
Tom Forkin, chairman of Atlantic City Alcohol Beverage Control, has been pushing the idea of permitting open containers for several years. On Monday, Forkin said he was frustrated that an idea that has both bipartisan support and local backing might not happen this summer.
“Those people in Trenton couldn’t hit water if they fell out of a boat,” he said about the Legislature’s inability to pass the bill in a timely manner.
The Senate passed the bill on June 20 by a vote of 37-0. The bill was then referred to the Assembly Oversight, Reform and Federal Relations Committee, which does not have another scheduled meeting before the legislative recess.
LOWER TOWNSHIP — A township police lieutenant, who has not returned to work since being charged with driving with a blood alcohol content 4½ times the legal limit in 2018, has retired and his arrest is the subject of an ongoing administrative investigation.
In a video released Monday, police Lt. John Chew, 48, can be seen struggling to complete field sobriety tests administered by subordinate officers during a traffic stop conducted less than a mile from his home on April 27, 2018. After failing several road-side tests, Chew was placed under arrest. According to the police report, Chew’s BAC was .36%. The legal limit in New Jersey is .08%.
Chew, contacted Monday, said that he retired April 1, 2019, but declined to comment on the incident, in which he was charged with driving while intoxicated and failure to maintain lane.
Township police Capt. Martin Biersbach said Monday that Chew was not technically suspended. He was not permitted to return to work and had to use his available time.
An Internal Affairs investigation began immediately and has not been completed pending Chew’s retirement filings, Biersbach said.
The video and police record were first posted online Saturday by YouTube channel operator Real World Police.
The Press obtained the police report and was provided with a video of the car stop by township officials Monday.
Chew was placed on administrative leave following his arrest, according to the police report.
Detective Sgt. Aaron Sykes of the Cape May County Prosecutor’s Office said the county’s top law enforcement agency was notified of the arrest, but that any administrative investigations in this instance would be handled by Lower Township police.
Lower Township Manager James Ridgway said the township cannot comment on the incident because it is considered a personnel issue.
“As per legal instruction, we’re not allowed to discuss personnel issues publicly,” he said.
Ridgway confirmed Chew no longer works for the township.
Chew, who started his career with the department in 1995, had been promoted to lieutenant three months before his arrest. According to state pension data, where he is still listed as active, Chew earned an annual salary of $127,242.
According to the police report, a citizen contacted police shortly before 6:30 p.m. about a vehicle driving erratically and at a high rate of speed. The description of the vehicle matched Chew’s 2002 black Chevrolet pickup truck.
Chew was pulled over by Patrolman Michael Nuscis and then-Cpl. John Armbruster near Honeysuckle Lane and Idell Street after passing by the police station on Breakwater Road.
When Nuscis approached the vehicle, he detected the smell of alcohol and “noticed (Chew’s) eyes were watery and droopy,” the police report stated.
Armbruster told Chew that the officers’ body cams were recording and that he and Nuscis “have to handle this like anything else,” before asking his superior to exit the vehicle.
“I get it,” Chew said in the video.
Chew failed two field sobriety tests and declined to continue during a third while struggling to maintain his balance without swaying or holding on to the back of his truck for balance.
He was taken to the police station, observed for 20 minutes then provided samples for a breath test, both of with resulted in a .36 percent reading.
He was then transported to Cape Regional Medical Center and issued a motor vehicle summons.