In an effort to make sure gaming regulators in Nevada don’t raise any red flags over possible too much market control, Eldorado Resorts has agreed to unload its MontBleu Casino in Lake Tahoe. In doing so, it is proactively preparing for approval from regulators for its acquisition of Caesars Entertainment, presenting a slightly smaller local portfolio that shouldn’t cause concerns about a regional Nevada monopolization of gaming activity. Eldorado outlined the sale in a statement yesterday, explaining that it has already put the wheels in motion to hand over the keys to the property.
Maverick Gaming will pick up the casino for an unspecified amount of money. Eldorado CEO Tom Reeg adds in the statement, “The agreement to divest MontBleu is consistent with our continued focus on the expected closing for the Caesars transaction in the first half of 2020.”
Maverick has been busy the past year or so buying properties around the country and now has acquisitions in Colorado, Nevada, Washington and Louisiana. This is the second deal of the year between the two casino operators after Maverick agreed to purchase the Eldorado Resort & Casino in Shreveport, Louisiana this past January for $230 million in cash. That purchase is still under review by local gaming regulators.
MontBleu has a unique history in the gaming industry. It was operated by Caesars for about 25 years before the company finally bought it. It then sold the property to Columbia Sussex, a former gaming operator, in 2005, in a deal to avoid similar monopolization concerns when the company was merging with Harrah’s. Columbia then sold the venue in 2010 to Tropicana Entertainment, who sold it to Eldorado eight years later.
Caesars owns Harvey’s Lake Tahoe and Harrah’s Lake Tahoe Stateline; having a third local casino post-acquisition could cause issues and, of the three, MontBleu was the best candidate for elimination. Despite 45,000 square feet of gaming space, it hasn’t been performing up to expectations, and Eldorado sought to reduce the resort’s property value last month. It asserted that the amount of traffic received wasn’t enough to justify the $73.8-million valuation, and local authorities agreed, cutting the property’s taxable value by more than 50% to $34.7 million. That almost certainly had some impact on the completion of the sale of the property to Maverick.
Several states – Iowa, Louisiana, Maryland, Mississippi and Pennsylvania – have already signed off on the Eldorado/Caesars deal. Indiana, Nevada and New Jersey still have to weigh in, but the MontBleu deal should make it easier for Nevada regulators to approve the acquisition.
