ATLANTIC CITY – Brian Tyrrell, professor of Hospitality and Tourism Management Studies at Stockton University, who will become the faculty director of Stockton’s Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism (LIGHT) on July 1, discussed the $17.6 billion all-cash sale of Caesars Entertainment to Tilman Fertitta. The Houston billionaire already owns the Golden Nugget brand. Regulatory approval could take while.
How could this affect Atlantic City?
If the merger between Fertitta Entertainment and Caesars Entertainment proceeds similarly to the 2020 merger between Eldorado Resorts Inc. and Caesars Entertainment, we can expect some debate over whether this meets the terms of the “undue economic concentration” clause in the Casino Control Act. Whether the Federal Trade Commission and local Atlantic City regulators ultimately approve the merger will depend on what Fertitta Entertainment says that they are going to do.
While El Dorado was allowed to own four of the city’s nine casinos, this was very brief as Bally’s was quickly sold to another operator.
A similar situation occurred in the mid-1980s when Donald Trump was building the Taj Mahal and successfully bid for a controlling stake of Resorts International. That would have had four casinos (Trump Plaza and Trump Marina being the other two) being controlled by one company. Before the completion of the Taj Mahal, Resorts International had been sold to Merv Griffin.
The Golden Nugget and the three Caesars properties (Harrah’s Atlantic City, Tropicana Atlantic City and Caesars Atlantic City) are distinct in their brand identities so it will be interesting to see which if not all of them Fertitta chooses to continue operating and how that will impact brand promises such as free parking at Golden Nugget.
Each of the properties in the current Caesars Entertainment portfolio in Atlantic City has a unique brand and target market, so as long as they are making a profit, it is not a given that any one casino will close because of the acquisition. The biggest threat to a possible casino closure at this time is the potential impact of New York casinos and the possibility of North Jersey casinos.
Are there any concerns for consumers?
A typical concern of one company operating many properties in a geographic area is that it could reduce competition, which may lead to increased prices for consumers or decreases in promotional offers. However Atlantic City casinos not only compete with each other but also with casinos in Pennsylvania, Maryland, New York and Delaware. So, they will still need to remain competitive.
How could this affect the local casino workforce?
Whenever two companies merge or one acquires the other, there are often efficiencies that can be gained by consolidating positions at the highest levels of management. However, front-line employees are still needed to run the day-to-day operations in the casinos, food and beverage, hotel, and entertainment venues. So, they are the least likely to be consolidated. According to the announcement, the current Caesars Entertainment Management team will remain in place to oversee existing Caesars operations, so any potential impacts to management positions may not take place in the near term.
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