Eldorado Gains Temporary Approval to Own Tropicana Atlantic City

Tropicana Atlantic City Eldorado Resorts

Gaming and Leisure Properties will own the Tropicana Atlantic City property, while Eldorado Resorts will hold the lease and operate the casino on a daily basis.

Eldorado Resorts won temporary approval to own and operate Atlantic City’s Tropicana Casino, which was part of 7 casinos bought by Eldorado earlier this year. The Division of Gaming Enforcement continues to review Eldorado’s full casino license and plans on a decision later in the year.

Tropicana Atlantic City is part of a $1.85 billion acquisition by Eldorado Resorts earlier this year. The Reno-based company bought Tropicana resorts from billionaire Carl Icahn earlier this year.

Eldorado Resorts bought the Atlantic City casino with the second-highest annual revenues, though Tropicana once was considered a failing or even doomed property in the town. Carl Icahn is given credit for the dramatic turnaround.

These days, gaming analysts are concerned that Atlantic City casinos will suffer from market saturation after the Hard Rock Atlantic City and Ocean Resort Casino opened earlier this year, Eldorado president Thomas Reeg is bullish on the AC casino market.

Thomas Reeg on Tropicana Casino

In a public statement, Reeg said, “We’re coming in eyes wide open that we’re going to have to fight for our position in this market. We expect a fight for market share and we’re prepared to get involved. We’re buying an asset that we hope is standing and competing 50, 100 years from now.”

Eldorado Resorts is a growing gaming enterprise throughout the United States. The late Don Carano, who was a practicing lawyer when he bought the Eldorado Hotel and Casino in 1973, built a legacy in several fields. In 1981, Don Carano co-founded the Ferrari-Carano Vineyards and Winery alongside his wife Rhonda in Sonoma County’s Dry Creek Valley.

By the time Don Carano passed in October 2017, he had built a casino network of 21 properties spread over 12 different US states. Before the Tropicana purchases, Eldorado Resorts owned 4 in Missouri, 3 in Nevada, and 2 apiece in Colorado, Louisiana, Pennsylvania, and Iowa.

Sale Includes Gaming & Leisure Properties

Now under Don Carano’s son’s guidance, Eldorado Resorts is in an expansion phase. The deal to purchase Tropicana Resorts was complicated. In February 2018, Eldorado sold Presque Isle Downs and Lady Luck Casino Vicksburg to Churchill Downs Inc. in a $230 million deal. Later, the sell of Lady Luck was overturned due to anti-trust issues involving Churchill Downs, but the rest of the sale stood under different terms.

Two months later, Eldorado agreed to buy the “operating business” of Tropicana Resorts’ seven casinos for $640 million. Gaming and Leisure Properties, a spinoff of Penn National Gaming based in Wyomissing, Pennsylvania agreed to buy the Tropicana properties. Gaming & Leisure Properties agreed to lease the Tropicana casinos to Eldorado for $110 million a year.

Tropicana Resorts Properties

Tropicana’s Aruba properties are not a part of the deal, but will be “disposed of as a condition to closing” the sale of the other properties. The other six properties being purchased by Eldorado Resorts are:

Tropicana Laughlin Hotel and Casino (Nevada)
MontBleu Casino Resort & Spa (South Lake Tahoe)
Belle of Baton Rouge Casino & Hotel (Louisiana)
Tropicana Casino Greenville (Mississippi)
Lumière Place (Missouri)
Tropicana Evansville (Indiana)

The Tropicana Atlantic City property is the highest-profile casino of the bunch. Gary Carano, Eldorado Resorts’ chairman and CEO, said of his company’s ability to compete in the Atlantic City scene, “We’re not new to competition. Reno is as much if not more competitive. We will be able to compete favorably; we have in every market we’ve been in.”

Carl Icahn Profile

Carl Icahn is the New York City investor who was called a corporate raider in the 1980s, but is these days one of the country’s top activist investors. Carl Icahn made his first investment in Tropicana in 2008. Icahn bought Tropicana Atlantic City out of bankruptcy in 2010 and turned the Atlantic City casino around in 5 years, making the casino profitable when many thought it was doomed.

Carl Icahn seemed to sour on the casino market after his experience with the Trump Taj Mahal, which he closed in October 2016 amid union strife. When the investor sold the company he saved with a $20 million loan in December 2014, he left with harsh words for New Jersey Senate President Stephen Sweeney and UNITE-Here Local 54 leader Bob McDevitt.

Carl Icahn’s New Jersey Issues

Sweeney had been instrumental in legislation which would have banned a casino owner from shutting down a New Jersey casino and reopening under a new name. That was the plan Sweeney and his legislative allies had in mind, because they thought Carl Icahn had closed Trump Taj Mahal in order to reopen again without union workers.

Others who know Carl Icahn believe he sold his two-billion-dollar casino empire because the assets had ripened. Carl Icahn tends to invest in businesses he believes are undervalued, get them into shape through investments or layoffs, and then sell them for a profit. That would describe the Tropicana casinos in Atlantic City and Las Vegas.

Trump Entertainment Ownership

The billionaire, who has been a factor on the New York Stock Exchange since the late 1960s, bought Trump Entertainment out of bankruptcy in early 2015. A personal friend of the Trump family, he gained the personal approval of Donald and Ivanka Trump before making the purchase.

Later, Donald Trump appointed Carl Icahn as his special advisor over regulatory reforms — a title which brought conflict of interest charges. During the August 2017 shakeup which swept Steve Bannon out of the White House, Carl Icahn gracefully stepped down from the post. Now Carl Icahn is out of the casino industry altogether for the first time since 2008.