Eldorado Resorts (NASDAQ:ERI) received a directive this morning from the Federal Trade Commission (FTC) on several casino properties it must divest to obtain regulatory approval for its planned acquisition of Caesars Entertainment (NASDAQ:CZR). The government agency identified several locations, saying it believes the deal "likely would be anticompetitive in those markets," and specifies the divestitures it requires for the merger to move ahead.
The FTC ruling states Eldorado must sell two of its casinos to Twin River Worldwide Holdings (NYSE:BALY), a relatively small gambling company with a market cap of $656 million (Eldorado's is $4 billion). The two casinos are the Montbleu Resort Casino and Spa in the South Lake Tahoe area and the Eldorado Casino Resort in the vicinity of Bossier City-Shreveport.
Additionally, the FTC says Eldorado must complete its current sale of the Isle of Capri Casino in Kansas City, Missouri, within 60 days of the Caesars acquisition's closing. If Eldorado misses this deadline, the FTC can choose to mandate sale of the Isle of Capri to an approved buyer within a year. The Isle of Capri is a riverboat casino with two restaurants but no on-site hotel.
Eldorado's massive acquisition of Caesars would create one of the USA's largest casino companies, but will cost it $17.3 billion to $17.5 billion. Additionally, the merger has seen multiple delays since the two companies agreed to it a year ago, on June 25, 2019. Even if the deal closes, the combined casino titan faces a gambling market troubled by ongoing problems and potentially threatened by fresh COVID-19 outbreaks.