Eldorado Basically Buys Out Icahn In Casino Shopping Spree

Icahn Enterprises announced on Monday the sale of Tropicana Entertainment’s real estate holdings to Gaming and Leisure Properties, Inc. (GLPI). As part of the agreement, Eldorado Resorts will take control of hotel and gaming operations.

Carl Icahn, the billionaire investor, shared the good news on Twitter.

Today $IEP announced an agreement to sell Tropicana Entertainment for $1.85 billion. Read more: https://t.co/RXPp61fUmH

— Carl Icahn (@Carl_C_Icahn) April 16, 2018

The sale includes seven of the eight properties in the Icahn Enterprises portfolio. It doesn’t include Tropicana’s Aruba property. However, disposal of the Aruba property is a condition of closing.

The seven casinos span six states and include:

• Tropicana Laughlin Hotel and Casino (Nevada)
• MontBleu Casino Resort & Spa in South Lake Tahoe (Nevada)
• Tropicana Evansville (Indiana)
• Belle of Baton Rouge Casino & Hotel (Louisiana)
• Trop Casino Greenville (Mississippi)
• Lumière Place (Missouri)
• Tropicana Casino and Resort, Atlantic City (New Jersey)

About the buyers

GLPI is known as a “real estate investment trust” and only operates two of the 38 properties in its portfolio. The casinos and racinos span 14 states. Tenants including Penn National Gaming, Inc., Casino Queen, and Pinnacle Entertainment, lease the properties.

With two casinos in Pennsylvania, it is likely GLPI will enter the online gaming market later this year when the industry launches. Adding Tropicana Casino and Resort, Atlantic City to its portfolio ensures their entry into online casinos once the sale finalizes.

The Tropicana purchase brings a new partner to the table for GPLI. Eldorado is excited to partner with GPLI and the new opportunities in the gaming market it provides.

“The acquisition of seven Tropicana Entertainment properties will allow Eldorado to enter two new gaming jurisdictions and deliver additional financial and geographic diversity to our operating base,” said company chairman and CEO Gary Carano as reported in the Las Vegas Sun.

Eldorado is a Nevada-based gaming company that operates 20 properties in 10 states, including two PA properties of its own.

Eldorado has been on a bit of a buying spree. In a deal valued at $1.7 billion, it purchased Isle of Capri Casinos in 2017. On Monday, it entered into a cash deal to buy Grand Victoria Casino in Elgin, Illinois for $327.5 million.

GPLI and Eldorado will partner as they enter the New Jersey market. With both companies invested in PA and now New Jersey, they have immediately become significant players in the land-based and online casino industry.

Icahn Enterprises all but leaves the casino business

Icahn Enterprises currently owns and operates eight casinos and initially bought a stake in Tropicana in 2008.

Its most prominent property is Tropicana Atlantic City which earned $390 million in 2017. It had the second-highest revenue of the city’s casinos that year.

The sale should finalize sometime in the second half of the year, provided all regulatory requirements are met. After the sale, Icahn Enterprises will own only one casino, the Trump Plaza Hotel and Casino in Atlantic City which remains shuttered today.

Tropicana Atlantic City is getting ready for some tough competition

According to Union Gaming research analyst, John Decree, Tropicana Entertainment’s casinos are in excellent condition.

“The assets are in very good shape. Tropicana Atlantic City, Lumiere, and Evansville – all stand out as top-notch assets,” DeCree said to Reuters.

That is good news as Atlantic City casinos expect tougher competition when Hard Rock Hotel & Casino and Ocean Resort Casino open their doors sometime this summer.

As a side note, Icahn Enterprises sold the former Trump Taj Mahal to a group of investors led by Hard Rock International last year.

“We do not foresee any need for near-term capital investments of any scale across the properties,” Carano said.

It looks to be a busy few months for GLPI and Eldorado. Atlantic City is expecting the most active summer it has had in years, and online gaming in Pennsylvania is set to launch soon. It looks like this sale is positioned to take advantage of both.

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