There’s no doubt that merger of Reno’s Eldorado Resorts Inc. with Caesars Entertainment Corp. is a big deal — a very big deal — for the gaming business nationally.
But the impact of the merger on downtown Reno casinos remains to be seen, even though both companies have their roots in a few square blocks of downtown.
With the $17.3 billion merger, Caesars Entertainment Inc. — the new name for Eldorado Resorts — becomes the largest casino company in the United States. It owns or operates more than 55 casino properties in 16 states, including eight on the Las Vegas Strip.
The company’s headquarters will be in Reno, and the merger has the historic effect of returning the home of the Harrah’s brand back to the city where it was founded in 1937. The Eldorado opened in 1973.
For the past five years, Eldorado Resorts worked steadily to solidify its position in downtown Reno.
Eldorado Resorts bought Circus Circus and the half of The Silver Legacy that it didn’t already own from MGM Resorts in 2015. That deal allowed Eldorado to manage and market the three adjoining hotel casinos as a single unit. Today, they’re branded as “The Row.”
Then while the big merger still was pending at the start of this year, the former owners of Caesars sold Harrahs Reno to CAI Investments of Las Vegas. It’s closing the casino and redeveloping the property into apartments, offices and retail space.
Closure of the Harrah’s casino brings the amount of gambling space downtown more into line with consumer demand — or, to put it another way, the closure reduces competition among The Row and other remaining casinos for business that’s been under pressure for two decades.
If redevelopment of the old Harrah’s hotel and casino is done well, it will provide a substantial boost to all of downtown — including the three properties in The Row, says Richard Wells, a longtime consultant to the gaming industry and the president of Reno-based Wells Gaming Research.
Wells says the company’s three remaining properties in downtown Reno — the Eldorado, Silver Legacy and Circus Circus — are likely to get an immediate marketing boost from the merger.
More than 60 million people worldwide are members of Caesars Total Rewards program — one of the largest loyalty programs in the world — and the Eldorado properties now will be included in that promotional network.
One unanswered question, Wells says, is the amount of investment that the new Caesars Entertainment Inc. will be able to put into the Reno hotel-casinos. For one thing, he notes that managers of all 55 casinos in the new company will be arguing for a bigger slice of the money the company has available for investment.
Folks who loaned money to the company also will be expecting their share.
Eldorado Resorts sold $6 billion in debt in June to help finance the acquisition. Last year, the company said it hoped to cut Caesars’ overhead costs by about $500 million to help repay the debt. On the other hand, pandemic-related issues might tighten the amount of cash that’s available to repay creditors.
Wells notes that gaming markets that rely on fly-in travelers — Las Vegas, most notably — are likely to struggle the most with pandemic worries. Markets with heavy concentrations of drive-in consumers — Reno, for instance — may fare better.