• The companies will keep the Caesars name, after finalizing the terms of the merger in 2020.
  • With a strong sports betting market share, Caesars will be able to capitalize on the online market.
  • A spinoff online betting company is possible, creating an extra revenue stream for Caesars.

RENO, Nev. – Caesars Entertainment and Eldorado Resorts agreed to a merger last month to create the largest gambling company in the United States.

The terms of the deal would see Eldorado paying off all of Caesars’ debt by the summer of 2020 and the two companies combining assets under the Caesars name. Now, 16 states will feature a Caesars-branded property, bringing the nationwide casino total for the company up to 60.

While talks of selling a property on the Last Vegas Strip have been in the forefront, a conference call earlier this week demonstrated that casinos are not the only focus of this deal, but also the implications to legal sports betting.

When Telsey Advisory Group Analyst Brian McGill inquired about a potential sports betting “spin off”, Tom Reeg, CEO of Eldorado Resorts, replied “yes”.

Eldorado’s US Sports Betting Expansion

Caesars and Eldorado have been heavily involved in the year one of the nationwide sports betting expansion and some of their partners include DraftKings, William Hill, 888, and more. Their jump into the industry has allowed Caesars to operate (or be ready to operate) in nine sports betting states, while Eldorado has a stake in six.

In Indiana alone, the newly merged company is ready with 10 casinos to launch sportsbooks before or during the NFL football season. Additionally, Caesars is actively attempting to add locations in Iowa and Illinois before their launch dates.

However, both companies have been taking a stronger focus on online gambling as opposed to retail. In New Jersey, they combine for four properties within Atlantic City, but it is the online casinos and sportsbooks that have produced the most revenue for these companies.

“[Caesars has] an internet casino business that… I think really gets little to no value,” said Tom Reeg, CEO of Eldorado Resorts, on Tuesday’s Q2 2019 Earnings Call. “I’m starting to think about: Is there a way to structurally put something together that shines a light on that business?”

That possibility exists that after the merger is complete. The two companies have an option to create a spinoff publicly-traded company solely focused on online gambling. This would allow for a whole new set of investors to prop up the business, while also allowing the parent company (Caesars) to continue to grow off the online betting company’s revenue and expansion.

It seems like a “sure-thing” to be profitable because Pennsylvania just recently launched their online gaming platforms, Illinois is the next major state to move forward with mobile betting, and New York has discussed the possibility for past two years.

These states alone are a goldmine of high-volume gamblers and their ability to make an impact in the lower handle states will likely come with great success.

With Caesars also owning the rights to the World Series of Poker, there will not be much that the company will not be able to get their hands on. Expansion is inevitable. The Caesars brand will likely be noticed on a variety of online platforms, and in this arms race, they are certainly on top for now.

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