Sale Of Tropicana AC Will Have A Big Impact On Online Gambling

This week started off with some major news for the US casino market, as Carl Icahn announced he has entered into a definitive agreement to sell Tropicana Entertainment to Eldorado Resorts for $1.85 billion.

The sale includes the following Tropicana properties:

• Tropicana Atlantic City — Atlantic City, NJ
• Belle of Baton Rouge — Baton Rouge, La.
• Lumière Place — St. Louis
• Trop Casino Greenville — Greenville, Miss.
• Tropicana Evansville — Evansville, Ind.
• Tropicana Laughlin — Laughlin, Nev.
• MontBleu Resort Casino & Spa — Stateline, Nev.

An eighth casino in Aruba, “will be disposed of as a condition to closing,” according to the press release.

“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. “Eldorado Resorts intends to implement our proven strategy of enhancing margins by further improving customer service and the customer experience while focusing on promotion and other spending in all areas of the newly acquired properties.”

Eldorado is already a major player in the US casino industry, but flies under the radar due to its previous focus on smaller, regional casinos. With the addition of Tropicana Entertainment’s seven casino properties, Eldorado Resorts will operate more than two dozen casinos in 12 states, and has added a few larger properties to its portfolio.

Eldorado well-positioned for US online gambling

In addition to increasing its land-based casino footprint, the sale turns Eldorado Resorts into a key participant in the burgeoning US online casino industry.

Eldorado’s assets include casinos in three of the four online gambling states:

• Nevada (a total of five casino properties)
• New Jersey (Tropicana)
• Pennsylvania (Lady Luck Nemacolin)

As well as in three states that have flirted with online legalization:

• West Virginia (online gambling bills in 2017 and 2018)
• Louisiana (online gambling bill in 2018)
• Mississippi (multiple online gambling bills from 2011-2016)

Eldorado might be well positioned, but what we don’t know is how will Eldorado will approach online gambling.

Among the unanswered questions are:

• Who will Eldorado partner with in Pennsylvania?
• Will it keep Tropicana’s New Jersey online gaming deal with Gamesys intact?
• With online poker liquidity sharing expected to go live on May 1, will Eldorado launch a Nevada poker site?

It’s also now in three states with sports betting laws on the books.

As good a guess as any

One scenario that makes sense would see Eldorado maintain the status quo at Tropicana in Atlantic City and utilize two platform providers in Pennsylvania, one for casino and one for poker.

When the sale is completed, Eldorado will assume control of Tropicana AC’s existing online casino site. The site is currently powered by Gamesys, and even though it ranks towards the bottom in terms of online casino revenue, it’s competitive in the market and a solid all-around online casino platform.

As such, Eldorado could:

• Continue to be poker-only in New Jersey by maintaining its relationship with Gamesys;
• And then partner with Gamesys in Pennsylvania for online casino;
• And perhaps ink a deal with PokerStars, or another top-flight online poker operator in Pennsylvania.

Considering how crowded the market already is, I’m not sure there would be enough of a benefit for Tropicana AC to launch an online poker site in New Jersey at this point in time.

Further, Lady Luck is an also-ran in the Pennsylvania land-based casino industry. As such it makes sense to partner with a platform provider that is capable of being the headliner on a marquee, like PokerStars.

In that scenario, PokerStars could share online poker players between Lady Luck/PokerStars in Pennsylvania and Resorts/PokerStars in New Jersey.

If that’s the case, it’s unlikely Eldorado would launch an online poker site in Nevada, a state where PokerStars has been deemed persona non grata.

Plenty of other options

The above is just one scenario.

If Eldorado has intentions to launch in Nevada, I’d expect them to partner with a different online poker provider. Regardless who it is — 888 Poker, PartyPoker or Pala Poker — it creates a whole host of interesting possibilities.

And of course, there is always the option to remain online-casino-only and choose Gamesys or another platform in Pennsylvania.

Photo by Ben Stanfield used under license CC BY-SA 2.0.