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Two weeks into 2019 World Series of Poker, the attention of the poker world is fixed firmly on the action at the tables. Rightly so, but players keeping an eye on financial markets may have noticed that Caesars Entertainment is up for sale.
Who’s kicking the tires on the casino giant and its world-class live poker product? And would a new owner place as much value in the WSOP as the current one? Given the way these things often work, there’s a chance that poker wouldn’t be a priority — or even a good fit — for a prospective buyer.
The WSOP is all that’s left of Caesars Interactive Entertainment (CIE).
The brand, including its online poker sites in Nevada and New Jersey, used to be in the same group as CIE’s Playtika social casino games until the latter was sold to Chinese company Giant Interactive Group for $4.4 billion in August 2016.
Since then, the WSOP has been something of an orphan even within its own Caesars‘ family.
Over the recent months, legendary corporate raider Carl Icahn has built up a 28.5% stake in Caesars Entertainment. He’s appointed four directors to the board and approved Anthony Rodio (formerly with Tropicana) as the new CEO.
Icahn is seizing an opportunity.
He decided Caesars was cheap, and he bought in heavily at between $8.45 and $9.39 per share. He is not a long-term investor. There’s little doubt Icahn intends to exit with a nice profit — and at the age of 83, sooner rather than later.
As OPR previously reported, the strategy is public:
“I believe the best path forward for Caesars requires a thorough strategic process to sell or merge the company to further develop its already strong regional presence, which will allow Caesars to continue to take advantage of the Caesars Rewards program bringing more and more players into Caesars’ Vegas market. I expect this to make Caesars the most powerful competitor in Vegas, the gaming capital of the world.”
Caesars owns a whole bunch of stuff that buyers might value, including:
The WSOP represents just a small fraction of Caesars’ total business, not even worthy of a mention in its 2018 annual report. Prospective buyers won’t necessarily have an interest in a tiny online poker business and an annual poker series no matter how prestigious it is.
A proposed merger with the Stars Group (TSG) failed, as did a separate effort to acquire 888, and a subsequent attempt by 888 to acquire Will Hill also failed. The company can’t seem to get a deal over the line.
That doesn’t, however, mean William Hill is necessarily out of play with Caesars.
In October 2018, Golden Nugget owner Tillman Fertitta offered $13 per share to purchase Caesars Entertainment. The deal was all stock and financially complicated, and Icahn ultimately walked away.
The possible path for William Hill begins with yet another failed takeover. Caesars also rejected a proposal from Eldorado Resorts, with CEO Tom Reeg reportedly offering $10.50 per share.
Caesars is saddled with over $18 billion in debt, and Reeg asked executives to come up with a plan to save $500 million a year in costs. He presumably sees value in Caesars, just not quite enough value for Icahn to accept.
Eldorado isn’t out of the picture yet either, though. Analysts suggest a deal between the two would make a lot of strategic sense, with a joint entity controlling dozens of properties in 18 states.
Back to William Hill.
Now think about combining all three companies: Caesars, William Hill and Eldorado.
This is where things get interesting. William Hill’s sports betting expertise and its global footprint would give Caesars and Eldorado real scale. Such a transaction would inevitably shake up the Las Vegas casino landscape, too.
There are plenty of rumors that Rio is up for sale, though nothing seems to have come of them. Still, Rio would likely be one of the properties in the disposal bag if such a merger happened. Eldorado would need to pay down debt quickly, and shedding several billion dollars worth of property would make sense, even if it wasn’t a regulatory necessity.
The WSOP does not fit cleanly into any of these scenarios.
If Eldorado itemized the Caesars assets it could sell without a significant impact, the WSOP would almost certainly be on that list. The brand is not in play for sports betting, and online poker will always be small potatoes among other forms of gambling.
Although we’re well into speculative territory now, we’re also going back into history. You may recall that in February 2013, Caesars approached PokerStars and offered to sell the WSOP and Rio as a package deal.
Here’s PokerStars spokesperson Eric Hollreiser speaking to Forbes:
“Caesars Entertainment approached PokerStars and offered to sell us certain assets, such as the Rio Casino in Las Vegas. Caesars suggested that this acquisition would give us a better relationship with Caesars and would help PokerStars gain a license in Nevada. PokerStars declined the offer because we had no plans to acquire another casino in the near term.”
All these years later, don’t count that plan entirely out. TSG very notably has an online gambling deal in place with Eldorado.
Whether it’s Eldorado or another group that ultimately joins forces with Caesars, the WSOP requires an owner that truly cares about poker. TSG, GVC and 888 would all be in the market if the WSOP does come up for sale. And the inevitable bidding war could be exactly what Caesars needs.