Eldorado-Caesars deal would leave some sportsbooks in limbo

Eldorado Resorts Inc.’s $17.3 billion proposal to acquire Caesars Entertainment Corp. won’t close until sometime next year, subject to regulatory approvals — but analysts are already assessing how two competing sportsbook operators will fare.

Several of Eldorado’s 26 properties in 12 states already operate sportsbooks, and many of Caesars’ venues also take sports bets, but they use different sportsbook operators.

Eldorado has an exclusive 25-year deal in place with William Hill and a 20-year agreement with The Stars Group, while Caesars brings an existing deal with DraftKings to the table.

Marc Rubinstein, managing partner of the Las Vegas law firm Reid Rubinstein & Bogatz, said it’s hard to say what will happen without seeing the terms of each deal.

But, he said, it is “common sense” that the companies most closely associated with the company doing the acquiring will fare better.

In response to an analyst’s question about sportsbook partners during a conference call Monday, Eldorado CEO Thomas Reeg said — referencing Stars Group and William Hill — “We really like what we’ve got there. We’ll analyze if there’s a better way to go about it, but it would surprise me if there is a different answer.”

Eldorado spokeswoman Caroline Coyle declined to comment on the outlook for DraftKings if the acquisition goes through.

Strategic partnership

William Hill put out a statement Tuesday outlining its position and the strategic partnership it reached in September 2018 with long-term business partner Eldorado.

“Under the agreement, William Hill gained the right to exclusively operate sports books at all properties owned or managed by Eldorado in the United States and to operate mobile sports betting in states where Eldorado obtains a license,” the statement said. “These rights apply to casino properties owned or managed by Eldorado when the strategic partnership was signed and any subsequent acquisitions. Therefore, the rights apply to casinos currently owned or managed by Caesars if Eldorado’s acquisition of Caesars is completed.”

William Hill U.S. CEO Joe Asher told the Review-Journal Wednesday the statement was in response to analyst inquiries and with Eldorado’s green light. Coyle declined to comment on Eldorado’s role in William Hill’s statement.

“This is all subject to regulatory approval,” Asher said, “but, obviously, we’re going to have a lot more on our plate if and when the deal is approved.”

The agreement with Stars Group is not expected to present any competitive issues for William Hill. When the Eldorado-Stars Group deal was announced in November, William Hill said at the time that it receives 50 percent of the equity or equivalent in Stars Group payable for access to Eldorado’s online sports betting skins.

“The Stars deal is something that is in place and has been in place, and is something that we consented to,” Asher told the Review-Journal. “Beyond that, I think the statement speaks for itself.”

He declined to comment on DraftKings.

DraftKings spokeswoman Sabrina Macias said in an emailed statement, “We remain confident that DraftKings is well positioned to expand our presence as states continue to authorize sports betting.”

Rubinstein said it’s possible that an amicable resolution could be reached.

“The most likely scenario would be DraftKings being bought out in some way, or maybe taking some small piece of the pie, or maybe just having a fantasy sports aspect of a deal. But who knows?”

Consolidation ‘inevitable’

UNLV law professor Anthony Cabot said William Hill is the beneficiary of the merger between Eldorado and Caesars, “but the consolidation of the sports wagering operators is inevitable.”

Benjamin Edwards, UNLV associate law professor, said it “probably makes sense to have one operator as opposed to piecemeal operators,” though it could raise monopoly concerns in markets where there isn’t a lot of sportsbook competition, he said.

Jennifer Roberts, of UNLV’s International Center for Gaming Regulation, said it may be “quite some time” before a resolution is reached.

“This is an issue that would be governed by contractual terms between the parties in the purchase-sale and their partners. This will be a lengthy process that requires several governmental reviews and approvals,” she said.

Contact Nicole Raz at nraz@reviewjournal.com or 702-380-4512. Follow @Nicole0Raz on Twitter.