Tom Reeg, chief executive officer of Eldorado, raised eyebrows among Asia observers by suggesting that the new Caesars Entertainment would be focused on the United States IR market, perhaps exclusively.
“We’ve not made firm decisions on international yet,” he told a conference call with investors, “I would tell you that you know us as a company that’s been domestically focused… so the opportunity internationally is going to have to be, frankly, stupendous for us to be running in that direction, but no firm decisions have been made at this point.”
Whether or not bidding for an IR license in Japan would qualify as a “stupendous” opportunity is as yet unclear, and his comments may have even more grave implications for the future of Caesars Korea, which is a much smaller enterprise.
On the other hand, there is unlikely to be any immediate changes to Caesars’ posture in Japan. The current management will remain in place until at least early 2020 when the Eldorado merger is expected to be closed, after close scrutiny by shareholders and regulators.
The potential always exists for such a large and complex deal not to be approved, though at present there’s no indication of such trouble on the horizon.
The combined company, if and when it is formed, will become the largest US operator both in terms of the number of properties and anticipated profitability. According to Eldorado’s presentation materials, the expected EBITDAR will be about $3.6 billion annually, which compares to MGM Resorts’ $2.5 billion EBITDAR, its only close competitor.