Eldorado Resorts and Caesars Entertainment; Analysis of Agreement Containing Consent Orders To Aid Public Comment
| Published date | 07 July 2020 |
| Citation | 85 FR 40649 |
| Record Number | 2020-14582 |
| Section | Notices |
| Court | Federal Trade Commission |
Federal Register, Volume 85 Issue 130 (Tuesday, July 7, 2020)
[Federal Register Volume 85, Number 130 (Tuesday, July 7, 2020)]
[Notices]
[Pages 40649-40653]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-14582]
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FEDERAL TRADE COMMISSION
[File No. 191 0158]
Eldorado Resorts and Caesars Entertainment; Analysis of Agreement
Containing Consent Orders To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement; request for comment.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair methods of competition.
The attached Analysis to Aid Public Comment describes both the
allegations in the complaint and the terms of the consent order--
embodied in the consent agreement--that would settle these allegations.
DATES: Comments must be received on or before August 6, 2020.
ADDRESSES: Interested parties may file comments online or on paper, by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Please write: ``Eldorado and
Caesars; File No. 191 0158'' on your comment, and file your comment
online at https://www.regulations.gov by following the instructions on
the web-based form. If you prefer to file your comment on paper, please
mail your comment to the following address: Federal Trade Commission,
Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610
(Annex D), Washington, DC 20580; or deliver your comment to the
following address: Federal Trade Commission, Office of the Secretary,
Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex
D), Washington, DC 20024.
FOR FURTHER INFORMATION CONTACT: Joshua Smith (202-326-3018), Bureau of
Competition, Federal Trade Commission, 600 Pennsylvania Avenue NW,
Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34,
notice is hereby given that the above-captioned consent agreement
containing a consent order to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of thirty (30) days. The
following Analysis of Agreement Containing Consent Orders to Aid Public
Comment describes the terms of the consent agreement and the
allegations in the complaint. An electronic copy of the full text of
the consent agreement package can be obtained from the FTC website (for
June 26, 2020), at this web address: https://www.ftc.gov/news-events/commission-actions.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before August 6, 2020.
Write ``Eldorado and Caesars; File No. 191 0158'' on your comment. Your
comment--including your name and your state--will be placed on the
public record of this proceeding, including, to the extent practicable,
on the https://www.regulations.gov website.
Due to the public health emergency in response to the COVID-19
outbreak and the agency's heightened security screening, postal mail
addressed to the Commission will be subject to delay. We strongly
encourage you to submit your comments online through the https://www.regulations.gov website.
If you prefer to file your comment on paper, write ``Eldorado and
Caesars; File No. 191 0158'' on your comment and on the envelope, and
mail your comment to the following address: Federal Trade Commission,
Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610
(Annex D), Washington, DC 20580; or deliver your comment to the
following address: Federal Trade Commission, Office of the Secretary,
Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex
D), Washington, DC 20024. If possible, submit your paper comment to the
Commission by courier or overnight service.
Because your comment will be placed on the publicly accessible
website at https://www.regulations.gov, you are solely responsible for
making sure that your comment does not include any sensitive or
confidential information. In particular, your comment should not
include any sensitive personal information, such as your or anyone
else's Social Security number; date of birth; driver's license number
or other state identification number, or foreign country equivalent;
passport number; financial account number; or credit or debit card
number. You are also solely responsible for making sure your comment
does not include any sensitive health information, such as medical
records or other individually identifiable health information. In
addition, your comment should not include any ``trade secret or any
commercial or financial information which . . . is privileged or
confidential''--as provided by Section 6(f) of the FTC Act, 15 U.S.C.
46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)--including in
particular competitively sensitive information such as costs, sales
statistics, inventories, formulas, patterns, devices, manufacturing
processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular,
the written request for confidential treatment that accompanies the
comment must include the factual and legal basis for the request, and
must identify the specific portions of the comment to be withheld from
the public record. See FTC Rule 4.9(c). Your comment will be kept
confidential only if the General Counsel grants your request in
accordance with the law and the public interest. Once your comment has
been posted on the public FTC website--as legally required by FTC Rule
4.9(b)--we cannot redact or remove your comment from the FTC website,
unless you submit a confidentiality request that meets the requirements
for such treatment under FTC Rule 4.9(c), and the General Counsel
grants that request.
Visit the FTC website at http://www.ftc.gov to read this Notice and
the news release describing this matter. The FTC Act and other laws
that the Commission administers permit the collection of public
comments to consider and use in this proceeding, as appropriate. The
Commission will consider all timely and responsive
[[Page 40650]]
public comments that it receives on or before August 6, 2020. For
information on the Commission's privacy policy, including routine uses
permitted by the Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.
Analysis of Consent Orders To Aid Public Comment
I. Introduction and Background
The Federal Trade Commission (``Commission'') has accepted for
public comment, subject to final approval, an Agreement Containing
Consent Orders (``Consent Agreement'') from Eldorado Resorts, Inc.
(``Eldorado'') and Caesars Entertainment Corporation (``Caesars''). The
purpose of the proposed Consent Agreement is to remedy the
anticompetitive effects that would likely result from Eldorado's
acquisition of Caesars (``the Acquisition''). Under the terms of the
proposed Decision and Order (``Order'') contained in the Consent
Agreement, Eldorado is required to divest to Twin River Worldwide
Holdings, Inc. (``Twin River''): (1) Eldorado's only casino in the
South Lake Tahoe area, the MontBleu Resort Casino and Spa
(``MontBleu'') in Stateline, Nevada; and (2) Eldorado's only casino in
the Bossier City-Shreveport, Louisiana, area, the Eldorado Casino
Resort (``Eldorado Shreveport''). The divestitures must be completed by
the earlier of (i) 12 months from the closing of the Acquisition; or
(ii) 30 days from the date that Twin River receives all regulatory
approvals. Additionally, if Eldorado does not consummate its sale of
the Isle of Capri casino (``Isle of Capri'') in Kansas City, Missouri,
within 60 days from the closing of the Acquisition, the proposed
Consent Agreement provides the Commission with the option (at its
discretion) to require Eldorado to divest the Isle of Capri casino to a
Commission-approved acquirer within 12 months. The Isle of Capri sale
is independent from the Acquisition.
The proposed Consent Agreement has been placed on the public record
for 30 days for receipt of comments from interested persons. Comments
received during this period will become part of the public record.
After 30 days, the Commission will review the comments received and
decide whether it should withdraw, modify, or make the Consent
Agreement final.
On June 24, 2019, Eldorado agreed to acquire Caesars for
approximately $17.3 billion. By a vote of 3-1-1 on June 25, 2020, the
Commission issued an administrative complaint alleging that the
Acquisition, if consummated, would violate Section 7 of the Clayton
Act, as amended, 15 U.S.C. 18, and Section 5 of the Federal Trade
Commission Act, as amended, 15 U.S.C. 45, by eliminating meaningful and
substantial competition between Eldorado and Caesars for casino
services in the South Lake Tahoe, Bossier City-Shreveport, and Kansas
City area markets. The elimination of this competition would likely
have caused significant competitive harm, specifically higher prices
and diminished quality and service levels in each of these markets. The
proposed Consent Agreement would remedy the alleged violations by
requiring a divestiture in the affected markets. The divestitures will
establish a new independent competitor to Eldorado in each relevant
area, replacing the competition that otherwise would be lost as a
result of the Acquisition.
II. The Parties
Eldorado is a publicly traded casino entertainment and hospitality
services provider headquartered in Reno, Nevada. Founded in 1973,
Eldorado operates 23 casino gaming properties in 11 states. Eldorado
operates casinos under several brands, including Eldorado, Isle of
Capri, and Tropicana. In the aggregate, Eldorado's properties feature
approximately 23,900 slot machines, 660 table games, and more than
11,300 hotel rooms. In the South Lake Tahoe area market, Eldorado
operates the MontBleu casino in Stateline, Nevada. In the Bossier City-
Shreveport area market, Eldorado operates the Eldorado Shreveport
casino in Shreveport, Louisiana. In the Kansas City area market,
Eldorado operates the Isle of Capri casino in Kansas City, Missouri.
Eldorado had approximately $2.5 billion in revenue in 2019.
Caesars is a publicly traded casino entertainment and hospitality
services provider headquartered in Las Vegas, Nevada. It operates 53
properties in 14 states and five countries outside of the United
States. Caesars' properties offer approximately 38,000 slot machines,
2,700 table games, and more than 36,000 hotel rooms. Caesars' gaming
properties operate primarily under the Harrah's, Caesars, and Horseshoe
brand names. In the South Lake Tahoe area, Caesars operates two
facilities offering casino services: Harrah's Lake Tahoe Hotel and
Casino, and Harveys Lake Tahoe Hotel and Casino, both in Stateline,
Nevada. In the Bossier City-Shreveport area, Caesars operates two
facilities offering casino services: Horseshoe Bossier City Hotel and
Casino in Bossier City, Louisiana, and Harrah's Louisiana Downs, a
gaming and racetrack facility located eight miles east in Shreveport,
Louisiana. In the Kansas City area market, Caesars operates Harrah's
Kansas City Hotel and Casino in Kansas City, Missouri. Caesars had
approximately $8.7 billion in revenue in 2019.
Twin River is a publicly traded casino entertainment and
hospitality services provider headquartered in Providence, Rhode
Island. It operates eight properties in four states, including the Twin
River Casino Hotel in Lincoln, Rhode Island. Twin River's properties
feature approximately 9,130 slot machines, 267 table games, and 1,200
hotel rooms. The company had approximately $524 million in revenue in
2019.
III. Casino Services in South Lake Tahoe, Bossier City-Shreveport and
Kansas City
Eldorado's proposed acquisition of Caesars would likely result in
substantial competitive harm in the markets for casino services in
South Lake Tahoe, Bossier City-Shreveport and Kansas City. The relevant
product market in which to assess the competitive effects of the
proposed Acquisition is casino services. The casino services market
consists of casino-based gaming services (e.g., slots and table games),
as well as other amenities such as lodging, entertainment, and food and
beverage services. Casino operators typically generate the vast
majority of their revenues from gaming. Casino services differ
significantly from other entertainment and leisure activities in a
number of respects. For example, casinos are highly regulated, with a
limited number of casinos licensed to operate in any given state and
age restrictions on who can gamble. Consistent with prior Commission
precedent, the evidence here supports a distinct relevant market
consisting of casino services.
Local geographic markets are appropriate to assess the competitive
effects of the proposed Acquisition. There are three relevant
geographic markets in which to analyze the merger's effects: (1) The
South Lake Tahoe area, which approximately corresponds to the area in
and around the cities of Stateline, Nevada, and South Lake Tahoe,
California; (2) the Bossier City-Shreveport, Louisiana area, which
approximately corresponds to the Bossier City-Shreveport, Louisiana
metropolitan statistical area; and (3) the Kansas City area, which
approximately corresponds to the Kansas City, Missouri metropolitan
statistical area.
Absent relief, the Acquisition would result in significant
increases in concentration and lead to highly
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concentrated markets in all three markets, resulting in a presumption
of the enhancement of market power under the Horizontal Merger
Guidelines. Further, Eldorado and Caesars are close and vigorous
competitors in the South Lake Tahoe, Bossier City-Shreveport, and
Kansas City area markets. Absent relief, the Acquisition would
substantially lessen the significant head-to-head competition between
Eldorado and Caesars and would likely increase Eldorado's ability and
incentive to raise prices post-Acquisition in the form of hold rates,
rake rates, and table game rules and odds that are less favorable to
customers, and lower player reinvestments. The proposed Acquisition
also would likely diminish Eldorado's incentive to maintain or improve
the quality of services and amenities to the detriment of casino
customers in each of these markets.
New entry or expansion is unlikely to deter or counteract the
likely anticompetitive effects of the Acquisition in the South Lake
Tahoe, Bossier City-Shreveport, and Kansas City area markets. The
affected markets are insulated from new entry or expansion by
significant regulatory barriers, including limitations on the number of
casino licenses available and the ability to expand existing gaming
operations. In the South Lake Tahoe area market, entry or expansion is
unlikely to occur in a timely manner because of, among other things,
the time and cost associated with acquiring the necessary state,
county, and city approvals. In the Bossier City-Shreveport area market,
Louisiana law limits the number of casino licenses and it has already
issued all available licenses. Louisiana also has statutory
restrictions that make significant expansion by current market
participants unlikely absent legislative action. Similarly, in the
Kansas City area market, Missouri and Kansas law limit the total number
of casino licenses available and both states have already issued all
available licenses. Expansion in Missouri is unlikely and only limited
expansion in Kansas is possible. Entry or repositioning would be
unlikely to be sufficient to deter or counteract the anticompetitive
effects of the Acquisition.
IV. The Proposed Consent Agreement
The proposed Consent Agreement remedies the likely anticompetitive
effects in the South Lake Tahoe and Bossier City-Shreveport area
markets by requiring divestitures of the MontBleu and Eldorado
Shreveport casinos to Twin River by the earlier of (i) 12 months from
the closing of the Acquisition; or (ii) 30 days from the date Twin
River receives all regulatory approvals. Until the completion of each
divestiture, the parties are required to abide by the Order to Hold
Separate and Maintain Assets, which requires them to maintain the
viability, marketability, and competitiveness of the divestiture assets
until the divestitures are completed. The proposed Consent Agreement
appoints a Monitor to ensure the parties' compliance with the Order to
Hold Separate and Maintain Assets, Consent Agreement, and divestiture
agreements between Eldorado and Twin River following the divestiture.
The proposed Consent Agreement also remedies the likely anticompetitive
effects in the Kansas City area market in the event that Eldorado's
independent sale of the Isle of Capri casino does not close within 60
days from the closing of the Acquisition. In the event the Isle of
Capri sale does not timely close as required, the proposed Consent
Agreement provides the Commission with the option (at its discretion)
to require Eldorado to divest the Isle of Capri casino to a Commission-
approved acquirer within 12 months. Although these divestiture
deadlines are longer than typically ordered by the Commission, they are
appropriate in this matter to accommodate the lengthy state regulatory
approval process, which may be subject to continued disruption from the
COVID-19 pandemic.
Additionally, the proposed Consent Agreement requires the parties
to provide transitional services to the approved acquirer for up to 12
months after the divestiture, as needed, to assist the acquirer with
the transfer and operation of the divested assets. Finally, the
proposed Consent Agreement contains standard terms regarding the
acquirer's access to employees, protection of material confidential
information, and compliance reporting requirements, among other things,
to ensure the viability of the divested business.
A. South Lake Tahoe
The proposed Consent Agreement remedies the likely anticompetitive
effects of the proposed Acquisition in the South Lake Tahoe area market
by requiring the divestiture of Eldorado's MontBleu. This remedy would
preserve the status quo in the South Lake Tahoe area casino services
market, maintaining three independent casino operators and resulting in
no change in market concentration.
B. Bossier City-Shreveport
The proposed Consent Agreement remedies the likely anticompetitive
effects of the proposed Acquisition in the Bossier City-Shreveport area
market by requiring Eldorado to divest the Eldorado Shreveport. This
remedy would preserve four independent casino operators and result in
no change in market concentration.
C. Kansas City
In the Kansas City area market, the proposed Consent Agreement
provides the Commission with the option (at its discretion) to require
Eldorado to divest its Isle of Capri casino to a Commission-approved
buyer within 12 months if its independent sale of the Isle of Capri
fails to consummate within 60 days of closing the Acquisition. If a
divestiture is required, the proposed Consent Agreement remedies the
likely anticompetitive effects of the Acquisition by requiring Eldorado
to divest the Isle of Capri. The proposed Consent Agreement would
preserve four independent casino operators and result in no change in
market concentration.
The purpose of this analysis is to facilitate public comment on the
proposed Consent Agreement to aid the Commission in determining whether
it should make the proposed Consent Agreement final. This analysis is
not an official interpretation of the proposed Consent Agreement and
does not modify its terms in any way.
By direction of the Commission, Commissioner Chopra dissenting,
Commissioner Slaughter not participating.
April J. Tabor,
Secretary.
Dissenting Statement of Commissioner Rohit Chopra Summary
The Commission should not agree to merger settlements
unless divestitures are completed promptly to a qualified buyer ready
and willing to compete on day one.
It is risky and makes little sense to propose a complex
settlement with a prolonged divestiture period and unorthodox terms to
justify a merger that has no meaningful benefits, particularly given
the financial uncertainties stemming from the COVID-19 crisis.
I am concerned that the Commission's standard process for
vetting divestiture buyers minimizes or ignores major financial red
flags. We should revamp our approach.
Caesars Entertainment (NASDAQ: CZR) is selling itself to one of its
smaller competitors, Eldorado Resorts (NASDAQ: ERI). The transaction
has no noteworthy benefits to customers, workers, suppliers, or
competition. If anything, the transaction is risky for everyone
involved.
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The enormous amount of debt financing could materially increase the
likelihood of financial distress of the combined casino conglomerate,
and rating agencies have already started to downgrade Eldorado's
debt.\1\ Given the major financial uncertainties looming over the
gaming industry stemming from the pandemic, as well as the industry's
past experiences with leveraged buyouts, the proposed transaction might
make conditions even more fragile and precarious.
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\1\ See e.g., Moody's downgrades Eldorado Resorts CFR to B2,
rates new debt for Caesars acquisition; outlook, Moody's Investor
Service (June 17, 2020), https://www.moodys.com/ngrades-Eldorado-Resorts-CFR-to-B2-rates-new-debt-PR_426702?cid=7QFRKQSZE021.
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The agreement is subject to review by state gaming regulators and
the Federal Trade Commission. In comparison to state regulators, who
must weigh a number of public interest factors, the Federal Trade
Commission's mandate is more specific: To determine whether the
transaction violates U.S. antitrust laws. Based on the Commission's
investigation, I agree that the transaction is illegal and I support
the complaint.
However, I have serious reservations about the terms of the
settlement. As a policy matter, I disagree that the Commission should
enter into risky, complicated settlements with delayed divestitures--
like the resolution proposed here.
The Proposed Buyer Will Not Immediately Restore Competitive Intensity
To remedy an illegal transaction, the FTC should only agree to
settlements when divestitures will quickly restore the competitive
intensity killed off from a merger. It is not enough to have some of
the competition restored; it must be fully restored. A new competitor
should be able to step in on day one to compete.
For example, in 2015, the FTC prevailed in its challenge of the
merger of Sysco and US Foods, the nation's two largest food
distributors, when divestitures could not cure the harmful merger on
``day one.'' The companies proposed to divest a lengthy list of US
Foods' assets to an entity controlled by the Blackstone Group. The FTC
argued this was insufficient, and the court agreed that the new
competitor could not replicate the same level of competitive intensity
of US Foods.\2\
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\2\ Fed. Trade Comm'n v. Sysco Corp., 113 F. Supp. 3d 1, 73
(D.D.C. 2015).
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The Commission's proposed remedy will definitely not cure this
harmful casino merger on day one. Under the terms of the Commission's
proposed settlement, Eldorado is required to divest one property in
Nevada and another in Louisiana to Twin River Worldwide Holdings (NYSE:
TRWH)--but after a prolonged period of time.\3\ Allowing a lengthy
divestiture only compounds the problems with this settlement, as it
necessitates the addition of other risky settlement provisions.
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\3\ \3\ The divestitures must be complete by the earlier of 12
months from the closing of the merger or within 30 days of state
regulatory approval. In theory, the divestitures may be completed
before 12 months. However, past experience suggests that the
approval process requires significant due diligence over an extended
period of time.
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To mitigate the anticompetitive harm from the prolonged divestiture
schedule, the FTC's proposed settlement sets up a complex arrangement
where some casinos will be operated separately by Commission-appointed
casino property managers until a buyer is ready to take over the
assets. I do not believe that the Commission should be in the business
of appointing casino property managers here.\4\
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\4\ If the state gaming regulators had already approved the
transaction (as well as the corresponding divestitures) and selected
casino property managers, this would raise fewer concerns.
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The Commission will also appoint a monitor. It is particularly
unclear how the Commission and the appointed monitor can remove or
discipline the casino property managers. In addition, the casino
property managers will operate under a similar compensation and bonus
plan as provided by the prior owner, which could easily lead to
anticompetitive distortions. The anticompetitive harms could grow if
Twin River is rejected as a suitable buyer by state regulators.
There may be rare circumstances where unusual settlement terms are
warranted, but this isn't one of them. The proposed remedy is also a
gamble on several other fronts.
First, the Commission's due diligence on Twin River did not
adequately analyze the role of new investors exerting enormous control.
The FTC must always consider the incentives and plans for those in
control of a divestiture buyer. Sometimes, new investors can help a
stagnant company change strategic direction. But too often, new
investors find ways to buy, strip, and flip, rather than create a
strong, long-term competitor. This is particularly true for certain
private equity and hedge fund investors, so careful due diligence is
critical.
In 2019, a Wall Street hedge fund, Standard General, accumulated a
major ownership stake in Twin River. Standard General now has
significant control over the company and is, by far, its largest
shareholder. Its stake is roughly equivalent to the maximum amount
allowable under state law.\5\ Another hedge fund, HG Vora, has also
emerged as a major holder of Twin River.\6\ Standard General and
similar funds often seek to accumulate board seats to implement their
desired investment strategy. Indeed, just a few months ago, Twin
River's longtime chairman ``reluctantly'' stepped down and was replaced
by Standard General's managing partner, Soohyung Kim.\7\
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\5\ In a recent Schedule 13D securities filing, Standard General
revealed that it was managing its holdings of Twin River, given Twin
River's share repurchase plan that could lead to Standard General
violating the Rhode Island casino ownership cap of 39%. See Twin
River Worldwide Holdings, Inc., Amendment No. 6 to Schedule 13D at 4
(Feb. 20, 2020).
\6\ Recent securities filings reveal significant ownership of
Twin River by HG Vora Capital Management. See HG Vora Capital
Management, LLC, Form 13F Information Table (Form 13F) (Aug. 8,
2019). Standard General and HG Vora are currently on the same side
of a major battle in another public company. See Svea Herbst-
Bayliss, EXCLUSIVE-Hedge fund HG Vora wants Tegna to consider a sale
or merger--sources, Reuters (Jan. 21, 2020), https://www.reuters.com/article/tegna-hgvora/exclusive-hedge-fund-hg-vora-wants-tegna-to-consider-a-sale-or-merger-sources-idUKL1N29Q0KT.
\7\ Ted Nesi, John Taylor out at Twin River, 12WPRI.com (Dec. 9,
2019), https://www.wpri.com/business-news/john-taylor-out-at-twin-river/.
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By approving Twin River as the divestiture buyer, I am concerned
that the Commission is relying on Twin River's past track record,
rather than analyzing how changes in ownership and control of the
company will impact their future business strategy.
Second, buyers of divested assets need to prioritize competing on
day one, but they cannot if other high-priority mergers and
acquisitions distract them. In this matter, Twin River is in the midst
of a string of other takeovers.
In 2019, it completed an acquisition of Dover Downs Hotel and
Casino in Delaware,\8\ and then in January of this year, Twin River
acquired three casinos in Colorado.\9\ Several other acquisitions are
pending: in the last twelve months, it has inked deals to purchase
casinos in Missouri and Mississippi.\10\ Outside of
[[Page 40653]]
this settlement, it has also struck a deal to purchase Bally's, its
first foray into the large Atlantic City market.\11\ These acquisitions
will require significant management attention, and I did not find any
compelling evidence that Twin River will prioritize the divested assets
to fully restore competitive intensity in the markets that the
Commission believes would suffer from killed-off competition.
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\8\ Press Release, Twin River Worldwide Holdings, Inc., Dover
Downs Stockholders Approve Merger with Twin River; Merger Set to
Close on March 28, 2019 (Mar. 26, 2019), https://investors.twinriverwwholdings.com/news/news-details/2019/Dover-Downs-Stockholders-Approve-Merger-with-Twin-River-Merger-Set-to-Close-on-March-28-2019/default.aspx.
\9\ Press Release, Twin River Worldwide Holdings, Inc., Twin
River Worldwide Holdings Completes Acquisition of Three Colorado
Casinos (Jan. 24, 2020), https://investors.twinriverwwholdings.com/news/news-details/2020/Twin-River-Worldwide-Holdings-Completes-Acquisition-of-Three-Colorado-Casinos/default.aspx.
\10\ Press Release, Twin River Worldwide Holdings, Inc., Twin
River Worldwide Holdings Signs Definitive Agreement To Acquire Two
Casinos From Eldorado Resorts (July 11, 2019), https://investors.twinriverwwholdings.com/news/news-details/2019/Twin-River-Worldwide-Holdings-Signs-Definitive-Agreement-To-Acquire-Two-Casinos-From-Eldorado-Resorts/default.aspx.
\11\ Press Release, Twin River Worldwide Holdings, Inc., Twin
River Worldwide Holdings to Acquire Three Casinos from Eldorado and
Caesars (Apr. 24, 2020), https://investors.twinriverwwholdings.com/news/news-details/2020/Twin-River-Worldwide-Holdings-to-Acquire-Three-Casinos-from-Eldorado-and-Caesars/default.aspx.
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Finally, the Commission should avoid acting without the benefit of
a full review by the state gaming regulators. State regulatory agencies
have unique insights and expertise into the industries they regulate;
their findings inform the issues the Commission takes into
consideration, and not just relating to the appointment of casino
managers. Some states have a specific mandate to look at the ownership
and financial conditions of the transacting firms, and we would benefit
from that expertise. Their analysis is particularly important during
this period of uncertainty, as the industry is roiling from closures
due to the current COVID-19 pandemic. It is important that we consider
all of the information and work across government bodies to protect
competition. While the Commission does work with some of these
authorities, I am not convinced that acting before state regulators
have completed their analysis is the right approach.
Conclusion
The proposed resolution in this transaction offers a unique window
into the assumptions and philosophy of the Federal Trade Commission.
The merger is clearly anticompetitive in the markets where the
Commission alleged a violation, and offers no meaningful benefits to
the public. Since the Commission would not need to go to trial to block
the transaction because the state regulators have yet to act, there is
no immediate concern about limiting FTC resources or weighing the
litigation risk. Given these facts, why would the Commission put the
public at risk with delayed divestitures to a questionable buyer that
has no guarantee of obtaining a license?
I am concerned that the Commission is rolling the dice with this
complex settlement that will clearly not lead to an immediate
restoration of lost competition. It is also clear that we must revamp
our approach when it comes to vetting proposed divestiture buyers,
particularly when a new financial investor is in charge in the
boardroom.
Our state partners will obviously need to scrutinize the financial
aspects of the proposed transaction between Caesars and Eldorado, given
the harms inflicted on the public and regional economies from past
leveraged buyouts--and resulting bankruptcies--in the industry.\12\
They will also need to carefully assess whether the restoration of
competition will come too late, and whether Twin River can guarantee
that it will actually accomplish this goal. The stakes are high right
now. For these reasons, I dissent.
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\12\ See, e.g., Sujeet Indap, What happens in Vegas...the messy
bankruptcy of Caesars Entertainment, THE FIN. TIMES (Sept. 16,
2017), https://www.ft.com/content/a0ed27c6-a2d4-11e7-b797-b61809486fe2.
[FR Doc. 2020-14582 Filed 7-6-20; 8:45 am]
BILLING CODE 6750-01-P
