Eldorado Considers Spinning Off Sports Betting After Closing Caesars Deal

(Bloomberg) -- Eldorado Resorts Inc., fresh off an agreement to acquire Caesars Entertainment Corp. and become the largest casino owner in the U.S., has more deals in mind.

Chief Executive Officer Tom Reeg is considering a spinoff of its sports-betting and online-gambling businesses after the Caesars purchase closes next year. The idea is to wring value from potentially fast-growing operations that have been buried inside the casino giant.

“They've got an internet casino business that is a material business that I think really gets little to no value,” Reeg said on a conference call with investors Tuesday. “I'm starting to think about: Is there a way to structurally put something together that shines a light on that business? More of a pure-play fashion.”

The Caesars deal, which Reeg said should be completed in the first half of 2020, has a total cost of $17.3 billion, including debt. Reeg has said he's looking to reduce the company's borrowing through assets sales and other means.

Sports betting, meanwhile, has exploded in the U.S. since the Supreme Court legalized such wagering outside of Nevada last year. Caesars and Eldorado have both been adding sportsbooks to their existing casinos and offering mobile wagering in states where it is allowed.

The companies have a hodgepodge of partners in the sports-betting industry, including William Hill Plc, Stars Group Inc. and DraftKings Inc. Their roles after the acquisition have yet to be worked out. Caesars also owns the World Series of Poker.

Growth Prospects

Caesars has long been a pioneer in the online-gambling business, offering internet poker and other games in states such as New Jersey. Online betting has never been as big a business as the industry anticipated because few jurisdictions jumped on board. But that's beginning to change with the legalization of sports betting and states such as Pennsylvania approving both.

Caesars, based in Las Vegas, earlier listed shares of its social gaming and internet divisions. The social business, which included free-to-play slot machine like games, sold for $4.4 billion in 2016.

On the call, Reeg reaffirmed that he's also looking to sell a casino on the Las Vegas Strip after the Caesars deal closes. Industry insiders have suggested that Planet Hollywood may be the one he lets go.

Rio, an off-the-Strip resort owned by Caesars, has long been on the market. Reeg also said he may have to sell properties to satisfy Federal Trade Commission concerns about market concentration.

To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Rob Golum

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