The tale of the sale of the struggling Revel casino hotel in Atlantic City is getting as murky as its existence as a gaming property on the Boardwalk. Just weeks after rumors surfaced about an interest from Hard Rock International in the property, Bloomberg reported that Caesars Entertainment is preparing to bid on the property. But like the Hard Rock rumors, there is no certainty that any offers will be forthcoming.
Should Caesars make a bid, it may face a regulatory hurdle. For years, New Jersey regulators tried to prevent one company from dominating the market. While the previous regulation against owning more than two casinos was overturned several years ago, the Division of Gaming Enforcement still must examine the issue of market concentration with any sale, known as “undue economic concentration.”
And since Caesars already controls 41 percent of the market with its ownership of four casinos—Caesars, Harrah’s, Bally’s and Showboat—adding Revel’s currently anemic 6.2 percent would push it close to half the market. There are no guidelines about what is considered market domination, but the DGE is required to look into it.
Caesars has confirmed that the company is listening to offers for Bally’s and Showboat, but no official offers have been made on either property at this time. The company recently bought the Atlantic Club casino (the former Atlantic City Hilton) and closed it down to remove competition from the market. Some analysts believe that Caesars would close one of the other properties should it successfully bid for Revel. Others say the company could cut costs by consolidating Revel into its system.
How Caesars would afford to buy Revel is also problematic. Caesars Entertainment is saddled with more than $20 billion in debt, but a spinoff, Caesars Acquisition Company (CAC), was formed to make deals such as this. CAC currently controls the Planet Hollywood in Las Vegas, the under-construction Horseshoe Baltimore and Caesars Interactive, the company’s online gaming venture.