Caesars’ Possible Purchase of Revel Casino Questioned

Posted on January 31st, 2014 by Todd Wilkins

Revel CasinoIf Caesars Entertainment were to purchase the Revel Casino, it may violate a state law designed to prevent one party from dominating the gaming market.

Reports earlier this week indicated that Caesars may be in line to bid on the Revel Casino Hotel, which emerged from bankruptcy proceedings last year after opening its doors just one year earlier. That has led New Jersey Senator Jim Whelan to question whether Caesars can legally acquire the casino considering that it already owns and operates four of the 11 Atlantic City casinos.

Whelan cited a state law that specifies that casino licensure should not be issued if undue economic concentration results. With Caesars already operating Harrah’s, Showboat, Bally’s and Caesars in Atlantic City, some may argue that the company is already teetering on too great a share of the market.

To further strengthen the argument that Caesars would not be the best possible choice for ownership of the Revel for the good of the New Jersey gaming industry, it can be pointed out that Caesars recently completed the purchase of the Atlantic Club in tandem with Tropicana with no intentions of re-opening as a casino. At least one other company had bid on the Atlantic Club and would have continued casino operations had its bid been accepted, the Press of Atlantic City reported.

While undue economic concentration may be in play if Caesars gained control of the Revel, there is no statute that defines exactly how much is too much for any one company to own. In 2013, Caesars’ four casinos generated slightly over $1 billion in revenue, some 38% of the $2.9 billion taken in by all 12 of the casinos in operation at the time.

Another question to be answered would be that of Caesars possibly closing one of its other four casinos should it acquire the Revel. The Casino Control Commission would likely not look favorably on such a scenario, as would other state officials who have the best interest of the state’s gaming industry in mind.

In 2005, undue economic concentration was mentioned when Caesars merged with Harrah’s. The merger was approved, but not before the New Jersey Division of Gaming Enforcement warned that the survival of other casinos on the boardwalk may be under threat if too much control were given to any one company such as Caesars.

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