Family casino business catapults to gaming giant

By Bryan Horwath

Friday, June 28, 2019 | 2 a.m.

In the 1970s, Gary Carano wouldn’t have imagined his family’s company would one day be the talk of the gaming industry.

But nearly a half-century after his father, the late Don Carano, opened the Eldorado Hotel Casino in Reno, that’s precisely what Eldorado Resorts Inc. became this week when it reached an agreement to purchase Caesars Entertainment.

“It’s beyond belief in a way,” Carano said. “At the same time, we’re confident about where we are now and where we’re going.”

Assuming the $17.3 billion deal gets the necessary regulatory and shareholder approval, Eldorado, which only went public in 2014, is poised to become the largest gaming company in the country. It will grow from 26 properties and 18,000 employees to 81 properties and about 81,000 employees.

While Eldorado shareholders will own a majority of the combined company — about 51% — the merged company will bear the Caesars name.

The deal, announced Monday, had been rumored for some time, though it was anything but a sure thing after Eldorado officials first inquired about the purchase.

Carano, Eldorado’s chairman and the eldest of five siblings, said the company was turned away when it first asked about a possible purchase of Caesars last year.

“They weren’t interested,” he said.

After activist investor Carl Icahn started buying shares of Caesars and pushing for a sale of the company, that seemed to change, Carano said.

Icahn and Eldorado have a history together. Icahn’s company, Icahn Associates Holdings LLC, sold Tropicana Entertainment to Eldorado in a deal announced last year.

“I think (Icahn) was comfortable with us as a company,” Carano said. “When we approached Caesars again, we were able to make something work.”

Eldorado made another high-profile acquisition in 2017, essentially doubling in size with the purchase of Isle of Capri Casinos. Caesars will add 43 properties in the U.S. and 55 worldwide.

“As far as if we planned to grow this much or if we’ve taken advantage of opportunities that have been presented, I think it’s both,” Carano said. “During the last five years, many opportunities have presented themselves, and we have then determined whether they are the right fit for Eldorado Resorts.”

The Caesars brand, its coveted Caesars Rewards customer loyalty database and the iconic Caesars Palace property fit the bill.

“There’s only one Caesars Palace in the whole world,” said Carano’s son, Anthony, Eldorado’s president and chief operating officer.

As with any change in ownership for a behemoth like Caesars, industry watchers are busy speculating what the sale will mean going forward for Caesars, its employees and the brand.

“Eldorado is a company known for executing on synergies and operational efficiencies,” said John DeCree, an equity research analyst with Union Gaming Group. “You’re looking at a company that really empowers property-level management at each individual casino. The Caesars organization has largely had a centralized cost base with a lot of corporate overhead.”

The Culinary Workers Union, which represents about 25,000 workers at Caesars and Eldorado properties, has already expressed concerns about the merger.

“Eldorado announced cost-savings of $500 million in the first year of the combined company,” union President D. Taylor said in a statement. “Where are they going to cut?”

“We will not stand by idly if the proposed Caesars-Eldorado transaction will lead to significant job losses, worse wages and benefits for our members, and lower state gaming tax receipts in the many communities where members we represent work and live,” Taylor said.

Anthony Carano said it was too early to talk about any specific plans but that “for hourly employees and management, I think there will be very little turnover.”

“For a long, long time, Caesars was the gold standard. It has come down a little these past couple of years, but we’re going to bring that standard back. A lot of current Caesars employees are going to be on our team," he said.

The team concept is important to the Caranos, who are “all a bunch of ex-athletes,” Gary Carano said.

His brother, Glenn Carano, played quarterback for UNLV from 1974 to 1976 and later played for the NFL’s Dallas Cowboys.

His grandfather on his mother’s side, Bill Ireland, was UNLV’s first football coach and later served as the school’s athletic director from 1973 until 1980. And Anthony Carano played baseball at UNLV and UNR.

“We give our employees the tools they need to succeed,” Anthony Carano said. “Our employees are the people in the trenches. They’re the ones who know their team members and players the best. Our company culture is all about the importance of being part of a team.”

There could also be some other big shifts as a result of the merger. During a conference call, Eldorado CEO Tom Reeg said the company expected to sell some properties, perhaps on the Las Vegas Strip.

“I think that there’s more Strip exposure than we would need to accomplish our goals with our regional database,” Reeg said. “So, I would expect that we would be a seller of a Strip asset, but that decision has not been made.”

DeCree said the sale of a large property would provide a cash infusion that “would go a long way toward managing the balance sheet, which is what people are focused on now. I think it’s very possible we see a Las Vegas casino trade over the next 12 or 18 months.”

Already, Treasure Island owner Phil Ruffin and Houston Rockets owner Tilman Fertitta have expressed interest in Strip properties that might hit the market.

“We wouldn’t be interested in the Rio, but we’d be interested in something on the Strip if something were to be available,” Ruffin said.

Meanwhile, those who have watched the meteoric rise of Eldorado Resorts marvel at the trajectory the company has taken.

Reno Mayor Hillary Schieve said it has “been incredible to see the growth and success of Eldorado Resorts through the years,” calling it a “true homegrown success story.”

Becky Harris of UNLV’s International Center for Gaming Regulation said the rise of Eldorado Resorts is the epitome of “the Nevada dream.”

“The Caranos are a hometown family that has grown Eldorado into this huge, successful company. It’s quite the story,” she said.

With the sausage-making negotiation process now in the rearview mirror, Gary Carano can afford to reflect about just how far Eldorado Resorts — which started with a 282-room hotel casino that had 12 gaming tables in 1973 — has come.

Though Don Carano died in 2017, Gary Carano said his father’s legacy is stronger than ever.

“I get kind of sentimental about it all,” he said. “We came from small beginnings. It’s a bit surreal.”