Tilman Fertitta Closing In on Caesars Deal That Could Force Las Vegas Property Sale

^{The Flamingo is considered to be one of the most likely Las Vegas casualties of a Fertitta-Caesars deal. (Photo: JHVEPhoto / Alamy)}

LAS VEGAS – It appears as though Golden Nugget owner Tilman Fertitta is inching closer to buying Caesars Entertainment. If it goes through, the purchase could shake up the casino landscape in Las Vegas and around the country beyond new ownership.

The Financial Times is reporting that several banks are putting together approximately $5 billion for Fertitta to use for the deal. While the company is worth just over $5 billion, it has $25 billion in debt that a new owner (Fertitta or otherwise) will have to deal with. A sale could be announced within a few weeks, though there are plenty of obstacles in the way. Between financing and regulatory approvals, this will be a complicated deal.

If the deal goes through, Fertitta or Caesars will likely have to sell at least one Las Vegas property. The immediate question is: what has to be sold to make the deal happen?

Which Las Vegas Casinos Will Be on the Market?

The Caesars properties rumored to be on the chopping block are the same ones that have come up in previous Caesars sale discussions. Flamingo sits on top of the list and could make sense as Caesars sold the adjacent LINQ Promenade in 2024. The company is also wrapping up another slew of renovations, which could make it attractive to a buyer.

Once again, Planet Hollywood is in the rumor mill. This could legitimately go either way, since Fertitta also owns land across the street from the property where he planned to build a luxury casino resort. Those plans were shelved last year, but there may still be potential for the land.

Lastly, Fertitta's Golden Nugget in downtown Las Vegas could also be on this list. JPMorgan Securities analyst Daniel Politzer says casinos in six to eight markets could be sold because both companies own properties in the same areas.

The LINQ Hotel and Casino is not mentioned in rumors at this time, even though it shares the name of the shopping promenade that was sold. The main reason is that it's connected to the Caesars Forum conference center, which generates revenue for all facets of the business.

There’s a lot of flexibility and potential for casinos in Las Vegas that could be sold. 

Potential Regional Casino Sales

When Eldorado and Caesars merged in 2020, numerous casinos across the country from both companies had to be sold to obtain regulatory approval. The same dynamic will likely happen here if the deal with Fertitta moves forward.

Casinos from either company will likely have to be sold in markets where both Fertitta and Caesars have overlapping properties, including:

• Lake Tahoe, NV
• Laughlin, NV
• Atlantic City, NJ
• Biloxi, MS
• Lake Charles, LA

Between potential casino sales in Las Vegas and other markets, there could be a significant shakeup in the industry. Buyers could include existing casino operators, private equity firms, or tribal gaming companies.

New Blood Could Be Great for Las Vegas Visitors

Competition is often good for consumers, in this case, casino guests. It's one reason so many are looking forward to Hard Rock Las Vegas opening in late 2027.

Increased competition means prices could go down as more casino operators offer different experiences and compete for customers. This could also lead to further improvements in rooms, restaurants, and gambling rules, as casinos fight for attention.

Caesars and MGM Resorts operate more than half the Strip's casinos, effectively creating a duopoly with little competition between the two. If one makes a move, the other follows. Note the recent all-in packages: MGM launched its deal, and Caesars followed a couple of weeks later. This happens pretty often both ways.

While there are rumors about possible casino acquisitions, there isn't much being said about potential buyers. When pressed for comment during earnings calls, casino executives historically never share anything tangible until a deal is done.

Caesars Corporate Madness

Caesars is a large company with a confusing corporate structure. There are many moving parts, and a lot of work to do from the top down.

This organizational flowchart from 2011 will make your head spin, even if you’re familiar with corporations.

Now imagine how this is replicated down to each property. Caesars is in this position because it has a lot of debt that it can't dig out of, despite:

• The company typically reports high occupancy in Las Vegas rooms.
• Its restaurants charge outrageous prices ($28 for a burger), which either go towards high rent or towards income on its balance sheet. 
• Drink prices are outrageous unless guests drink a $5 draft beer special, which is still profitable.
• Las Vegas show ticket prices are among the highest in the country. 
• Continuous record performances from Caesars Digital (online casino and sports betting)

Whether it's with Fertitta or another owner, there are many hoops to jump through to make Caesars a profitable and successful company.