s part of a list of conditions imposed by New Jersey state gaming regulators for approval of the $17.3 billion acquisition of the former Caesars Entertainment by Eldorado Resorts, the newly formed casino company — now the largest operator in the United States — agreed to invest $400 million in the next 36 months at its three Atlantic City properties.
A $25 million sale of Bally’s Atlantic City to Rhode Island-based Twin River Worldwide Holdings is pending, but if the deal falls through, an additional $125 million would be spent as part of the reinvestment plan, The Press of Atlantic City reports.
The massive capital expenditure proposal includes a minimum of $150 million in hotel renovations, gaming upgrades and new food and entertainment offerings at Caesars Atlantic City, in addition to improvements at Harrah’s Resort Atlantic City and Tropicana Atlantic City.
In a report submitted to the NJ Casino Control Commission before the merger was approved, regulators with the state Division of Gaming Enforcement (DGE) detailed the lack of investment at Caesars and Bally’s Atlantic City. The report noted that even the city’s two smallest casinos — Golden Nugget Atlantic City and Resorts Casino Hotel — outspent the two Boardwalk icons in terms of capital reinvestment. In 2018, the same year Hard Rock Hotel & Casino Atlantic City and Ocean Casino Resort opened on the Boardwalk, the DGE noted that capital spending at Bally’s and Caesars had decreased.
Caesars Entertainment Chief Financial Officer Bret Yunker said the new management is aware of the prior company’s shortcomings in Atlantic City. “The old Caesars went through a very tough period where they had a hard time investing in, honestly, all of their assets,” he said in a recent interview after the merger was approved. “Once they got out of bankruptcy (in 2015), they really were focused on Vegas and a handful of targeted regional markets, but, unfortunately, Atlantic City got the short end of the stick there.”
Yunker said capital investment in Atlantic City is a significant part of the marketing strategy for the new Caesars brand. The capital expenditure plan for all three casinos submitted to the DGE includes nearly $160 million in hotel room renovations, $31 million for new gaming equipment, $16 million for food and beverage upgrades, $5 million for pool area enhancements and more than $63 million in yet-to-be-named projects.
Yunker also referenced Tropicana’s success with The Quarter as a “template” for investment across the new company’s Atlantic City portfolio. “(The Quarter) really repositioned (Tropicana) as a true destination for, not just your day-tripper, but people coming from a broad swath of the East Coast,” Yunker said. “I think there’s a huge opportunity for us on the East Coast to drive business to Atlantic City.”