When New Jersey gaming regulators gathered for their regular meeting in December, they set in a motion a series of events that would lead to last week's announcement that Reno's Eldorado Resorts LLC will pay up to $245 million to buy a riverboat casino in Indiana.
Here's how it unfolded:
New Jersey regulators, unhappy with the operation of The Tropicana Casino Hotel in Atlantic City, refused to renew the gaming license of the casino's operator during the session shortly before Christmas.
Tropicana Casino and Resorts, the Kentucky company that owns casinos at South Lake Tahoe and elsewhere around the country, numbered the Casino Aztar riverboat property at Evansville, Ind., among its holdings.
But Indiana regulators have a straightforward rule: No gaming operator who is denied a license in one state can be licensed in Indiana.
In fact, regulators in the Hoosier state were getting ready to meet last Monday to discuss stripping Tropicana's license when the deal with Eldorado Resorts was unveiled.
The Reno company, which owns The Eldorado Hotel Casino and a half interest in The Silver Legacy Resort Casino, had moved quickly to assemble its offer for the property, said President Gary Carano.
From start to finish, the deal came together in three weeks.
"We had to make decisions," Carano said. "We kept the attorneys burning the midnight oil."
Eldorado Resorts LLC plans to pay $190 million in cash along with a $30 million note for the riverboat property. The purchase price could be boosted by another $25 million, depending on how well the property performs.
Carano thinks the Casino Aztar property has substantial room to grow its profitability under his family's management.
The casino serves a market of about 350,000 from its location along the Ohio River at the southern border of Indiana, and its most important competition is a year-old casino at French Lick, Ind., some 90 miles to the northeast.
The Evansville casino recorded net operating income of $15.2 million on revenues of $99.7 million in the nine months ended Sept. 30, Tropicana Casino and Resorts said in a filing with the Securities and Exchange Commission.
Innovation Capital LLC, an adviser to Tropicana, said the sales price of $220 million $245 million with the incentives is at least equal to fair market value.
Carano said Eldorado Resorts LLC expects to invest some additional capital into sprucing up Casino Aztar, but generally thinks the property is "a very quality asset."
The Indiana casino's relationships with local elected officials also need to be spruced up. The mayor of Evansville had complained that Tropicana hadn't kept promises after it acquired the casino as part of its purchase of Aztar Corp. in 2006.
The Eldorado Resorts acquisition of the Indiana casino still needs the OK of Indiana regulators. In the meantime, Tropicana can continue shopping the property, but it will owe a breakup fee to Eldorado Resorts if it accepts another offer.
The riverboat property will be managed by a trustee appointed by the Indiana Gaming Commission until the deal closes.
The Indiana transaction marks the second major step out of its Reno home territory for the Eldorado. In 2005, the company took control of a troubled casino-hotel property in Shreveport, La., and rebranded it with the Eldorado name.
