Give Gary Carano credit.
When Eldorado Resorts merged with MTR Gaming a couple of years ago, the CEO said he would use his company’s new status as a public company to grow.
Has he ever.
Not many years ago, Eldorado owned its namesake casino in downtown Reno and half of the adjacent Silver Legacy.
The family-owned company was part of the insular Reno society.
No one, I suspect, would have guessed that in a few short years, Carano would have transformed Eldorado into one of the several largest regional casino operators in America with 20 properties covering every one of the nation’s time zones.
The transformation began modestly enough with Eldorado buying Hollywood Casino in Shreveport, Louisiana, a decade ago.
Then, two years ago, Eldorado bought MTR Gaming, acquiring one casino each in Pennsylvania, West Virginia and Ohio, and using MTR’s public company status to become public itself.
Eldorado followed that up last year by buying the other half of Silver Legacy and adjacent Circus Circus from MGM Resorts, thus giving it three contiguous resorts in downtown Reno.
Now, Eldorado will become a company that can reach $2 billion a year in revenue.
Eldorado is one of our Nevada Triple Play companies, along with Monarch Casino and Golden Entertainment. These are three family-controlled, Nevada-based gaming operators that are good bets on Nevada’s growth, as well as each having its unique additional growth story.
Monarch and Eldorado are players on the boom times coming to Reno, which we expect will be a 21st century city. Monarch also has a casino project in the works in Black Hawk, Colorado, that promises to be transformational.
Golden is a bet on both booming Las Vegas, where it operates a growing network of upscale taverns with slots, and on the potential proliferation of slot routes throughout the country.
Eldorado was also a play on the synergies that can be generated by the consolidation of the three downtown Reno properties.
All three companies are bets on the controlling families who don’t need to be persuaded to align their interest with shareholders because they are the shareholders, and the family pride in their operations is clear and palpable in each of them.
Now, Eldorado has broken out of that mold and will require a fresh look.
The earlier components of the story are still in place, but now Eldorado will be a much larger operation to manage.
That scale presents both opportunities and risks.
Carano, naturally, emphasizes the opportunities. The company intends to apply its historic strengths of margin improvement and resort development and management to generate higher returns. And, with expected debt-to-EBITDA of just 5.1 times by next year, it will be in position to reduce debt and have the financial wherewithal to continue to grow, he says.
Eldorado’s soon-to-be sprawling casino network could present other opportunities. The most obvious question is whether the company will go the asset-light route and spin off its real estate into a REIT or sell the properties to a REIT.
Our guess is that Carano sees the greater potential in growing the company as it is, at least for the foreseeable future.
Whatever he decides, there is no doubt that Carano is boldly living up to his promise.
