Regulators OK sale of Hilton casino - Saturday 12th of March 2005

New Jersey casino regulators signed off Thursday on the sale of the Atlantic City Hilton, a deal forced by the pending merger of two casino giants.

In a 5-0 vote, the state Casino Control Commission endorsed Colony Capital LLC's planned $513 million purchase of the casino from Caesars Entertainment Inc. The deal, which is expected to be closed next month, may go unnoticed by gamblers because the casino's name will remain.

The sale was prompted by plans for a $9 billion merger of Caesars Entertainment and rival Harrah's Entertainment.

Under New Jersey casino law, no one company or individual can control so much of the market as to suppress competition or threaten the market's economic stability.

For years, no casino company or individual could hold more than three casino licenses; that number was stricken from the law in 1995, giving regulators the wherewithal to determine on a case-by-case basis whether the addition of another casino would give any existing operator "undue economic concentration" in the market.

Because Harrah's already owns two Atlantic City casinos, its purchase of the Caesars empire ??? which includes three Atlantic City properties ??? would have given it control over five of the city's 12 casinos.

To avoid that, Caesars agreed to sell the Hilton.

Nonetheless, the Casino Control Commission has scheduled a two-day hearing beginning May 23 to address whether the purchase still would give Harrah's too much market share.

On Thursday, the panel's focus was squarely on Colony Capital, the Beverly Hills, Calif.,-based investment firm that bought Resorts Atlantic City four years ago and now plans to acquire the Hilton as part of a $1.3 billion deal that also involves the purchase of Harrah's East Chicago in Indiana and the Bally's Tunica and Harrah's Tunica casinos in Mississippi.

In testimony before the commission, Colony Capital Chairman Thomas J. Barrack said his company was bullish on Atlantic City because of New Jersey's stable regulatory environment and Atlantic City's recent wave of casino expansions and openings.

"The industry is growing up," he said. "It's turned from an individually owned, single-property base to a Wall Street, mega-merged synthesized industry."

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