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Casino Deals Put on Hold

The deal included Harrah's East Chicago Casino in Indiana, reducing the combined company's casinos there to two, and Caesars' Atlantic City Hilton, reducing their casinos in that N.J. market to four. The sale also included the Bally's and Harrah's casinos in Tunica, Miss.

"Harrah's and Caesars might have satisfied its regulatory concerns in one fell swoop," said Morningstar's Ayer. "They sold four casinos in the three markets that are likely to receive the most regulatory scrutiny, and it looked like they got a good deal on that sale."

Still, observers wonder whether Harrah's still faces concentration issues in Atlantic City. Based on 2004 net gaming wins, Harrah's and Caesars combined accounted for about 41% of the Atlantic City market, excluding the Atlantic City Hilton. That was down from about 49% in 2003. The decline was mostly due to the entrance of the Borgata, a joint venture between MGM Mirage and Boyd Gaming (BYD - Get Report).

Although New Jersey regulators are responsible for that state alone, analysts said they may take a broad view of gaming competition in Atlantic City and note existing competitive threats in Connecticut and New York.

A spokesman for the New Jersey Casino Control Commission declined to comment on how the body might rule. Harrah's spokesman Gary Thompson said the company had received no indications it would have to sell more properties.

Analysts say developments in Illinois and Detroit might delay the MGM Mirage purchase of Mandalay.

In Detroit, MGM Mirage and Mandalay must sell one of their two properties. Although interest in the MGM Grand Detroit and Mandalay's Motor City Casino is said to be high, observers wonder whether the companies can complete a sale in time for the merger deadline.

Feldman said the companies have yet to decide which property they will sell. But he added they're confident they can conclude a deal that would appease regulators.

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