With seventeen casinos, Moneyland operates the most casinos in a certa

Casino Negotiations

Step 1: Identify the Question

The word undermines in the question stem indicates that this is a Weaken the Argument question.

Step 2: Deconstruct the Argument

M: 17 casinos (most in state)

A: acquired E chain of casinos

A must sell 5 casinos, 20 left → © A will have most

Step 3: Pause and State the Goal

In a Weaken question, the right answer will make the conclusion less likely to be correct. Here, the conclusion is that Apex Casinos will have the most casinos in the state, after it completes its acquisition of Eldorado. The right answer will show how Apex could actually not have the most casinos in the state. It will likely do this by showing that Moneyland will acquire more casinos, that Apex will lose more casinos, or that a third entity will have more casinos than Apex.

Step 4: Work from Wrong to Right

(A) CORRECT. As part of its overall plan, Apex is required to sell five casinos. If Apex doesn’t do this successfully, it will not be able to acquire the Eldorado casinos, and will not have the most casinos in the state. If it does successfully sell the 5 casinos, it must have a buyer. This answer choice implies that the only possible buyer is Moneyland. Moneyland already has 17 casinos, so if it buys five casinos from Apex, it will have 22 in total. In this scenario, Moneyland, not Apex, will have the most casinos.

(B) The conclusion only states that Apex will have the most casinos, not the most profitable casinos. Whether the casinos can operate profitably isn’t relevant to the conclusion.

(C) It is not clear how these rules would affect the likelihood of Apex successfully acquiring Eldorado’s casinos to become the company with the most casinos because Eldorado’s existing casinos have to be located in counties that allow casinos. This prohibition could limit the ability to build new casinos, but this would affect all companies and would not change the number of existing casinos.

(D) The argument already states that Moneyland owns 17 casinos. As long as this is fewer than 20, and as long as Moneyland does not acquire more casinos, the conclusion will hold. This answer choice does not state that Moneyland will acquire more casinos (or that Apex will be unable to acquire casinos). In fact, it makes it less likely that Moneyland will be able to acquire more casinos, since the state only allows Moneyland to operate one casino per county.

(E) This makes it more likely, not less likely, that Apex’s acquisition will be successful. If there is a clear source of funding, Apex is more likely to successfully complete the acquisition and end up with 20 casinos in total.

Hello,

A) is the correct answer and at least to me - the logic is clear if we assume as per the powerscore bible that GMAT questions are written to be logically sound with no additional information

Prompt:
Moneyland has 17 casinos
Post acquisition Apex will be left with 20 casinos but only after selling 5 casinos. Those 5 casinos will therefore be bought by someone. One can logically infer that one would not buy a casino to shut it down but its not actually necessary to do so (most weaken is not an absolute)

A) states that the casino landscape is a closed system, the buyer of those casinos must therefore be moneyland. Therefore moneylands total casinos could increase to 22. The key is could, it may not but it certainly raises significantly the possibility that Moneyland would operate more than 20 casinos

Therefore A) weakens the conclusion

As regards C) - this does not weaken the conclusion indeed the prompt uses the word "operate" which implies that the 20 casinos will by definition be in areas where they will be able to operate
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With seventeen casinos, Moneyland operates the most casinos in a certain state. Although intent on expanding, it was outmaneuvered by Apex Casinos in negotiations to acquire the Eldorado chain. To complete its acquisition of Eldorado, Apex must sell five casinos to comply with a state law forbidding any owner to operate more than one casino per county. Since Apex will still be left operation twenty casinos in the state, it will then have the most casinos in the state.

Which of the following, if true, most seriously undermines the prediction?

A) Apex, Eldorado, and Moneyland are the only organizations licensed to operate casinos in the state.
B) The majority of Eldorado's casinos in the state will need extensive renovations if they are to continue to operate profitably.
C) Some of the state's counties do not permit casinos.
D) Moneyland already operates casinos in the majority of the state's counties.
E) Apex will use funds it obtains from the sale of the five casinos to help fund its acquisition of the Eldorado chain.

Hi mikemcgarry,

Need your help here.

I do understand the logic of the argument but by selecting A aren't we assuming that the casinos sold by Apex will be purchased by other casinos only. Isn't this an additional assumption ?
For example: A casino might also be just sold off as a property (not necessarily to some other casino) and utilized later for some other purpose.

Thanks in advance!

Dear Poorvasha,

I'm happy to respond.

My friend, in doing the GMAT CR, it's very important to have a sense, especially a business person's sense, of how things operate in the real world. See:
GMAT Critical Reasoning and Outside Knowledge.

This is a brilliant official question, and the OA is (A). You are correct: the logic of this is that the pool of buyers is limited. If Apex buys Eldorado and wants to sell 5 casinos, who can buy them? Apex is the seller, Eldorado would be no longer an independent entity, and Moneyland is the competitor that Apex is trying to outmaneuver.

Think about it: more so than, say, an office building, a casino is a building that has tremendous infrastructure: gaming machines, specific play tables, etc. Almost no other industry could come in and use the space for purposes other that a casino. The cost of the casino itself would be substantially more than the cost of the land it occupies, so for someone to buy it purely for the land--that is, intending to liquidate and knock-down the casino and then build anew--then either Apex or that land-buyer would take a HUGE capital loss. Let's say that the casino + land is $20M and the land alone is $4M--there would be a $!6M loss, absorbed by Apex or the land-buyer or split between them. That is not the stuff of financial success. When the argument says that "Apex must sell five casinos," what's implied is that they are sold as casinos, not written off as losses.

If you just use your own creativity and imagination on GMAT CR, you will wind up going down all kinds of rabbit holes that will lead you away from the correct answer. You have to have a real-world sense of how much different things cost, how much money or effort or difficulty is involved in pursuing various actions. You get that sense by reading the business news every single day.

Does all this make sense?
Mike

GMATNinjaTwo generis VeritasPrepKarishma GMATNinja

Can experts help me to validate my PoE for (D) and (A)

Since this is weaken question, my first step is to identify the conclusion, which is:
Apex Casinos will have the most casinos in the state after acquisition.

Why author say so?
Since Apex will still be left operating twenty casinos in the state after acquisition of Eldorado , and the next highest is Moneyland which operates 17 (same no of casinos before and after the above acquisition)

Few more facts I need to know:
A state law forbids any owner to operate more than one casino per county.
Because of this law, Apex must sell 5 casinos that it PRESENTLY has.
Moneyland also wanted to expand but probably could not get correct bid for buying
Eldorado in comparison to Apex. (Could be that M quoted less than A)

Now, D says:

After acquisition, we are given that Apex shall have 20 casinos.
We are also given that moneyland has and will have same no of casinos ie 17
since it lost bid against Apex. So even if it operates MAJORITY in any on state's countries, my conclusion that Apex has maximum no of casinos is not weakened since Apex has 20 and Moneyland has 17.


Do I have to NEGATE this for conclusion for break? Since if there is any another organization, it HAS TO operate
more casinos than Apex. I am not able to find such evidence in argument.

Am I correct in my reasoning?

P.S. Can you please take up the question in upcoming QOTD?

Hi adkikani, you are on the right track here.

This is a sneaky one. Remember, Apex must sell 5 casinos once it acquires the Eldorado chain. Who is going to BUY those 5 casinos from Apex? Well, it can't be Eldorado, since they were just acquired by Apex. If choice (A) is true, then the ONLY other potential buyer is Moneyland. That means that Moneyland will have 22 casinos in total after the sale. Thus, Moneyland (22) will have more casinos than Apex (20).

I hope that helps!

According to the prompt, Moneyland operates the most casinos in a certain state. Moreover, Apex will still be left operating twenty casinos in the state after selling five casinos.

Does not these two premises contradict each other?

If Moneyland with seventeen casinos operates the most (=more than half) casinos in the state, how come Apex operates twenty-five casinos (=more than seventeen) in the first place?

Please enlighten us.

Hello, tyildirim92. At first glance, these two pieces of information do seem contradictory, but a careful reading of the passage and answer choice (A) can show you why that is not so. The passage, along with the correct answer:



Let A = Apex, E = Eldorado, and M = Moneyland. Now, picture a state that has, say, 30 counties. Since we are told that Moneyland, with seventeen casinos, operates the most casinos in the state, we can map those out in our imaginary counties. Also, since we know that Apex, after the acquisition of Eldorado, must sell five casinos but will still be left operating twenty casinos, we can be sure that Apex will own 25 casinos right after the acquisition. But we have no information on how many Eldorado casinos are being acquired. We can imagine a number such as 10 that would put Apex at 25 total casinos, post-acquisition, meaning that Apex, pre-acquisition, owns 15 casinos. We can map those out as well. The state could be carved up in the following manner, pre-acquisition:

County 1 - M
2 - M
3 - M
4 - M
5 - M
6 - M
7 - M
8 - M
9 - M
10 - M
11 - M, A
12 - M, A
13 - M, A
14 - M, A
15 - M, A
16 - M, A
17 - M, A
18 - A
19 - A
20 - A
21 - A, E
22 - A, E
23 - A, E
24 - A, E
25 - A, E
26 - E
27 - E
28 - E
29 - E
30 - E

Total count: M = 17, A = 15, E = 10

Now, with the restriction provided in the passage that a state law forbids any owner to operate more than one casino per county, and with the information in answer (A), that only A, E, and M operate casinos in the state, once E bows out, only A and M remain, and you can see from the situation outlined above that counties 21-25 will present a problem for A. These are the five casinos that must be sold, per state law, and who is the only other casino owner operating in the state? Moneyland. Thus, we can conclude that, to abide by the law within the given constraints, A will sell the casinos that formerly belonged to E in counties 21 to 25 to M. The final layout of casino ownership would then appear thus:

County 1 - M
2 - M
3 - M
4 - M
5 - M
6 - M
7 - M
8 - M
9 - M
10 - M
11 - M, A
12 - M, A
13 - M, A
14 - M, A
15 - M, A
16 - M, A
17 - M, A
18 - A
19 - A
20 - A
21 - A, M
22 - A, M
23 - A, M
24 - A, M
25 - A, M
26 - A
27 - A
28 - A
29 - A
30 - A

Now, you can see quite plainly how A could go from owning 15 casinos to 25 casinos and then back to 20 casinos, while M benefits from state regulations and walks away with an additional 5 casinos. Thus, even if A were to own 20 casinos, M would own 22, and A would not then have the most casinos in the state. It is a tricky question, the kind I would expect to see pop up on the Quant end of the test, but perhaps you could think of this as an opportunity to cross-train.

I hope that helps. If you have further questions, feel free to ask.

- Andrew

Question Type: Assumption + Weaken

Premise: Moneyland operates 17 casinosPremise: Apex acquires Eldorado while selling five casinos.
Assumption: No organization has more casinos than 20.
Conclusion: Apex has 20 casinos and will have the most casinos in the state.

A: Correct, If three companies are the only companies to have licenses, Moneyland is the only other company that can acquire casinos that Apex has sold.
B: OOS, needing extensive renovations and operating profitably is not our interest.
C: OOS, permission has nothing to do with the conclusion
D: Strengthen, if the Moneyland operating 17 casinos operates in the majority of the state’s counties, we can assume that Apex operating 20 casinos will also operate in the majority of the state’s counties. Furthermore, we can imply that no other organizations are operating more than 20. (Meaning possibility goes down..)
E: OOS, funding is irrelevant to the conclusion.

Key in A option is that there are only three companies able to purchase, NO NEW ENTRANTS! thus if APEX wants to sell there is only Moneyland to buy. So when Apex sells 5 casinos, it will be left with 20. And Moneyland will be only player able to buy this 5 casinos, so it will have 17+5=22. Moneyland will have most casinos, thus it undermines the argument.

Its all fun and games until both Verbal and Quant combine together in one question.

GMATNinja - I did not understand why D is wrong?

If D is true, that means "Moneyland already operates casinos in the majority of the state's counties."

The majority means >50% so, the number of counties within the state is less than 17x2 or less than 33 as then owning 17 will mean they are at 51% of the counties. The premise also tells us that each county can only have one Casino, so that means the remaining maximum number is 33-17 = 16, so as the Conclusion says that the number is 20 does not hold, am I missing something?

Also, for A - How are we assuming that is they sell, someone will buy, what if there are no buyers?

The state law mentioned in the passage forbids "any owner to operate more than one casino per county." That's significantly different than only allowing one casino total in each county. To work with your example, let's say there are 33 counties and three different entities that own casinos in the state. The max number of casinos would be 99, not 33, because each of the three owners could operate a casino in every county. So, knowing that there are 33 or fewer counties doesn't mean that Moneyland has the highest number of casinos in the state.

As for (A) -- sure, there's no guarantee that Moneyland will buy up the five casinos. However, from (A) and the info in the passage we know that:

1) Moneyland really wants to expand
2) Apex must sell five casinos
3) Inference from the info in (A): the only potential buyer is Moneyland

From these three pieces of the puzzle, we can conclude that Moneyland is likely to buy up the five casinos that must be sold. Remember, we're not asked to PROVE that Apex won't have the most casinos in the state -- we're just asked to UNDERMINE that prediction. (A) does exactly that by implying that Moneyland will likely grow to 22 total casinos and outstrip Apex's 20.

I hope that helps!

This question is so illogical given that it's in the CR section. I think GMAT has good questions and bad questions. This one is an example of a very bad question.

What if Moneyland has already had casinos operated in all 5 counties where Apex's 5 casinos, which are planned to be sold, are located?

Additionally, who says that Apex must sell its casinos to another licensed casino owner? It can sell it to whichever buyer it wishes to sell, those buyers can renovate/repurpose the premise, whatever as long as they dont operate them casinos.

I can think of a million reasons why A is a very bad answer.

Hello, kienbn932, and welcome to GMAT Club. I agree that we must take some liberties with this question, but at the same time, our task is to most seriously [undermine] the prediction, not necessarily disprove it. So, yes, there could very well be "a million reasons why A is a very bad answer," but then the question becomes, Which answer choice—among those provided—more seriously undermines the prediction? I and others have weighed in above. If you think a different answer choice is more justifiable, I would be quite eager to hear your argument. (I used to struggle most with CR in Verbal and found many questions and correct answers arbitrary... until I taught myself to play by the rules GMAC™ apparently wants us to adhere to. I refer to these rules collectively as the linear logic of the passage in many of my posts.)

I think this question trips up most test-takers the first time they lay eyes on it. I probably missed it, even though I honestly cannot remember. But let it serve as a "once bitten, twice shy" reminder.

Good luck with your studies.

- Andrew

I also chose the wrong answer when I practiced this question, but the official explanation for (A) convinced me. I would like to share my takeaway from this question:

1. merge and acquire
M&A are not uncommon business words, and we read M&A news from time to time. But, somehow when I read the phrase "in negotiations to acquire the Eldorado chain," I did not realize that it actually means that Eldorado is leaving the casino market. Instead, I thought that perhaps Eldorado will sell part of its casinos but will still be in the business by providing other services. The latter interpretation may not be completely wrong, but anyway I should have caught the clue and inferred that Eldorado will no longer be in the list of casino operators.

If I had gotten the inference, the option (A) would have been more obvious. Basically, (A) points out that there are only three players in the market: Moneyland, Apex and Eldorado. Since Eldorado will leave the picture, only M and A are left. Knowing this would help us infer that M will be the only prospective buyer of the five casinos Apex plans to sell and thus help us see that there is a chance that M will have 22 casinos (17+5), higher than 20 owned by Apex.

I guess that I was not the only one who, after seeing the numbers 17, 20 and 5, quickly thinks that 17+5 will surpass 20. I looked for clues or evidence suggesting that M would buy the five casinos, but unfortunately, I did not notice that it is exactly what (A) suggests. Sometimes the clues in the CR questions could be hidden and indirect.

2. Weakening is not disproving

As other experts have pointed out, weakening is not disproving, but I also need to remind myself about this point frequently. When we do the "weaken" type CR questions, our task is to cast doubt on the conclusion, not to refute it. As other members have pointed out, there could be many factors that would prevent M from buying the five casinos, so it is not necessarily true that M would hold 22 casinos. But the point is that it does not have to be necessarily true.

(For example, M might have already operated casinos in the five counties where the five casinos Apex plans to buy are located, or Apex would rather close the five casinos than sell them to M in a bid to beat M in terms of market share, or a new company suddenly gets a license to operate casino and is eligible to buy the five casinos.)

Correct answers to the weaken-type CR questions do not need to disprove the conclusions. We must not confuse them with negated assumptions which show up in the assumption-type questions. Negated assumptions always disprove the conclusion, but correct answers to weaken-type questions do not.

Understand the Passage

With seventeen casinos, Moneyland operates the most casinos in a certain state. Moneyland operates more casinos than any other player in a certain state. The statement implies that every other player in the state has fewer than 17 casinos.

Although intent on expanding, it was outmaneuvered by Apex Casinos in negotiations to acquire the Eldorado chain. Even though Moneyland wanted to acquire Eldorado chain of casinos, Apex Casinos beat it in the negotiations i.e. Apex Casinos is buying Eldorado chain of casinos.

To complete its acquisition of Eldorado, Apex must sell five casinos to comply with a state law forbidding any owner to operate more than one casino per county. There is a state law that prohibits any chain to have more than one casino in a county. The statement implies that Apex and Eldorado both have casinos in five counties. Thus, to comply with the law, Apex will have to sell five casinos.

(A natural question that came up in my mind as I read this statement was ‘why Apex must sell?’. Why can’t it simply close those five or at least some of those five casinos? Even though, in this specific argument, this question doesn’t matter, I wanted to mention the question because I believe such questions should arise in a person’s mind as he reads the argument. We need to be active readers, who question things, not passive readers, who read just to remember.)

Since Apex will still be left operating twenty casinos in the state, it will then have the most casinos in the state. Even after selling five casinos, Apex will still have 20 casinos. (Since 20 casinos is more than 17 casinos of Moneyland, which had the most casinos till now,) Apex will have the most casinos in the state.

Predict an Answer

The argument says that since the greatest number of casinos with any chain is 17 now, Apex Casinos will have the greatest number of casinos once it has 20 casinos.

One of the assumptions underlying the argument is that by the time Apex completes its acquisition of Eldorado, Moneyland will not have opened more than three new casinos on top of its existing ones.

If Moneyland ends up opening 4 or more casinos in the meantime, Apex, with 20 casinos, will not have the most casinos in the state.

Option Analysis

(A) Correct. Since we are given the Apex must sell five casinos to comply with the law and, from this option, we can see that Moneyland will be the only buyer, the option leads to a situation in which Moneyland will have 22 casinos before the acquisition of Eldorado by Apex is complete. In such a situation, Apex Casinos, with 20 casinos, will not have the most casinos in the state.

Thus, this option significantly weakens the argument.

(B) Incorrect. How much renovation will be required for Eldorado’s or Apex’s casinos or whether they will remain profitable does not impact the argument. The argument is about which chain will have the most casinos, not about which chain will be more profitable.

(C) Incorrect. The presence of such counties has no bearing on the argument. The argument is not concerned with whether all or even most counties allow casinos. Whether all counties allow casinos or only a few allow casinos, the argument remains unimpacted.

(D) Incorrect. Majority means more than 50%. The option says that Moneyland operates casinos in more than 50% of the counties. This means that 17 is greater than 50% of the number of the counties in Moneyland. However, the argument still stand as is. If Apex gets 20 casinos, it’ll have more casinos than Moneyland and thus the most casinos in the state.

(E) Incorrect. How Apex uses sales proceeds from the sale of five casinos has no bearing on the argument. Whether Apex uses such funds to fund the acquisition or to give a fully-paid vacation to its top management doesn’t have any impact on its number of casinos and thus any impact on the argument.