* Icahn to sell Tropicana's real estate to GLPI
* Tropicana's gaming and hotel operations to merge with Eldorado
* Eldorado shares hit record high, GLPI up 4.7 pct (Adds background, analyst comment, updates shares)
By Ankit Ajmera
April 16 (Reuters) - Billionaire investor Carl Icahn is cashing out of casino business Tropicana Entertainment in a $1.85 billion deal that will see Eldorado Resorts picking up Tropicana's casino operations including its crown jewel in Atlantic City.
Under the deal announced on Monday, six of the eight casino properties run by Tropicana will be sold by Icahn Enterprises LP to real estate investment trust Gaming and Leisure Properties for $1.21 billion.
The casino operations will be taken over by Eldorado, which will pay the remaining $640 million and lease the properties from GLPI for an initial 15-year period.
Eldorado's shares jumped as much as 21 percent to an all-time high of $43.15, while those of Gaming and Leisure Properties were up 4.7 percent at $34.85.
"(Tropicana Entertainment's) assets are in very good shape. Tropicana Atlantic City, Lumiere and Evansville - all stand out as top notch assets," Union Gaming Research analyst John DeCree said.
The deal is the latest in a series of mergers and acquisitions in the U.S. gambling sector in recent years as companies expand their reach, diversify their businesses and take advantage of recent legalization of gaming in some states.
"We did not foresee any need for near-term capital investments of any scale across the properties," Eldorado Chief Executive Officer Gary Carano said.
The addition of Tropicana's "high quality" assets will allow Eldorado to save about $40 million in the first year following the close of the deal later in 2018.
This is Icahn's second major sale in as many weeks. Last week, he agreed to sell auto parts maker Federal-Mogul to Tenneco Inc in a $5.4 billion deal, unloading an investment he has held for nearly two decades.
Icahn Enterprises said in its statement that the deal did not include Tropicana's Aruba casino and resort in the Caribbean, which would be sold separately as a condition of closing the deal.
Reno-based Eldorado owns and operates twenty properties in 10 U.S. states, including Colorado, Florida, Iowa, Louisiana, Mississippi, Missouri, Nevada, Ohio, Pennsylvania and West Virginia.
The company, which bought Isle of Capri Casinos in a $1.7 billion deal in 2017, on Monday also agreed to acquire Grand Victoria Casino in Elgin, Illinois for $327.5 million in cash. (Reporting by Ankit Ajmera in Bengaluru; Editing by Patrick Graham and Saumyadeb Chakrabarty)