Penn National Gaming

Penn National Gaming, Inc. is an American operator of casinos and racetracks, based in Wyomissing, Pennsylvania. It operates 44 facilities in the United States and Canada, many of them under the Hollywood Casino brand. The company also controls a 36% stake in Barstool Sports. Penn formed a corporate spin-off in November 2013 called Gaming and Leisure Properties.

In 1967, Pennsylvania enacted a law allowing thoroughbred horse racing with parimutuel wagering.[3] Two companies that would later form part of Penn National Gaming were founded in 1968 by groups seeking one of the four available racing licenses: Pitt Park Raceway, Inc., formed by several Erie area businessmen,[4][5] and the Pennsylvania National Turf Club, established by a group of Central Pennsylvania investors.[6][7] The Turf Club was awarded one of the licenses, and soon began construction on Penn National Race Course.[8][7] The complex included a motor speedway, which held its first races in 1971,[9][10] and the horse track, which opened in 1972.[11][12]

Pitt Park Raceway, meanwhile, was denied in its initial application, but received one of a second round of licenses issued in 1970.[5][13] The first Pitt Park racing meet opened in 1971 at The Meadows, an existing harness racing track.[14] Pitt Park lost half a million dollars in its first meet, leading its owners to sell the company to a group of investors, including Philadelphia insurance businessman Peter D. Carlino.[15][16] After another unsuccessful season at The Meadows, Pitt Park changed its name to the Mountainview Thoroughbred Racing Association and moved to Penn National Race Course.[17][18] Starting in 1973, as a tenant of the Turf Club, Mountainview held 100 nights of racing there each year.[18][19]

In 1982, Carlino purchased Penn National Race Course from the financially struggling Turf Club.[20][21] The Turf Club would continue to operate its own racing meet each year, now as a tenant of Carlino.[21]

The companies involved with Penn National Race Course were reorganized in 1994 in preparation for an initial public offering.[22] PNRC Corp., which had been incorporated in 1982, was renamed as Penn National Gaming, with Mountainview and the Turf Club as its subsidiaries.[22] Carlino's son, Peter M. Carlino, who had earlier managed Mountainview, was Penn National's first CEO,[23][24] a position he would hold until 2013.[25] Penn National Gaming went public on the NASDAQ exchange; $18 million was raised to pay down company debts and fund construction of off-track betting parlors.[26][27]

Penn National expanded beyond its first racetrack with the acquisitions of Pocono Downs in 1996, Charles Town Races in 1997, and, in 1999, a half interest in Freehold Raceway and the operations of Garden State Park.[28]

The company acquired its first standalone casino properties in 2000, buying Casino Magic Bay St. Louis and Boomtown Biloxi from Pinnacle Entertainment for $201 million.[29] This was followed in 2001 by the acquisition of Carnival Resorts & Casinos, including ownership of Casino Rouge in Baton Rouge, Louisiana and the management contract for Casino Rama in Ontario.[30][31] Next, in 2002, it bought the Bullwhackers Casino in Black Hawk, Colorado from the Hilton Group for $6.5 million.[32]

In 2003, Penn National bought Hollywood Casino Corp. for $328 million plus $360 million in assumed debt, gaining three casinos in Aurora, Illinois; Tunica, Mississippi; and Shreveport, Louisiana.[33] The acquisition, which would double Penn National's revenues, was part of a continuing strategy to shift away from the horse racing business and into the casino business.[34] The company planned to rebrand its other properties under the Hollywood Casino name.[34]

In 2005, Penn National acquired Argosy Gaming Company for $1.4 billion plus $791 million in assumed debt, adding five casinos and one horse track to its portfolio (not including the Argosy Baton Rouge, which was quickly sold to satisfy antitrust concerns).[35][36] The purchase again doubled Penn National's size, making it, at the time, the third largest publicly held gaming company in the country (behind MGM Mirage and Harrah's Entertainment).[37]

In November 2006, a deal for Penn National Gaming to acquire Harrah's Entertainment fell through.[38]

In 2007, Penn National acquired the Zia Park racino in Hobbs, New Mexico for $200 million.[39]

An attempt in 2007 to take company private with a $6.1 billion buyout fell through for prospective buyers Fortress Investment Group and Centerbridge Partners.[40]

In November 2012, Penn National announced a plan to spin off a new real estate investment trust (REIT) with ownership of most of its properties, in an effort to reduce taxes and cost of capital, and overcome license ownership restrictions.[41][42] The REIT would own the land and buildings for 21 of Penn National's 29 casinos and racetracks; Penn National would continue to operate all but two of the properties under a lease agreement.[43] The spin-off was completed on November 1, 2013, creating Gaming and Leisure Properties, Inc. (GLPI).[44]

In July 2013, Penn National sold the Bullwhackers Casino to a local investor group.[45][46]

In April 2015, the company agreed to purchase the Tropicana Las Vegas for $360 million.[47]

In August 2016, the company agreed to purchase Rocket Games for $60 million.[48]

In May 2017, Penn National acquired the operating assets of Bally's Casino Tunica and Resorts Casino Tunica for a total of $44 million, and leased the two casinos from GLPI, which had simultaneously purchased their real estate assets.[49][50]

In October 2018, the company acquired Pinnacle Entertainment for $2.8 billion in cash and stock.[51][52] To ensure regulatory approval for the deal, Pinnacle sold four of its properties to Boyd Gaming prior to the merger.[51][53] The result was the addition of twelve new properties to Penn National's holdings, all of them leased from GLPI. In connection with the sale, Penn National sold the real estate of Plainridge Park Casino to GLPI for $250 million.[54]

In 2019, Penn National made two purchases in conjunction with Vici Properties. Penn National bought the operating businesses of the Margaritaville Resort Casino in Louisiana and Greektown Casino–Hotel in Detroit for $115 million and $300 million, respectively, while Vici bought both properties' real estate assets and leased them to Penn.[55][56]

On January 29, 2020, it was announced that the company had purchased a 36% stake in the sports blog Barstool Sports for $163 million. The company also has an option in the deal to increase its stake to control or full ownership in three years.[57]

During the COVID-19 pandemic, Penn faced the prospect of financial issues brought on by resort closures. As a result, Penn sold the land occupied by the Tropicana Las Vegas to its spin-off company, Gaming and Leisure Properties.[58] Penn sold the land for $337.5 million in rent credits, and the sale was finalized in April 2020. Penn will continue to operate the Tropicana for another two years, or until the resort and land are sold.[59]