Penn National Gaming made good on an agreement it made in April and said Tuesday it would acquire the operations of Hollywood Casino Perryville in Maryland for $31.1 million.
The all-cash deal is expected to close in the middle of 2021, giving the regional casino operator its 20th state its nationwide footprint. Penn will also pay real estate investment trust Gaming and Leisure Properties annual rent of $7.77 million.
The transaction became a foregone conclusion last month when Maryland voters in November overwhelmingly approved sports betting, which could become active in 2021. Penn and sports media platform Barstool Sports have launched sports betting in Pennsylvania and are expected to move into other states.
“Maryland is expected to soon become a significant retail and mobile sports betting market,” said Penn National CEO Jay Snowden. He added that Penn plans to add a Barstool branded sportsbook to the casino and launch its mobile platform.
Penn was given the right to acquire Hollywood Casino Perryville when it struck a deal with GLPI in April to sell Tropicana Las Vegas for $307.5 million in rent credits. Penn retained operations of the Strip resort. At the time, Penn was having a financial crunch as its entire casino portfolio was closed due to the coronavirus pandemic.
Penn actually developed Hollywood Casino Perryville, which opened in 2010. The property became part of GLPI when the REIT was spun off from the casino operator in 2013.
Hollywood Perryville has a 75,000-square-foot casino with both slot machines and table games, an off-track-racing wagering space, and dining and entertainment options.
In a separate announcement, GLPI said it was selling the operations of Hollywood Casino Baton Rouge in Louisiana to Casino Queen Holding Co. for $28.2 million. The companies will enter into a lease agreement covering both Hollywood Casino Baton Rouge and Casino Queen’s DraftKings at Casino Queen in East St. Louis, Illinois. The initial rent will be approximately $21.4 million.
In August, Hollywood Baton Rouge announced plans to move its gaming facility from a dockside location on the Mississippi River to a land-based facility by 2022.
“The sale of our operations in Baton Rouge and Perryville is bittersweet as both properties were foundational to the creation of GLPI seven years ago,” said GLPI Chairman and CEO Peter Carlino. “By retaining the real estate of both Perryville and Baton Rouge and continuing the development on the expansion in Baton Rouge, we retain a vested interested in their future.”
Earlier this month, Casino Queen said it was acquiring the Belle of Baton Rouge from Caesars Entertainment for an undisclosed price. The company also owns Casino Queen Marquette in Iowa.
Casino Queen CEO Terry Downey said the transaction with GLPI “gives us the opportunity to expand our regional footprint into the Baton Rouge area, a market which we are very excited about. We feel that with sports betting coming on, along with traditional gaming, we have a lot to offer to our valued customers.”
Deutsche Bank gaming analyst Carlo Santarelli said the transactions will eliminate GLPI’s Taxable REIT Subsidiary operations,
“While the two sales are relatively straightforward, GLPI also receives some incremental benefits in the transactions, including the right of first refusal on sale-leaseback transactions of up to $50 million from Casino Queen over the next two years,” he said.
Shares of Penn National closed at $83.09 on the Nasdaq Tuesday, up $4.08 or 5.16%. GLPI shares closed at $42.95 on the Nasdaq, up 81 cents or 1.92%.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
