Churchill Downs Incorporated (CDI) is just about officially a part of the Pennsylvania casino market.
In a Monday press release, the Louisville-based racing, gaming, and online entertainment company announced that it will “assume management” of Lady Luck Casino Nemacolin in Farmington while closing the purchase of Presque Isle Downs & Casino in Erie.
Looking at the Presque Isle deal
Monday’s announcement brings a close to CDI’s roller-coaster talks with Eldorado Resorts.
Earlier this year, CDI reached an agreement to purchase both Presque Isle Downs and Lady Luck Vicksburg in Mississippi. The rationale was that CDI was looking to position itself to enter the sports betting industry.
The Vicksburg acquisition bottomed out, however, as the casino fell into anti-trust concerns from the FTC. Not all was lost though, as Eldorado Resorts proposed a revised offer that included managerial rights to another Lady Luck.
“We are delighted to work with the team at Churchill Downs to move forward with our planned divestiture of Presque Isle Downs and believe the transfer of the management of Lady Luck Nemacolin to Churchill will allow Eldorado Resorts to realize meaningful tax benefits,” Eldorado CEO Gary Carano said in a July press release announcing the proposed deal.
The Presque Isle deal, according to the release, was reliant upon the operational acquisition of Lady Luck Nemacolin as well as the termination of the applicable waiting period. The Federal Trade Commission granted an early termination Aug. 3. The Presque Isle transaction also needed approval from Pennsylvania regulators.
CDI takes over Lady Luck Nemacolin. Additionally, it acquires “certain assets” from Eldorado Resorts for cash consideration of $100,000.
CDI expands portfolio
According to Monday’s announcement, the Presque Isle and Lady Luck Nemacolin transactions are expected to close in the fourth quarter of 2018.
The two deals are subject to “receipt of gaming licenses from the Pennsylvania Gaming Control Board. Additionally, Churchill Downs needs a racing license from the Pennsylvania State Horse Racing Commission.”
Once closed, CDI will obtain casino interests in seven eastern states. Eldorado will still own Lady Luck Nemacolin but will lease out operations to CDI.
When CDI was in talks to acquire Presque Isle and Lady Luck Vicksburg, company CEO Bill Carstanjen conceded that online gambling was a leading factor. While the Vicksburg side of the deal fell through, Carstanjen’s reasons still certainly rings true.
From a February press release:
“Presque Isle will give us a foothold in Pennsylvania which has recently passed legislation authorizing real money online gaming.”
Presque Isle gains CDI entry into the Keystone State, and Lady Luck Nemacolin gives the company an even stronger presence — especially when you consider CDI’s future betting plans.
CDI nearing sports betting?
Shortly after the Supreme Court decision that changed the sports betting landscape, CDI took steps to enter the regulated wagering industry.
In mid-May, CDI finalized a partnership with SBTech to create an iGaming platform “consisting of the consumer website, mobile apps, and back-office systems to manage iGaming and sports wagering.”
In a statement at the time, SBTech CEO Richard Carter said that the company was:
“thrilled to have Churchill Downs as our first U.S. partner. The combination of Churchill’s leading presence in the U.S. market, coupled with SBTech’s deep expertise in regulated sports betting markets globally, makes for an ideal partnership as we enter this monumental chapter in the U.S. gaming industry.”
Around the same time, CDI confirmed plans to offer online gaming in New Jersey via the Golden Nugget casino license.
These deals put CDI on the fast track to potentially offer online gambling and, eventually, sports betting in Pennsylvania.
Certainly CDI’s newest acquisitions — Presque Isle and Lady Luck Nemacolin — are vital for the company to enter the sports betting market. That said, CDI will still need to pony up $10 million for a sports betting license and then pay 36 percent in taxed revenue.