When asked about gambling hotspots in the United States, few people would think of Pennsylvania. But, at over $3 billion annually, the Pennsylvania casino market is the second-largest in the country, trailing only Nevada.
The Pennsylvania gaming market is expected to grow even larger thanks to a comprehensive gaming expansion law. That law passed in October, allowing for online gaming, VGTs, and mini-casinos, to name a few. As the Pennsylvania market expands, so do the opportunities. Naturally, multiple gaming companies are jumping at these opportunities.
One-third of casinos change hands
In the six months since the state passed its gaming reform law, four Pennsylvania casinos have undergone a change in ownership.
- Penn National acquired Meadows Racetrack & Casino as part of a $2.8 billion acquisition of Pinnacle Entertainment on Dec. 18.
- Days later, Boyd Gaming announced the purchase of Valley Forge Casino Resort.
- Churchill Downs purchased Presque Isle Downs & Casino last week.
- This week, Sands sold its Bethlehem casino to an Alabama tribal casino group, Wind Creek, for $1.3 billion.
In all three instances the new owners mentioned, and in at least one case highlighted, the new opportunity presented by the legalization of online gaming.
Penn National sees the opportunity
Penn National’s acquisition of Pinnacle Entertainment was a blockbuster deal, with national implications.
Even though the sale wasn’t Pennsylvania-centric, Penn National made a point to mention online gaming opportunities.
In a press release announcing its acquisition of Pinnacle, Penn National said:
“The combined company will benefit from additional promotional opportunities in online and social gaming, which will help provide an additional boost to property level performance.”
Boyd Gaming sees the same opportunities
Unlike the Penn National-Pinnacle deal, the purchase of Valley Forge by Boyd Gaming has everything to do with Pennsylvania and the new opportunities in the market.
Following his company’s acquisition of Valley Forge, Boyd Gaming President and CEO Keith Smith said:
“… With this acquisition, we will expand into the second-largest gaming state in the country, establishing a presence in a densely populated, high-traffic area just west of Philadelphia.
“And thanks to Pennsylvania’s recent passage of gaming expansion legislation, there are new opportunities to drive incremental growth at Valley Forge through the expansion of the property’s slot capacity and the introduction of new forms of gaming.”
CDI positioning itself to be a major player in online gaming
Earlier this month, Churchill Downs purchased Presque Isle. Even more so than Valley Forge, the acquisition of Presque Isle is all about the passage of online gaming legislation.
Churchill Downs CEO Bill Carstanjen was very blunt about his company’s targeting of Presque Isle, saying:
“Presque Isle will give us a foothold in Pennsylvania which has recently passed legislation authorizing real money online gaming.”
Churchill’s website touts its experience with online gaming thanks to its TwinSpires advanced deposit wagering platform. That’s followed by the following statement about other online gaming opportunities:
“CDI’s investment in online wagering technology and customer support systems also positions the company to take advantage of additional Internet gaming opportunities, such as online poker, as those activities are authorized at the state or federal level.”
How CDI’s online gaming will manifest is anyone’s guess.
And Sands’ blockbuster sale makes it four casinos
A year ago, Sands Bethlehem was ahead of the curve. The company talked extensively with MGM Resorts International about an acquisition.
Given Las Vegas Sands Chairman and CEO Sheldon Adelson’s revulsion and opposition to online gaming, getting out of PA was a no-brainer. Especially when other Pennsylvania properties are generating big price tags.
The buyer is surprising. Wind Creek is a regional chain of Southern casinos, with a couple of properties in the Caribbean. Additionally, not one of its properties even offers table games. To jump into the PA market with one of the top two casinos in the state is a huge and expensive risk.
However, Wind Creek thinks it is a risk worth taking. And, as we see, they are not alone by any means.