Saturated gambling market has Penn National looking at hotels, theaters and even malls
- Jeff Bell
- Staff reporter- Business First
File photo by Janet Adams | Business First
The casino business is constrained by saturation, a consultant says, leading Penn National to look for other growth avenues.
Spectrum Gaming Group’s Sandy Greenberg said Penn National CEO Peter Carlino told Spectrum there is little room for gaming expansion in the U.S. so it’s best for Penn to pursue alternative ways to grow the company.
That’s where Penn National’s separation plan comes in. It calls for Penn to spin its operating and real estate assets into separate companies, including a real estate investment trust that will operate as Gaming and Leisure Properties Inc., and refinance the company’s debt.
The new corporate structure will help Penn make acquisitions on more favorable financial terms than it can presently, Greenberg said. It will also lower the company’s capital costs and ramp up projects in the company’s pipeline, he said.
Carlino has said in public filings that creation of the REIT will also provide Penn with opportunities to diversify beyond the gaming industry. That might include hotels, theaters or even shopping malls, a Penn National official told me after the Casino Control Commission meeting.
As I reported, the commission approved Penn’s debt transaction plan for the corporate separation and two other issues related to licensing for the company’s Columbus and Toledo casinos. But the panel still must sign off on a vendor’s license for Gaming and Leisure Properties, possibly in September.
Greenberg recommended approval of the debt transaction, saying there should be no impact from it on Penn’s facilities in Ohio. Penn has also emphasized the new corporate structure will not affect property management, operating philosophy or employment at the casinos. About 1,500 people work at Hollywood Casino Columbus.
Jeff Bell covers public policy, utilities, energy and the business of sports for Business First.
http://www.bizjournals.com/columbus/blog/2013/08/saturated-gambling-market-has-penn.html
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