On December 31, 2013, Penn National Gaming, Inc. (Penn) owned, managed or had ownership interests in 26 casinos and horse and dog racetracks in 16 states and Ontario. On November 1, 2013, the company separated its operating assets and real property assets into two publicly traded entities. GLPI, the spin-off that is seeking to qualify with the IRS as a real estate investment trust, owns almost all of Penn’s former real property assets and leases them back to Penn for use by its subsidiaries.

Approximately 83% of Penn’s revenues in 2013 came from slots and to a lesser extent table games, with the remainder accounted for by racing operations and other sources such as dining, hotel, and concessions.

Penn owns the standalone horse racetracks Beulah Park (OH), Raceway Park (OH), Rosecroft Raceway (MD) and joint-venture interests in Sam Houston Park (TX) and Freehold Raceway (NJ). The company’s other horse racing tracks are affiliated with casinos–Hollywood Casino at Charles Town Races (WV), Hollywood Casino at Penn National Race Course (PA), Hollywood Casino Bangor (ME), and Zia Park Casino (NM). Penn also maintains three off-track wagering facilities in Pennsylvania and owns 50% of a leased OTW in New Jersey.

In 2014, Penn anticipates moving Beulah Park from near Columbus, OH to a new casino/racetrack close to Youngstown. Raceway Park in Toledo, OH is to be relocated to a start-up casino/racetrack in Dayton. The company also won a slots license in Massachusetts and will construct a gaming facility at Palianridge Race Course, a harness track southwest of Boston.

Penn had net revenues of $2.92 billion in 2013 and an operating loss of $772 million. Management explained that “Continued sluggish economic conditions and the expansion of newly constructed gaming facilities continue to impact the overall domestic gaming industry as well as our operating results.” The company is making reference to competition from relatively new casinos and casino/racetracks in states like Ohio and Pennsylvania. Penn also attributes its operating loss to a weak economy and reduced levels of discretionary consumer spending. The company’s common stock increased by about 6.6% in 2013.

An abstract of this analysis appeared in the Blood-Horse © 2014. Used with permission.