This gaming company is no one-trick pony. Penn National Gaming owns, operates, and has ownership interests in about 25 horseracing and casino gaming facilities (including several riverboats) throughout the US and in Ontario, Canada. Its casinos operate mainly under the Hollywood and Argosy names. It race track facilities include Raceway Park in Toledo, Ohio; Hollywood Casino at Charles Town Races in West Virginia; and Hollywood Casino at Penn National Race Course outside of Harrisburg, Pennsylvania. The company also owns the M Resort near the Las Vegas Strip.
The company operates facilities in Florida, Illinois, Indiana, Kansas, Louisiana, Maine, Maryland, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Pennsylvania, Texas, West Virginia, and Ontario.
Penn National has three main reportable segments based on geographic location of properties: West, East/West, and Southern Plains. In fiscal 2014 the company's East/West segment accounted for 57% of revenue.
The company's revenue has been increasing year-over-year prior to a decrease in 2014. Penn National reported $2.59 billion in revenue for fiscal 2014. That was a drop of $328 million compared to the prior fiscal period. The decreased revenue resulted in the company suffering a net loss of $233 million. However, that was an improvement compared to the $561 million net loss Penn National reported for fiscal 2013.
The decrease in revenue was reflected in the company's cash on hand during 2014. Net cash provided by operating activities was $220 million in fiscal 2014 compared to $440.8 million in 2013. The decrease was primarily caused by a decrease in cash receipts from customers and increased rental expenses.
Penn National's strategy is to acquire and develop new properties in attractive regional US markets, such as Ohio and Maryland. It relies on cash flow from its properties, mainly cash from slot machines and race wagering, to repay debt that it has incurred from making significant acquisitions over the years and to fund capital projects and maintenance at new and existing properties.
Penn National has also been forming joint ventures to further expand its operations in several markets. It formed a joint venture with Sam Houston Race Park to own and operate three Texas racing facilities: the Sam Houston Race Park in Houston, the Valley Race Park in Harlingen, Texas, and a planned racetrack in Laredo, Texas.
The company has also closed or sold off less profitable assets. In 2014 it closed Argosy Casino Sioux City (part of its Southern Plains segment).
Mergers and Acquisitions
In 2015 Penn National agreed to purchase The Tropicana hotel and casino in Las Vegas for $360 million. The Tropicana recently completed a $200 million renovation to its 1,500 hotel rooms and other parts of the property. The deal, which is expected to close later this year, gives Penn National its first property on the Las Vegas Strip.
During 2014 the company purchased the Plainridge Race Course in Massachusetts. Previous significant acquisitions made by Penn National include its 2012 purchase of the Harrah's St. Louis gaming and lodging facility from Caesars Entertainment for about $610 million. In 2011 Penn National acquired M Resort in Henderson, Nevada in exchange for its debt. The M Resort deal gave Penn National entry into the Las Vegas gaming market. The M Resort is about 12 miles from the Las Vegas Strip.