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About Penn National Gaming, Inc.

Penn National Gaming is a leading regional gaming company that operates or has ownership interests in 42 casinos, racing facilities, and video gaming terminals across the US. Its holdings feature about 51,000 gaming machines, more than 1,300 table games, and 9,000 hotel rooms. Many of its properties operate under the Hollywood and Argosy brands. Other facilities include the Tropicana on the Las Vegas Strip; racetracks (horseracing and greyhounds) in Florida, New Jersey, and Texas; and riverboat and dockside casinos mostly in the Midwest and the South. The firm also offers online gaming through Penn Interactive Ventures. Penn gained 12 properties through its $2.8 billion acquisition of Pinnacle Entertainment in 2018.

Operations

Penn National Gaming's properties rely heavily on revenue from slot machine entertainment. The company makes about 80% of its revenue from gaming, and slot machines represent approximately 90% of gaming revenue. Other revenue comes from table games and race track wagering as well as hotel, food and beverage, and retail operations, and other ancillary services. Is online gaming arm Penn Interactive Ventures operates mobile and desktop apps HollywoodCasino.com, Viva Slots, and HollywoodRaces.com. 

In the second half of 2018, the company launched live sports wagering at facilities in Mississippi, Pennsylvania, and West Virginia after the Supreme Court issued a ruling that effectively made sports betting legal in several states outside Nevada. 

Geographic Reach

Headquartered in Pennsylvania, Penn National operates facilities in 16 US states. Operations are organized along geographic lines, with segments devoted to the Northeast, South, West, Midwest, and Other.

More than half of the company's revenue comes from the Northeast segment, which includes 11 properties, most of which are in Ohio, Pennsylvania, and Indiana. The region's largest property is its land-based Hollywood Casino Columbus in Ohio, a 160,000 square-foot facility with more than 2,100 gaming machines.

The Midwest (23% of sales) includes nine properties, most of which are in Illinois and Missouri. Penn's largest facility in the Midwest is its Hollywood Casino St. Louis, a 120,000 square foot boat with about 2,000 machines, more than 60 table games, and some 500 hotel rooms.

The West (12% of sales) includes five properties in Nevada, New Mexico, and Colorado, such as the Tropicana Las Vegas and the M Resort in Henderson, Nevada. 

The South (11% of sales) consists of 11 properties in Louisiana and Mississippi, nearly all of which are dockside. Major properties in the region include L'Auberge Baton Rouge and Ameristar Vicksburg.

The Other segment (1% of sales) includes racetracks (horses and greyhounds) in Florida, New Jersey, and Texas. Through a joint venture with Sam Houston Race Park it owns and operates race parks in Houston and Harlingen, Texas.

 

Sales and Marketing

Penn National has a customer loyalty program with more than five million active customers. In 2019, the company adopted Pinnacle Entertainment's mychoice rewards program, transitioning members of its Marquee Rewards program to the mychoice players club. The program allows customers to earn promotional points that are redeemable for slot play and complimentary gifts. The accumulated points can also be redeemed for food and beverages at Penn National's restaurants and for products sold at retail stores in most of the company's casinos.

Financial Performance

Penn National Gaming's revenue has grown steadily year-over-year between 2014 and 2018. Growth has come mostly from a series of bolt-on acquisitions. The company's net income growth during the five-year period has been sporadic. Profits returned to year-over-year growth in 2015, 2016, and 2017 after a big loss in 2014. While still in the black, in 2018 Penn reported lower profits than the previous two years.

In fiscal 2018 revenue grew 14% from 2017 to reach $3.6 billion. The Pinnacle acquisition contributed $303.6 in gaming revenues and $82.0 million in food, beverage, hotel, and other revenues. In addition, revenue benefited from strong year-over-year performances at its Ohio properties as well as Prairie State Gaming in Illinois and a full year of operations of 1st Jackpot Casino Tunica and Resorts Casino Tunica, both in Mississippi.

The company posted net income of $93.5 million in 2018, a decrease from $473.5 million in 2017. The drop was mostly a result of higher expenses and a lower income tax benefit. Penn reported an income tax benefit of $3.6 million in 2018, compared to $498.5 million in the prior year period.

Penn relies on cash flow from its properties, mainly cash from slot machines and race wagering, to repay debt accrued from its long history of acquisitions and to fund capital projects and maintenance at new and existing properties. Cash at the end of 2018 was $481.2 million. Cash from operations was $352.8 million, while investing activities used $1.4 billion. Financing activities provided $1.3 billion.

Strategy

Penn National is focused on growth through acquisitions and the development of new properties, capitalizing on newly-legalized sports betting, and expanding its online gaming activities.

In addition to recent acquisitions (Pinnacle Entertainment and single properties in Michigan and Louisiana) the company has two development projects: Hollywood Casino York and Hollywood Casino Morgantown, both in Pennsylvania. It anticipates the projects will be complete within 12-18 months after Penn obtains the necessary local and regulatory approvals. The company also has a license to develop a racetrack in Manor, Texas outside of Austin through its Sam Houston Race Park joint venture.

The gaming and racing industries are highly regulated, and Penn must maintain its licenses and pay gaming taxes to continue its operations. The relaxing of gambling laws in certain states presents Penn National with both opportunities for growth and increased competitive threats. The company responds to changes in legislation by establishing new operations. It recently launched sports betting at its Ameristar Casino Council Bluffs in Iowa and at its Ameristar Casino East Chicago and Hollywood Casino Lawrenceburg, both in Indiana.

In 2019 Penn entered into multi-year agreements with leading sports betting operators DraftKings, PointsBet, theScore and The Stars Group for online sports betting and iGaming market access. It is operating these activities through a partnership with Kambi, a provider of sports betting services to licensed B2C gaming operators.

Mergers and Acquisitions

In 2019 Penn National Gaming acquired Greektown Casino-Hotel in Detroit, Michigan from JACK Entertainment for approximately $300 million in cash. Opened in 2000, Greektown features 100,000 square feet of casino space, approximately 2,700 gaming machines, 60 table games, a poker room, and several restaurants and bars. The casino also boasts a 400-room high-rise hotel with event and catering space. 

Earlier in 2019 Penn acquired Margaritaville Casino Resort in Bossier City, Louisiana for $115 million. Built in 2013, the property features 26,500 square feet of casino space, 395 hotel rooms, 6 restaurants and food and beverage outlets as well as a theater and meeting space.

In 2018 Penn National acquired Pinnacle Entertainment, a regional casino operator with 16 facilities, for $2.8 billion. As part of the acquisition, Penn divested four properties to Boyd Gaming Corp. Penn made the purchase to achieve greater operational scale and geographic diversity. The transaction added 12 properties to its mix of assets.

Company Background

Peter Carlino entered the racing industry in the 1970s through an investment in the Philadelphia Park race track. Carlino helped liberalize Pennsylvania gaming laws by allowing intrastate simulcasts and state-to-state broadcasts. His investment grew to include a pair of Pennsylvania horse tracks, nine off-track wagering centers around the state, and a West Virginia facility that offered thoroughbred racing and video slot machine gambling. 

Carlino's son Peter M. Carlino has expanded his father's business by acquiring existing tracks, investing big in renovations, making aggressive expansions into simulcasting and gaming, and eventually moving into other states. The firm went public in 1994. It spent $48 million in 1996 to acquire Pocono Downs.

Penn National Gaming, Inc.

825 Berkshire Blvd STE 200
Wyomissing, PA 19610-1247
Phone: 1 (610) 373-2400

Stats

Employer Type: Publicly Owned
Stock Symbol: PENN
Stock Exchange: , NASDAQ
Chairman: Peter M. Carlino
President and COO: Jay A. Snowden
CEO and Director: Timothy J. Wilmott
Employees (This Location): 120
Employees (All Locations): 25,750

Major Office Locations

Wyomissing, PA

Other Locations

Longwood, FL
Sioux City, IA
Aurora, IL
Joliet, IL
Kansas City, KS
Baton Rouge, LA
Perryville, MD
Bangor, ME
Biloxi, MS
Robinsonville, MS
Columbus, OH
Carbondale, PA
Grantville, PA
Lancaster, PA
Muncy, PA
York, PA