PN agreed to purchase Bally’s Casino Tunica and Resorts Casino Tunica. The sale of the two properties is expected to be finalized some time in June.
Both casinos had fallen into bankruptcy. The final price tag for the two Tunica-based locations came in at $44 million. Penn bought the properties from RIH Acquisitions MS I LLC and RIH Acquisitions MS II LLC — both holding companies for the bankrupted casinos.
According to the Associated Press, Penn National CEO Timothy Wilmott indicated the company will centrally manage its Tunica casinos and has plans for “modest” improvements. This includes the company’s well-received Marquee Rewards loyalty program, which is already in place at the company’s three other Mississippi properties:
- Boomtown Casino Biloxi
- Hollywood Casino Gulf Coast
- Hollywood Casino Tunica
“The acquisition will add two complementary casinos to our existing Hollywood Casino Tunica operations, thereby presenting Penn National with the opportunity to benefit from a centralized local management structure,” said Wilmott said in a statement.
What is Penn National getting for its $44 million?
Penn’s new casinos rely heavily on slot revenue. The 40,000-square-foot Bally’s Tunica possesses close to 1,000 slots and just 16 table games. Resorts Tunica is slightly smaller at 35,000 square feet, but is also slot-heavy. It has 800 terminals compared to just nine table games.
Resorts Casino Tunica also has a 200-room hotel and another 18,000 square feet of convention space, something Bally’s Tunica lacks.
Combined, Bally’s Casino Tunica and Resorts Casino Tunica generated $21 million in gross gaming revenue in 2016.
Penn National does things its way
If anyone can turn around the two regional casinos it’s Penn National. The company has shown an affinity for running small, regional casinos in recent years.
Penn’s gaming holdings run the gamut from off-track betting shops to racetracks to racinos to full-fledged casinos. Whether it’s one of the 15 Hollywood casinos or the Tropicana in Las Vegas or the recently opened Plainridge Park Casino (a racino) in Massachusetts, Penn’s numerous casino and gaming properties are often overlooked by the industry.
This could be because the company has done a good job creating smaller regional casinos, rather than following the popular strategy of building billion-dollar destination locations.
But the model is paying off for Penn National. Revenue rose from $2.8 billion in 2015 to $3 billion in 2016, with earnings of $844 million last year.
A job saver in Mississippi
The Mississippi sales should be good for everyone involved.
Penn National picks up the two casinos for a pretty good price. Plus, the local economy will get a much-needed reprieve. The two casinos employ around 1,000 people in the Tunica area — an area still trying to recover from the devastation of Hurricane Katrina in 2005.
Gaming has been a big part of the recovery, keeping thousands of people employed, and keeping the local economy flush with tax revenue from the casinos, which are still pulling in more than $2 billion per year.
However, the Tunica area has been hit hard. Casino revenue is down more than 40 percent compared to its 2006 levels.