The Meadows Casino being sold for $465 million
An eastern Pennsylvania company is betting heavily on The Meadows Racetrack & Casino, and is confident of winning.
“The acquisition of The Meadows represents another step to grow our company,” Peter M. Carlino, chairman and chief executive officer of Gaming and Leisure Properties Inc., said in a prepared statement.
His Wyomissing-based company announced Wednesday it had forged an agreement to purchase The Meadows from Cannery Casinos Resorts LLC for $465 million. The deal is expected to close in 2015, but will require approval from the Pennsylvania Gaming Control Board and the Pennsylvania Racing Commission.
It was a surprising deal to many across Western Pennsylvania. It was a quick deal, said Bill Paulos, co-founder and principal of North Las Vegas-based CCR. His firm purchased The Meadows from Magna Entertainment Corp. in 2004 for $200 million. That was less than half the amount of the current deal, but it was three years before the casino was built.
“This occurred suddenly. It popped up because both parties worked diligently to come up with an agreement,” Paulos said in a telephone interview Wednesday. “Two companies coming together to make an agreement that is beneficial to both is a good thing.”
He added that net proceeds from the transaction “will be used to reduce our debt.”
GLPI announced in a news release it will be seeking a third-party firm to run the North Strabane Township casino and purchase licenses and operating assets, but GLPI would own the land and buildings.
Meadows officials were unavailable for comment. Spokesman Tom Meinert referred all inquiries to Paulos.
The Meadows is a formidable property featuring a 180,000-square-foot casino and a 5/8-mile harness track with a 500-seat grandstand. The casino, among the largest in the eastern United States, has 3,317 slot machines, 61 table games and 14 poker tables. A 24-lane bowling facility and 11 restaurants, bars and lounges also are there.
And a 155-room Hyatt Place hotel is being erected on four acres near the front of the complex. It is expected to open in spring 2015.
Paulos and Sean Sullivan, Meadows vice president and general manager, promote the complex as “an entertainment destination.”
This is an employment destination as well, one of the largest in Washington County with 1,450 on the payroll.
Gaming and Leisure Properties formed Nov. 1 as a spinoff from Penn National Gaming. GLPI owns 21 casino properties in 13 states, and leases 19 of them to Penn National.
Six are racinos, sites with a horse track and casino. They include Penn National Race Course in Grantville, outside Harrisburg, and Mahoning Valley Race Course in Austintown, Ohio, which is being built just across the Pennsylvania line from New Castle.
Racing is the venerable venue at The Meadows, which celebrated its golden anniversary as a track last summer. But the casino is the primary revenue generator, as it is at probably all racino sites, at least in Pennsylvania.
The 12 gaming venues statewide have produced billions of tax dollars since casino gambling was legalized in the commonwealth in 2004, under Act 71, the Pennsylvania Race Horse Development and Gaming Act. One of the intents was to boost the then-flagging racing industry.
Pennsylvania gets 55 percent of the slots revenue and 15.5 percent of table games money, then devotes the funds to property tax relief (34 percent); the horse racing industry (12 percent); economic development and tourism (5 percent); and local and county governments (4 percent).
Slots play began in Pennsylvania in 2006, table games in 2010. The Meadows opened a temporary casino June 11, 2007, before moving to its permanent site April 15, 2009.
Revenue from the local track certainly has benefited the county and North Strabane, the host community. The county’s Local Share Account, which funds eligible programs countywide, exists solely because of it.
An oversaturation of casinos, however, has put The Meadows and other established gaming sites in peril. There are 10 casinos within 170 miles of North Strabane, two others are under construction and one is planned – near New Castle – that are or will be vying with The Meadows for the gambling buck.
Two existing sites are a mere half-hour away – Rivers Casino in Pittsburgh and Wheeling Island Hotel-Casino-Racetrack in Wheeling, W.Va. Two others are about a 75-minute drive – Mountaineer Casino, Racetrack and Resort in Chester, W.Va., and Lady Luck Casino Nemacolin in Fayette County.
A number of Pennsylvania’s casinos have been dealing with declining year-over-year revenues for about 18 months. The alarming part is the major dropoffs generally have occurred in slots play, which generally raises more than three times as much revenue per month as table games,
The Meadows’ April revenue was 7.64 percent below that of April 2013, a second consecutive month the year-over-year figure dipped about 8 percent.
Because closure of the deal may take about a year, Cannery Casino is still in charge of the 157-acre property. So this will not be an abrupt separation for Paulos.
“We will operate The Meadows the way we have for the last seven years,” he said, referring in this instance to the casino. “We will still enjoy the incredible people of Western Pennsylvania.
“This is a bittersweet day, obviously. I’ve been doing this for 45 years and each casino you build is near and dear to your heart.”