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Tuesday, October 22, 2013

Penn National Makes An Offer That Can't Be Refused?

Harness horsemen in Maryland are excited about the offer Penn National Gaming has made in its presentation to the Maryland Video Lottery Location Commission yesterday.  They promised to amend their application so all net profit at the casino to be located at Rosecroft Raceway would be dedicated to Prince George County.  As part of this profit-sharing agreement, Penn National Gaming would pledge $320 million of that profit be donated to the counties health and education systems.

Why/how could Penn National pledge to donate all net profits to the county if they get the casino license?  Penn National is in the process of splitting into two companies.  One company, a casino REIT would make money because Penn National would have to make rent payments to the split-off company.  This way, while Penn would not make money per se at the casino, being the shareholders of Penn would initially own shares in the REIT, they same people would still see money coming their way.

It will be interesting to see if the other two proposals can beat the Penn National offer monetarily.  While the other two locations, including National Harbor may be preferred by some people who matter, the chances of Rosecroft Raceway being named the victor have increased dramatically.

The other two sites make their presentations later this week, let's see if they can react quick enough to out-wow Penn National Gaming.  Here's hoping they don't.

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