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Churchill Downs agrees $2.5bn Peninsula Pacific acquisition

| By Nosa Omoigui
Churchill Downs Incorporated (CDI) is to acquire the assets of Peninsula Pacific Entertainment (P2E) in a deal worth $2.49bn (£1.84bn/€2.19bn).
CDI 2023

CDI will assume control of P2E’s assets in Virginia and New York, in addition to the operations of its Hard Rock-branded Sioux City casino property in Iowa.

The Virginia assets include the Colonial Downs Racetrack and six Rosie’s Gaming Emporium venues across the state, offering historical horse racing machines. The company has the opportunity to build five additional Rosie’s venues in Virginia.

CDI have also purchased the rights to build a large gaming resort in the state, known as the Dumfries project. P2E previously announced plans to invest up to $400m to build the initial phase of the development, which is scheduled to open in 2023.

The rights to develop the ONE Casino and Resort, a $565m property in Richmond, Virginia are also included in the transaction. While plans were advanced in 2021, the project hit a roadblock when voters narrowly rejected a ballot measure that would have cleared the way for work to begin.

In New York, CDI will acquire the del Lago Resort and Casino, a 96,000sq ft casino with a 6,000sq ft sportsbook, that is active in the sports betting market in partnership with DraftKings.

The underlying real estate of Hard Rock Hotel & Casino in Sioux City, meanwhile, will be sold to a third party, with CDI to lease the operations from this unnamed owner.

P2E’s gaming licence in Louisiana, and its casino development rights in Cedar Rapids, Iowa, are not included in the transaction.

The deal is subject to closing conditions being met and the company obtaining regulatory approval from the Virginia Racing Commission, the New York State Gaming Commission and the Iowa Racing and Gaming Commission.

“This unique set of assets expands our geographic footprint and provides additional scale,” CDI CEO Bill Carstanjen said. “P2E has done an exceptional job developing and managing this collection of assets, which we are very excited to acquire and plan to strategically grow in the years ahead.”

CDI is to fund the transaction through a combination of new debt and cash on hand, including proceeds from the sale of land near Calder Casino in Florida.

Macquarie Capital served as the exclusive financial advisor to CDI for the transaction, with Sidley Austin LLP served as legal advisor.

CDI, who recently launched in New Jersey with its TwinSpires product, reported record revenue and profits for the third quarter of its 2021 financial year.