Churchill Downs Buys Most P2E Gaming Properties for Nearly $2.5 Billion

Posted on: February 23, 2022, 05:30h. 

Last updated on: February 23, 2022, 05:30h.

Churchill Downs Inc. (CDI) made a move Tuesday that bodes to significantly expand the size of the Louisville-based gaming company when it announced it would spend nearly $2.5 billion to acquire nearly all of the assets from Peninsula Pacific Entertainment (P2E).

The transaction includes a mix of horse racing, historical horse racing, and casino properties and projects in Iowa, New York, and Virginia.

Once the transaction closes, and Churchill Downs officials expect that to happen by the end of this year, the company will own or operate 12 casinos or racinos and more than double the number of historical horse racing (HHR) parlors. The company’s eight horse and harness racing tracks are included among the casinos, racinos, and HHR facilities.

For $2.49 billion, Churchill Downs will acquire Colonial Downs Racetrack, a thoroughbred track in New Kent, Va., which is located between Richmond and the Hampton Roads region; the del Lago Resort and Casino in Waterloo, NY, which is located between Syracuse and Rochester; and the Hard Rock Hotel and Casino, in Sioux City, Iowa.

In addition, Churchill Downs will also acquire rights to substantially expand upon the 2,700 HHR machines it acquired in Virginia. The deal would allow them to build five more parlors that would add 2,300 machines in the state. Beyond that, CDI also acquired rights to develop a $400 million 1,800-HHR machine resort in Dumfries, Va., which is about 30 miles south of Washington, DC. That’s set to open in 2023.

Lastly, Churchill Downs also acquired the rights to build a casino in Richmond with Urban One. Voters rejected that $565 million project in the 2021 election, but proponents have vowed to keep the project alive.

This unique set of assets expands our geographic footprint and provides additional scale,” said Bill Carstanjen, Chief Executive Officer of CDI. “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.”

Not included in the sale was P2E’s gaming license in Louisiana, where it owns the shuttered DiamondJacks Casino in Bossier City. P2E’s rights to develop a casino in Cedar Rapids, Iowa are also not part of the deal.

A Lot of Horse Trading for Churchill

The planned acquisition of the P2E properties and projects is just the latest transaction for the company.

Last September, Churchill officials also reached an agreement to sell the 326-acre Arlington Park track to the Chicago Bears. If that $197.2 million deal closes, the Bears would likely plan to use that site for a new stadium. Two months later, the company sold 115 acres of land at its Calder Casino in South Florida for $291 million.

Organic Growth Also Underway

But Churchill Downs isn’t just growing through acquisitions.

It also is expanding through new developments and growth at its properties. Churchill Downs has nearly 2,900 HHR machines in Kentucky, and plans to add hundreds more in the state as well as in Louisiana.

In addition, the company plans to build a hotel at its Derby City Gaming HHR parlor as part of a $76 million expansion that will also add machines to the facility. It plans to spend $90 million at its namesake track to add new premium seating along the first turn.

There are also plans to spend $80 million and build a new upscale HHR parlor in downtown Louisville.

Up the road in Northern Kentucky, work is underway on a new grandstand facility at Turfway Park that also includes installing hundreds of HHR machines.

The ongoing projects, as well as its recent acquisitions and sales, may be topics of discussion when Churchill Downs Inc. holds its fourth-quarter financials call with investment analysts on Thursday.