An Indian casino being developed by Tropicana owner Penn National Gaming in San Diego, has received praise by Moody’s Investors Service.
The $390 million Hollywood Casino Jamul near San Diego, a key property in Penn National’s western push, is expected to open in July. The property will be managed by Penn National for the Jamul Indian Village, with the former also providng funding for the development of the resort.
The project’s $460 million debt was assigned a B3 rating by Moody’s, which will be used to repay Penn National and finance the project. A seven-year management contract between the tribe and Penn national pays the casino company 30 percent of pre-tax profits as well as a licensing fee of 1.5 percent for the Hollywood name. The Hollywood Jamul’s close proximity, 20 miles, to downtown San Diego will benefit the casino, according to Moody’s. Following expenses, between $25 million and $30 million could be generated in annual cash flow, according to Moody’s.
Keith Foley, Moody’s gaming analyst, said, “The ratings also take into account competition from several large casinos already operating in Jamul’s primary market area,” adding that “Currently, there are eight competitors in San Diego County, three of which already target Jamul’s core market,” according to the Las Vegas Review-Journal.
After struggling through legal proceedings for well over a decade, in 2013 Penn National announced the project. The operator of nearly 30 casinos and racetracks nationwide, Penn acquired M Resort in Henderson two years earlier. The $360 million Tropicana purchase was closed by Penn in August.
Penn National CEO Tim Wilmott said in an interview at the Global Gaming Expo that the Hollywood Jamul project was important in the development of Penn’s Southern California customer base towards marketing both the Tropicana and M Resort. Over the next four years Penn plans upgrades at the 1,500-room Tropicana to the tune of up to $200 million. The first upgrades involve the resort’s restaurant which will be changed out and its offerings expanded. Wilmott also expects Penn National’s players reward system and its 3 million-member database to increase because of the Hollywood Jamul resort.
Located off Route 94 in San Diego, the Hollywood Casino Jamul is a three-story development that totals 200,000 square feet. The resort has a casino, restaurants and other amenities, but does not have a hotel. The project was given the green light on the 15th of May by U.S. District Judge Kimberly Mueller, and in July celebrated its topping off ceremony.