American casino operator Penn National Gaming Incorporated has announced that it will no longer be managing the Hollywood Casino Jamul San Diego or supplying the southern California tribal casino with ‘branding and development services’ after May 28.
According to a Tuesday filing (pdf) with the United States Securities and Exchange Commission, Penn National Gaming Incorporated revealed that its San Diego Gaming Ventures subsidiary had advanced a $98 million loan to the Jamul Indian Village of California for the purposes of building, equipping and operating the San Diego County casino before subsequently providing the federally-recognized tribe with ‘delayed draw term loans and a limited completion guarantee’ worth approximately $29 million.
The Hollywood Casino Jamul San Diego opened on tribal land about 20 miles east of downtown San Diego in October of 2016 but Penn National Gaming Incorporated explained via a February 8 press release that it had chalked up a fourth-quarter impairment charge of $48.5 million on its outstanding financial commitments with the Jamul Indian Village of California. The Wyomissing-based operator stated that its decision to sever ties with the tribe will moreover result in it recording additional losses of around $29.4 million along with ‘unexpected costs related to the termination and transition of its management contract’.
“San Diego Gaming Ventures’ loans to Jamul Indian Village Development Corporation remain outstanding,” read a statement from Penn National gaming Incorporated. “However, San Diego Gaming Ventures’ only material recourse for collection of these loans is from positive cash flow, if any, from the casino operations or from the sale of these loans to a third party.”
For its part, the Jamul Indian Village of California used a Thursday press release to describe the termination of its agreement with Penn National Gaming Incorporated as ‘a natural next step towards economic self-sufficiency’. The tribe declared that it now intends to rebrand the venue as Jamul Casino while maintaining its ‘current executive management team’ and retaining ‘a highly qualified transition team’ to help it handle ‘the details of rebranding and transferring management’.
The Jamul Indian Village of California additionally proclaimed that its evolution away from Penn National Gaming Incorporated is to be led by David Patent, who previously worked for Caesars Entertainment Corporation but now serves as Chief Executive Officer for gaming consultancy Patent Enterprises, and that it does not anticipate having to change ‘employee roles or staffing structure’.
“Our announcement today represents an important step toward our long-held goal to manage our own casino,” read a statement from Erica Pinto, Chairperson for the California tribe’s casino-operating Jamul Indian Village Development Corporation vehicle. “We are grateful to Penn National [Gaming Incorporated] for all of its hard work and leadership in bringing what was a very challenging development project to fruition.”