After two years of ownership, Pennsylvania-based gaming and racing operator, Penn National Gaming, Inc. (PENN: NASDAQ) announced Tuesday that effective June 30, 2019, operations at its Resorts Casino Tunica property in Mississippi will cease subject to regulatory approvals.
“we did everything in our control to keep the property profitable“
In March 2017, the Wyomissing-headquartered company took over operations of both Bally’s Casino Tunica (later renamed “1st Jackpot”) and Resorts Casino Tunica. At the time, the firm explained that after completing the Tunica County deals, it intended to lease the then newly-acquired properties from its Gaming and Leisure Properties Incorporated (GLPI) real estate spin-off for an initial combined annual rent of $9 million.
According to the official press release…
Oversaturation of the market, namely the legalization of casino gaming in Arkansas, which has seen the approval of both Oaklawn Racing and Gaming and Southland Park Gaming and Racing to make the transformation into full-scale casinos from April 1, 2019, was cited by Penn as one reason for its decision to shutter the Tunica, Mississippi casino. Passage of Issue 4 will also reportedly see the Arkansas Racing Commission authorize one casino each for Jefferson and Pope counties.
Business volumes lower:
Explaining the closure, Sr. Vice President of Regional Operations for Penn National Gaming, Al Britton, said…
“With our acquisition of Resorts Casino as part of the two property deal, we knew we were acquiring an aging barge in need of significant capital improvements.
“While we did everything in our control to keep the property profitable over the last two years, increased competition from recent gaming expansion in Arkansas continues to drive the property’s business volumes lower. After exploring all viable alternatives, we are left with the difficult decision to close the business.”
“remains committed to the Tunica market“
Britton went on to thank the Tunica property’s team of nearly 200 members for “all their hard work, loyalty and commitment to this property during what has been an extended period of very difficult operating conditions.”
“We’ll be seeking opportunities for these team members at our two other properties in Tunica, other area resorts, or at one of our other 39 properties across the country. I want to emphasize that despite this decision, Penn National remains committed to the Tunica market and continues to focus on the ongoing successful operations at our two remaining Tunica properties.”
The Mississippi casino features a steakhouse, buffet restaurant and 24-hour cafe while additionally including a 201-room hotel, 18,000 square feet of meetings and events space and a 35,000 square feet casino complete with 800 slots and nine table games.
Caesars on same page:
Similarly, in November 2018, Caesars Entertainment Corporation (NASDAQ: CZR) announced that effective January 31, 2019, it would be shutting down operations at its Tunica Roadhouse Casino, but that both the 135-room hotel at the property and the hotel and casino at Horseshoe Tunica would remain operational. The Las Vegas-based gaming corporation cited “persistent declines in business levels in the area stemming from increased competition,” as the reason for its decision.
Rodio successor to Frissora:
In related news, Caesars Entertainment has confirmed the appointment of Anthony Rodio as the company’s new chief executive officer. Former CEO of boutique casino operator, Affinity Gaming, will succeed Mark Frissora, who will reportedly depart at the end of this month. The 63-year-old Frissora was due to take his leave in February, but Caesars worked out a deal for him to remain in his roles through the month and possibly longer if necessary.
According to the press release at the time, in exchange for remaining with the company past the February 8, 2019 exit date, Frissora will be compensated with an “equity grant for the 2019 compensation year with a target value of US$7 million” calculated on a pro rata basis.