Churchill Downs Buys Most P2E Gaming Properties, Projects for Nearly $2.5B

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

Last updated on: February 23, 2022, 10:32h.

Steve Bittenbender Read More
Expertise: Legislation, Sports Betting, Horse Racing.

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

del lago casino
An exterior shot of del Lago Resort and Casino in Waterloo, NY. On Tuesday, Churchill Downs Inc. announced it would acquire the upstate New York casino and several other properties from Peninsula Pacific Entertainment in a nearly $2.5 billion deal. (Image: Finger Lakes Tourism Alliance)

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, the company will own or operate 12 casinos or racinos, and more than double the number of historical horse racing (HHR) parlors. Churchill Downs officials expect this to happen by the end of the year. 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.

Eyes on Virginia

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, CEO 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.

Organic Growth 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 with 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.

CDI’s footprint also expanded in November when the Indiana Gaming Commission approved Churchill Downs’ $240 million plan to build a new casino and hotel in Terre Haute. The company will go before leaders in the west-central Indiana city next week with a proposed zoning adjustment for property it intends to acquire for the land-based casino.

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