Penn National Gaming goes Hollywood for profits

September 03, 2002 2:24 AM
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Penn National Gaming Inc., expects to nearly double its revenues with the expected closing of its $780 million purchase of Hollywood Casino Corp.

The deal will mean name changes for the riverboat and on-land casinos that Penn National owns in Mississippi, Louisiana and Colorado.

"We will brand all of our casino properties with the Hollywood brand," said Peter Carlino, chief executive officer at Penn National.

The purchase makes Penn National a national gaming power with a casino in the Chicago market. The buy also includes a casino and 505-room hotel in Tunica County, Miss., and a dockside casino and 403-room hotel in Shreveport, La.

"Chicago is one of the major markets in the country," said George L. Smith, a gaming industry analyst with Davenport & Co.

The Hollywood Casino, located in the Chicago suburb of Aurora, Ill., is slated to undergo a $70 million expansion.

Penn National made the list of Fortune magazine’s 100 Fastest Growing Companies last year at No. 58 by turning from racing to gaming. The rating has since climbed to 12.

"Over the last five or six years, horse racing has been in a downturn," Carlino said. "That’s been due largely to the growth of the casino business in Atlantic City and racetracks supported by slot machines in Delaware and West Virginia."

Penn National popularized the "racino" race track and casino concept when acquiring its current flagship property, Charles Town Raceway when West Virginia had not yet legalized slot machines.

Horse racing accounted for less than 20 percent of Penn National’s revenues last year. That figure will drop to five percent with the purchase of Hollywood Casino.

"You’ve got to go where the growth is," Carlino said.