Churchill Downs Inc. (CDI) is expanding its empire by acquiring Peninsula Pacific Entertainment (P2E) for nearly $2.5 billion. Additionally, the company revealed its plan to exit the online sports betting and online casinos space.
As of writing, $CHDN was trading at $210.94 per share.
Churchill pivoting its business model
With the acquisition of P2E, Churchill Downs will obtain assets in Iowa, New York, and Virginia.
Once complete, the company will own/operate 12 casinos (racinos) and double the number of historical horse racing (HHR) parlors it controls.
Some of the properties under the transaction include:
- Colonial Downs Racetrack in New Kent, VA
- Del Lago Resort and Casino in Waterloo, NY
- Hard Rock Hotel and Casino in Sioux City, IA
The $2.49 billion purchase is in line with recent comments from CDI CEO Bill Carstanjen detailing the company’s focus on strictly horse racing.
According to Horse Racing Nation, Carstanjen said:
“We will exit the [business to consumer] online wagering space. This isn’t the result we wanted, but it is the prudent next step. We remain excited about TwinSpires horse racing.”
It’s unknown when the complete exit of TwinSpires from the online gaming space will occur.
Expanding company portfolio
Churchill Downs’ expansion into Virginia will include 2,700 HHR machines and the ability to build five more parlors adding 2,300 more machines.
Additionally, CDI will acquire the rights to develop a $400 million 1,800 HHR parlor in Dumfries, VA, which will open sometime in 2023.
Carstanjen had this to say:
“This unique set of assets expands our geographic footprint and provides additional scale. 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.”
A significant part of the P2E purchase is the rights to the $565 million ONE Casino + Resort project in Richmond, VA.
P2E entered into a partnership with Urban ONE to operate the casino on Urban ONE’s behalf. With the sale, operations will now shift over to CDI.