Penn National has added a property in Michigan to its portfolio.
The Wyomissing, Pennsylvania-based company has entered an agreement to purchase the operations at the Greektown Casino-Hotel in Detroit.
Penn National will pay $300 million to Jack Entertainment for control of the casino’s activities. Jack is also selling the casino property itself to VICI Properties, a real estate investment trust, for $700 million.
Concurrent with the close of the deal, Penn will also enter a 15-year lease agreement with VICI Properties. The company will pay the new landowners an annual rent of $55.6 million.
In a press release, Penn National CEO Timothy Wilmott said about the deal:
“The acquisition of the Greektown Casino-Hotel operations from JACK Entertainment, LLC will further expand Penn National’s already diverse operating base with a facility that is extremely well-positioned in one of the nation’s largest regional gaming markets. We are pleased to partner again with VICI Properties to structure this transaction in a manner that is immediately accretive to Penn National’s operating results upon closing.”
As Wilmott alluded, this deal is not the first that featured combined efforts from Penn National and VICI Properties. In June 2018, the two entered a similar agreement to purchase and operate the Margaritaville Resort Casino in Louisiana.
The tie-in to legalized sports betting in Michigan
Penn National’s purchase of the casino’s operations obviously adds a valuable piece to the company’s portfolio. However, the deal also puts Penn National in position for Michigan sports betting.
Penn National management is making no secrets about its designs to that end. Senior Vice President of Public Affairs Eric Schippers said as much in an interview with the Detroit News:
“We would love the opportunity to offer sports betting there. That is something we are going to be exploring legislatively. MGM Grand Detroit has been working hard to bring about sports betting in Michigan. We want to join the team and take action on it.”
As Schippers mentions, Penn National will join MGM Resorts as a major casino operator in the Michigan market. MGM is already quite supportive of sports betting efforts, having recently partnered with the NBA and the NHL, among others.
For its part, Michigan is actively moving toward an expansion of its gambling laws. A bill to legalize online gambling has already passed the House and the environment for a sports betting bill is quite favorable.
It appears that things are swiftly in motion in the Wolverine State, and 2019 may be a banner year for gambling in Motor City.