Penn National Gaming is taking an alternative approach to the Southern gaming mecca. The company recently announced it is acquiring two casinos in the area for a combined cost of $44 million.
Penn National buys Resorts and Bally’s
Penn National already has a presence in Mississippi. The company owns Hollywood Casino in Tunica as well as Boomtown in Biloxi.
The company’s casino holdings doubled thanks to the new acquisition deal. Penn National purchased Resorts Casino and Bally’s, both of which are located in the Tunica area.
Bally’s is the Mississippi casino closest to downtown Memphis, TN, which is the nearest metropolitan area. Resorts Casino is located next door to Hollywood, so the deal will allow the two properties to pool their resources. The two new casinos will operate under Penn National’s rewards program as well.
Penn National president and CEO Timothy J. Wilmott released a statement about the new deal:
“The acquisition will add two complementary casinos to our existing Hollywood Casino Tunica operations, thereby presenting Penn National with the opportunity to benefit from a centralized local management structure.”
The company hopes to relaunch the casinos under the Penn National banner by this summer.
Sale comes during a rough stretch for Mississippi casinos
The news of the acquisitions is a positive note during what has been a rough couple of years for the area. Harrah’s Tunica closed its doors in 2014. Other casinos, like Sam’s Town, have been cutting back instead of expanding.
Last year, Sam’s Town consolidated all gaming to the first floor after revenue lags. The change also helped improve service by focusing employee efforts on a single area. The property had 66,000 square feet of gaming space. Now, there is just 44,000 square feet. The property removed 171 slot machines in the process.
Flooding in 2011 resulted in several casinos to temporarily lose and resulted in some financial setbacks for the industry. Really though, Tunica’s revenue problems have continued beyond the bad weather.
The area boomed when casinos first opened in the 1990s, but downsizing and layoffs have seen the unemployment rates in the area soar. When Harrah’s closed, 1,300 people lost their jobs and the area’s unemployment rate jumped to 12.3 percent. Over the past ten years, gaming revenue in the area has plummeted 44 percent.
The struggle is more than just the casinos. The community around Tunica has exceptionally high poverty and dropout rates. A 2015 story by the Washington Post reported the county is considered one of the five toughest in the country for children to escape poverty.
The same story also pointed out that when casinos were big business, local lawmakers used gambling tax revenue to fund high-end projects like a golf course instead of directing that money towards community programs.
Penn National could be a gambling company on the rise
Penn National has potential to be a company who could start turning things around in Tunica, though. Within the past couple of weeks, several financial groups, like Yahoo Financial, named Penn National as a stock to keep an eye on.
Company revenue is steady. Moreover, Penn National recently adjusted several quarterly earnings estimates to numbers higher than originally anticipated.