Meadows Racetrack & Casino is located about 15 miles from Pittsburgh in Houston, Pennsylvania.
Gaming & Leisure Properties of Wyomissing, a spinoff company of Penn National Gaming, has purchased the Meadows Racetrack & Casino near Pittsburgh. The sale price of the Meadows Racetrack is said to be $440 million, which is $25 million less than was offered by Gaming & Leisure Properties in May 2014.
The discounted sale settles a 14-month legal battle between Gaming & Leisure Properties and Cannery Casino Resorts LLC, of Las Vegas, the previous owner of the racetrack.
14-Month Legal Dispute
In October 2014, Gaming & Leisure sued Cannery Casino Resorts, saying it was misled about the financial situation of the Meadows Racetrack. At the time, the plaintiff said it did not know what the lawsuit would do to the negotiations or the eventual sale price. In its filing, G&L Properties said it wanted $10 million in consulting fees repaid to it.
The lawsuit was filed two weeks before the original sale closed. At the time, Cannery Casino Resorts said it intended “to take all available measures” to assure the lawsuit did not scuttle the November 2014 sale. That proved to be the case, though the two companies have wrangled over the sale price ever since.
Racetrack to Be Managed by Third Party Operators
Gaming & Leisure plans to maintain control of the buildings and real estate at the complex, which is located 15 miles south of Pittsburgh. While it retains ownership, it plans to find a third party operator to manage the harness track and casino located on the premises.
That is a common operating arrangement, similar to the deal between Resorts Casino and Mohegan Sun in Atlantic City. While Morris Bailey (DGMB Casinos) owns Resorts Atlantic City, he brought in Mohegan Sun to manage the casino in 2012 — an arrangement which has worked quite well.
Financial Outlook of Meadows Racino
The sale comes at a time when the regional casino industry is becoming saturated. In December 2014, New York licensed three new casino developments, and appears ready to add a fourth new casino. Philadelphia is ready to add one or two new casinos, while Atlantic City’s Revel Casino and Showboat might re-open in the coming months.
The gaming market is becoming increasingly fractured, so racinos like Meadows Racetrack must draw from a more localized customer base. Gaming & Leisure Properties sees the potential, given the Meadows’ proximity to Pittsburgh in the city of Houston, Pennsylvania.
Online Gambling Bill in Pennsylvania
In the next few years, new challenges and opportunities might present themselves for the racino. John Payne is working to pass legal online gambling in the State of Pennsylvania. Two interpretations of the bill exist, including one which would allow licensed racinos in the state to launch their own website. If racetracks are banned from online gambling, they might face a tougher financial situation with a new potential rival for customers. If racinos are given the opportunity to launch gaming sites, Gaming & Leisure might have bought a chance to partner with an international online gaming company on a poker site.
The leading sites in New Jersey draw in several million dollars a year. Pennsylvania has a population two-and-a-half times as large as New Jersey, so the potential revenue stream is likely to be worth over $10 million a year. That logic only applies if Pennsylvania legalizes online poker and online casinos. At the present, some versions of the gaming bill would legalize only Internet card rooms, which would limit revenues. In New Jersey, iCasinos account for 60% of the revenue or more.
