'Gaming Trends,' Charges Impact PNGI Finances

The company is moving forward with plans to create a real estate investment trust.

Penn National Gaming Inc. reported a net loss of $12.2 million for the second quarter of 2013, compared with a profit of $69.6 million for the three months in 2012.

The company, in a July 23 earnings report, attributed the results to $76 million in non-cash charges related to Argosy Casino Sioux City in Iowa; PNGI is engaged in litigation over the awarding of a gaming license to another entity.

Net revenue for the second quarter was $761.4 million, down from $793.2 million in the second quarter of 2012, according to the financial report.

PNGI chairman and chief executive officer Peter Carlino said second-quarter operating results fell short of projections due to "soft industry-wide gaming revenue trends," poor weather, and competitive trends in some markets.

"Given the trends from the first two quarters, results thus far in July, and a lack of visibility on factors that would improve national regional gaming revenue trends, we are guarded in our outlook for the remainder of the year," Carlino said in a release. "As such, we have adjusted our guidance and now expect full year 2013 adjusted (earnings before interest, taxes, depreciation, and amortization) of $805.1 million compared to our prior expectation of $875.8 million."

Carlino said the company is moving forward to separate operating assets from real property assets by creating a real estate investment trust called GLPI. 

"The company has notified each of the 27 regulatory agencies that have jurisdiction over the company's gaming and racing operations of the proposed separation and has made, and is continuing to make, all documentary filings required or requested by the various agencies," Carlino said.

On July 23 the West Virginia Racing Commission approved the separation, but not before hearing objections from the Charles Town Horsemen's Benevolent and Protective Association. The horsemen's group expressed concerns over having the racing and gaming owned by one entity and the barn area by another.

PNGI owns Hollywood Casino at Charles Town Races. It is part of the company's "east/west segment," which traditionally produces the most revenue on a monthly and annual basis.

PNGI also said two Ohio projects–Hollywood Mahoning Valley Race Course and Hollywood Dayton Raceway–are scheduled to be completed in the second half of 2014. Those projects involve the relocation of Beulah Park and Raceway Park, respectively, to new areas to capitalize on video lottery terminals.