Penn National Gaming Inc. said March 16 it has reached an agreement with Republican Ohio Gov. John Kasich to relocate two racetracks in the state to capitalize on video lottery terminals in new markets.
PNGI, which is building two referendum-approved full-scale casinos in Ohio, called the racetrack deal a “non-binding memorandum of understanding.” It requires the company to pay a $75 million relocation fee per racetrack VLT facility within 180 days of the facilities opening.
PNGI has said it plans to relocate Beulah Park near Columbus to the Youngstown area in northeastern Ohio, and Raceway Park in Toledo to the Dayton area in southwestern Ohio. It’s projected each facility will cost $200 million, which includes a $50 million licensing fee.
The agreement assumes a state tax rate of 33.5% on gross gaming revenue from racetrack VLTs, the same rate paid by the full-scale casinos. PNGI acknowledged it also will pay VLT revenue to the Ohio horse racing industry but said no percentage has been determined.
“Talks between Penn National and the Thoroughbred and harness horsemen’s organizations are ongoing,” the company said in a statement.
Racetracks and horsemen’s groups in the state have been negotiating the percentage since last summer. The racetrack VLT law of 2011 sets no percentages for purses and breed development programs.
The agreement is “expressly conditioned” on a definite deal with horsemen “that is satisfactory to Penn National” and approved by the Ohio State Racing Commission, the company said.
The agreement with Kasich restricts any other gaming facility from being located within 50 miles of the company’s under-construction Columbus and Toledo casinos, as well as its relocated tracks, with certain exceptions.
“This agreement is a significant step toward the development of two new first-class racing and gaming facilities that will create thousands of construction jobs and more than 3,000 direct and indirect jobs, and bring the excitement of horse racing and VLTs to two areas of the state that are now underserved with this type of entertainment option,” PNGI president and chief operating officer Tim Wilmott said.
The Kasich deal “assumes final state authorization of VLTs at Ohio racetracks and a favorable resolution of the current litigation challenging the establishment of VLT facilities in Ohio,” PNGI said. The Ohio Roundtable, a public policy group, has sued over the VLT law; oral arguments in the case are now scheduled for April 5.