PNGI Says Ballot Question Key to Texas Plans

PNGI officials believe a ballot question on racetrack VLTs in Texas would pass.

Penn National Gaming Inc. officials said April 21 they believe if the question of racetrack video lottery terminals makes the ballot in Texas it has a good chance to pass.

PNGI recently entered a 50/50 joint venture with Sam Houston Race Park in Houston; Valley Race Park, a Greyhound track in Harlingen; and a racetrack planned for Laredo. The deal includes more than 400 acres of land and an option to purchase another 135 acres for the Laredo project.

PNGI officials discussed the Texas situation during a teleconference on first-quarter earnings for 2011.

“The voters (in Texas) would strongly support this,” PNGI president and chief executive officer Peter Carlino said. “The trick is to get the legislature to step up and give them the opportunity.”

Texas is surrounded by states that have racetrack casinos. Polls have shown Texas voters are amenable to racetrack VLTs.

Eric Schippers, vice president of public affairs for PNGI, said there is an “overwhelming amount of people who want the chance to vote on this and are OK with having slot machines at the racetracks.” He said there could be a compromise bill on gaming and ultimately a special legislative session in a few months given a $25 billion hole in the Texas budget.

On the financial side PNGI reported a 19.6% increase in earnings before interest, taxes, depreciation, and amortization from $148.8 million for the first quarter of 2010 to $178 million this year. Net income of $51.5 million was up 42.2% from $36.2 million for the first three months of 2010.

Net revenue of $667 million was up 12.6% from $592.3 million, according to financial documents. As usual Hollywood Casino at Charles Town Races led the way with net revenue of $139.8 million and EBITDA of $44.8 million for the first quarter of 2011; the figures at the West Virginia facility were up 35.4% and 58.3%, respectively.

“Despite difficult weather we had very strong results for the first quarter,” Carlino said. “We’re not seeing robust top line growth with the exception of Charles Town and (Hollywood Casino at Penn National Race Course in Pennsylvania), but we’re off to an excellent start in the second quarter. We’re a big more optimistic than we have been in the past.”

The company is building two full-scale casinos in Ohio and awaiting word on Republican Gov. John Kasich’s verdict on racetrack gaming. PNGI owns two Ohio racetracks—Beulah Park near Columbus and Raceway Park in Toledo—and has told the Ohio State Racing Commission it would request to move those licenses to Dayton and near Youngstown, respectively, should racetrack VLT be legalized.

Kasich has hired a consultant to issue recommendations on gaming in Ohio.

“I hope (the consultant) will look to places like Pennsylvania that have done (expanded gambling) in a very balanced way, and have done it very well,” Carlino said. “Ohio has a similar population, and we believe a balanced program with racetrack gaming and casinos makes sense. There is an enormous opportunity for the governor there.”

PNGI officials said the company projects it will spend about $443 million on capital expenditures in 2011. In regard to Rosecroft Raceway, a shuttered Maryland harness track the company purchased earlier this year, PNGI is “currently in the process of developing a financially viable long-term plan for operating the track,” which could reopen for limited live racing later this year.

The end game is pursuit of legislation authorizing some form of gaming at Rosecroft. PNGI already owns and operates Hollywood Casino at Perryville in Maryland.