As retirement nears, Wilmott’s career reflects casino growth and gaming innovation Howard Stutz, CDC Gaming Reports · December 2, 2019 at 8:05 am Tim Wilmott was fresh out of business school when he made a bet on the casino industry. At the time, the U.S. gaming marketplace consisted of just Nevada and New Jersey. “I tell people that one of my decision points was state lotteries,” Wilmott said. “Massachusetts was the only state lottery in 1962 and by 1987, there were 16 states. I thought if lotteries could expand, why can’t commercial casinos?” It seems that the 62-year-old Wilmott, now in his final month as CEO of Penn National Gaming, has been in the middle of the casino industry’s massive growth throughout his career. He’s worked for just two casino companies since the late 1980s, Penn and Harrah’s Entertainment. Both greatly expanded beyond humble beginnings. Penn National CEO Tim Wilmott discusses the Ohio gaming referendum on Fox Business Wilmott’s fingerprints are associated with numerous gaming industry trends, including a focus on customer loyalty programs; the entrance of casinos into new markets; the collaboration between casino operators and real estate investment trusts; and, most recently, the expansion of gaming into the digital realm, led in part by the legalization of sports wagering in the U.S. Clearly, Wilmott’s bet has paid huge dividends. “I believed if we exposed people to casino entertainment, we could create new customers,” Wilmott said. “I thought this could be a real growth industry.” Former Harrah’s Chairman and CEO Phil Satre recognized Wilmott’s talents early. He was one of the original recruits to the casino company’s leadership program, which was designed to create future casino general managers and key executives as the company explored expansion across the U.S. in the late 1980s. Wilmott, Satre said, made a positive impression quickly. “We determined he was well-suited for future leadership,” Satre said. “We saw that Tim had strong financial skills and strong people skills. We saw a lot of potential for Tim.” Wilmott’s leadership changed the industry’s direction and status. But he has seemingly been in the background as other gaming personalities took center stage. American Gaming Association CEO Bill Miller experienced Wilmott’s leadership style from the beginning. Wilmott, who has been the AGA’s chairman since 2018, led the search committee that hired Miller last January. “There are a lot of heavy risk takers in this industry, massive disrupters, and larger than life characters,” Miller said. “Tim is a pragmatic, serious-minded individual who, as a corporate guy, always seems to have the highest and best use of capital in mind and how it (can) benefit shareholders.” Wilmott joined Wyomissing, Pennsylvania-based Penn National as chief operating officer in 2008. At the time, the company had 15 casinos. By the time he became CEO in 2013, Penn National’s holdings had expanded to 29 casinos and racetracks. As he prepares to leave, Penn now operates 41 gaming properties in 19 states which collectively employ nearly 33,000 workers, and two new casinos are under construction in Pennsylvania and scheduled to open in 2020. The company has grown through key transactions, including the $2.8 billion purchase of rival Pinnacle Entertainment in 2018, which brought a dozen gaming properties into the Penn family. Willmott’s initial goal was to change the company’s financial picture. Penn’s Hollywood Casino at Charles Town Races in West Virginia once accounted for a full 30% of the company’s earnings. “We were very susceptible to market softening there,” Wilmott said, explaining the eventual Northeast casino expansion. Today, Charles Town, along with L’Auberge Lake Charles, Greektown in Detroit and the Hollywood Casino in Columbus, Ohio, combine to account for 20% of the company earnings. “We’ve done a good job of diversifying our structure,” Wilmott said. ‘Jay is ready’ Wilmott announced his retirement plans in August. During an interview with CDC Gaming Reports in October at the Tropicana Las Vegas, Wilmott said there were two reasons he was stepping aside. Tim Wilmott helps open G2E in 2018 in his role as AGA chairman/CDC Gaming Reports First, he promised his wife he would stop working when their daughter was grown. Second, current Penn COO Jay Snowden, who takes over as CEO on Jan. 1, was “ready.” Wilmott worried Snowden, who joined Penn in 2011 and has been COO since 2014, might otherwise be lured away. “If I would have stayed a couple more years, Jay could have left and gone somewhere else to get a CEO job,” Wilmott said. “Jay and I have known each other 18 years. We worked together at Harrah’s. Jay’s got a lot running room now, and at (age) 44, he’s going to be able to steer this company forward for a lot of years.” Wilmott said there will be a brief transition period, but Snowden has long been involved in the company’s direction. On Penn’s third quarter earnings call in October, Wilmott’s last as CEO, he said he was “looking forward (in 2020) to being in the audience, listening to Jay and the team speak about our fourth quarter and year-end results for 2019.” Growing Penn Wilmott spent nearly 20 years with Harrah’s. He joined Penn a few years after the company acquired rival Argosy Gaming for $1.4 billion, a deal that was overshadowed by two other multi-billion transactions that year: MGM’s $7.9 billion buyout of Mandalay Resorts and Harrah’s $9 billion buyout of Caesars. “I used to tell (former Penn CEO) Peter (Carlino) that Harrah’s didn’t pay attention to Penn until they bought Argosy,” Wilmott said. “That got our attention. We knew they would be a competitor.” Five years later, Penn took center stage when it spun off 21 casinos and racetracks into the real estate investment trust Gaming and Leisure Properties, a first for the casino industry. In the new alignment, the publicly traded REIT took ownership of the land and buildings and Penn continued to operate the facilities through a lease agreement. Wilmott became CEO when Carlino moved to GLPI. The REIT structure allowed Penn to expand its presence. It also led to the emergence of other gaming industry REITs. “The concern initially was the structure,” Wilmott recalled. “In a triple net lease, the tenant is responsible for everything, such as repairs, maintenance, (capital expenditures), and taxes. We also have to make sure the rent check goes to our landlord.” GLPI was part of the Pinnacle transaction. Penn has since completed deals for Greektown and Margaritaville in Bossier City, Louisiana, with VICI Properties, a REIT spun off from Caesars Entertainment. Wilmott said the REIT structure has led to high valuations on gaming real estate. Penn paid $300 million for the operations of Greektown, while VICI paid $700 million for the real estate. “As an operating company, we’ve been able to grow,” Wilmott said. “We’ve created a lot of shareholder value. Old Penn had a market cap of $3.5 billion. Today, Penn and GLPI combine for a market cap of $10 billion.” One of Wilmott’s proudest moment was Penn’s work on the successful 2009 casino referendum in Ohio. Gaming measures had failed four times previously in the state. Penn partnered with Cleveland Cavaliers owner Dan Gilbert on the campaign, each contributing $25 million toward the effort. Penn now runs four Ohio gaming properties, two casinos and two racetrack casinos. “We wanted to get that state open because we knew it would be a great market,” Wilmott said. ‘Riverboat Tim’ Wilmott, a graduate of the Wharton School of the University of Pennsylvania, joined Harrah’s when the company had just four casinos, three in Nevada and one in Atlantic City. Satre and other Harrah’s executives selected Wilmott as part of the leadership team for Harrah’s Joliet, the company’s first riverboat casino, which opened on the Des Plains River about an hour and a half from Chicago in May 1993. “We saw what was going on in Alton (Illinois) and Tunica (Mississippi) and we said (riverboat casinos) was a business we need to get into,” Wilmott said. At the time, gaming could only take place when the casino boat cruised the river every two hours, as required by state law. The boat had limited capacity, and the initial fear was whether or not people would pay to get on boat to gamble or just to enjoy the cruise. Harrah’s received its answer on Day 1. “We would sell the cruise tickets for a Saturday night for $20 and people were scalping them for $100,” Wilmott recalled. As Harrah’s expanded its casino reach into other Midwest communities, Wilmott learned that a significant percentage of local customers were interested in going to Las Vegas after visiting the riverboat markets. The conclusion was to create a “portable common rewards program.” That idea evolved into Total Rewards – now Caesars Rewards – which is considered the largest player loyalty program in the casino industry, with more than 55 million members. Satre then brought Wilmott, a New Jersey native, back to Atlantic City to oversee the company’s growing holdings in that market. “Tim showed his leadership skills, and he was an instant success there,” Satre said. “He was working his way up to the top at an accelerated pace.” What’s next? Wilmott plans to move to South Carolina, travel with his wife, and “play a lot more golf.” He serves on the board of Orlando-based Darden Restaurants. “Maybe one other board opportunity down the road. I’m in no rush,” he said. Gaming leaders said Wilmott’s influence on the industry will be missed. “Tim could always be counted on for his pragmatic approach to the ultra-competitive gaming industry,” said sports betting consultant Sara Slane, who worked with Wilmott during her time at the AGA. “He is respected for his deep industry knowledge and ability to navigate complex issues.” #exclusive – As retirement nears, Wilmott’s career reflects casino growth and gaming innovation. –@howardstutz, CDC Gaming Reports. https://t.co/jzS49uidLp @PNGamingInc #CDCgaming — CDC Gaming Reports (@CDCNewswire) December 2, 2019 Miller, who called his relationship with Wilmott “important to me and the industry,” will miss the weekly phone calls the pair would have to discuss gaming industry issues. During the past year, he realized the influence Wilmott had in job creation. “We would go somewhere and there was always a hostess or a valet or a dealer who would come up and shake his hand and thank him,” Miller said. “He chose this industry and he provided it with great leadership.” Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at firstname.lastname@example.org. Follow @howardstutz on Twitter.