UPDATE: Churchill Downs completes $2.75 billion purchase of Peninsula Pacific assets

November 1, 2022 4:32 PM
Photo: By DanielPenfield - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=77509937
  • Rege Behe, CDC Gaming Reports
November 1, 2022 4:32 PM

UPDATE 11/1/2022: Churchill Downs Incorporated Tuesday announced it has completed the previously announced purchase of substantially all of the assets of Peninsula Pacific Entertainment for $2.75 billion, up from the original consideration of $2.485 billion.

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“Today marks a significant moment in the evolution of Churchill Downs Incorporated,” said Bill Carstanjen, Chief Executive Officer of Churchill Downs. “This transaction meaningfully expands our geographic footprint to Iowa, New York and Virginia, introducing a very unique set of assets and attractive organic growth opportunities to our company. We are excited to welcome the teams from each of these well-established properties into Churchill Downs Incorporated.”

The acquisition includes del Lago Resort & Casino in Waterloo, New York; Hard Rock Casino & Hotel in Sioux City, Iowa; Colonial Downs Racetrack in New Kent, Virginia; and six historical racing facilities across Virginia, known as Rosie’s Gaming Emporiums.

It also includes the opportunity to develop five additional historical racing machine facilities with up to 2,300 machines, and the rights to develop a new historical racing machine facilities in Dumfries, Virginia with up to 1,800 machines and Emporia, Virginia with up to 150 machines.

Churchill Downs also will acquire the rights to Peninsula Pacific’s ongoing effort, in a partnership with Urban One, to develop ONE Casino + Resort, a $565 million destination casino in Richmond, Virginia.

Macquarie Capital served as the exclusive financial advisor and Sidley Austin LLP served as legal advisor to Churchill Downs.

ORIGINAL ARTICLE 2/22/2022: Churchill Downs Incorporated Tuesday announced it has entered into a definitive purchase agreement to substantially acquire all assets of Peninsula Pacific Entertainment.

For a total consideration of $2.485 billion, Churchill Downs will acquire all of Peninsula Pacific’s assets in Virginia and New York, as well as the operations of its Hard Rock Casino & Hotel in Sioux City, Iowa.

Churchill Downs also will acquire the rights to Peninsula Pacific’s ongoing effort, in a partnership with Urban One, to develop ONE Casino + Resort, a $565 million destination casino in Richmond, Virginia.

“This unique set of assets expands our geographic footprint and provides additional scale,” said Churchill Downs CEO Bill Carstanjen in a statement. “Peninsula Pacific has done an exceptional job developing and managing this collection of assets, which we are very excited to acquire and plan to strategically grow in the years ahead.”

The acquisition includes:

  • The del Lago Resort & Casino in Waterloo, N.Y., which includes approximately 1,700 slot machines, 80 table games, a sportsbook, and a 205-room hotel
  • Colonial Downs Racetrack in New Kent, Virginia
  • Six historical racing facilities, known as Rosie’s Gaming Emporiums, across Virginia that have historical racing machines

According to terms of the transaction, Peninsula Pacific is expected to reach a definitive agreement to sell the real property associated with Hard Rock Sioux City to a third party. Churchill Downs will acquire the operating company and lease the Sioux City Property from that third party. Following closing, Churchill Downs will operate Hard Rock Sioux City and lease the property pursuant to lease terms negotiated prior to the closing.

If Peninsula Pacific is unsuccessful in reaching a definitive agreement with a third party to purchase the Sioux City property by a certain date, the property will be included in the Peninsula Pacific transaction, with the total consideration increasing to $2.75 billion.

Churchill Downs also will be able to develop up to five additional historical racing entertainment venues in Virginia and acquires the rights to build a gaming resort, known as the Dumfries Project, in Northern Virginia. Peninsula Pacific previously announced plans to invest up to $400 million to build the initial phase of the Dumfries Project, which is scheduled to open in 2023.

Churchill Downs also will acquire the rights to develop a Rosie’s Gaming Emporium in Emporia, the seventh historical racing entertainment venue under Peninsula Pacific’s Colonial Downs license.

The transaction depends on customary closing conditions, including approvals from the Virginia Racing Commission, the New York State Gaming Commission, and the Iowa Racing and Gaming Commission.

The transaction is expected to close by the end of 2022.