The Federal Trade Commission (FTC) has ordered Penn National Gaming to divest itself of four casinos after the company’s acquisition of Pinnacle Entertainment Inc.
The casinos in question are located in Cincinnati, St. Louis, and Kansas City. Penn National, based in Philadelphia, is a publicly traded company on NASDAQ.
The acquisition of Pinnacle, which is based in Las Vegas, cost almost $2.8bn (£2.15bn). The deal, originally brokered in December 2017, gave Penn National a lot more control over the gaming sector across the United States.
Why the need to sell casinos?
The casinos that Penn National has to sell are the Ameristar Casino in St. Charles, a suburb of St. Louis; the Ameristar Casino and Hotel in Kansas City, and the Belterra Resort and Belterra Park, both in the Cincinnati area.
There had already been a deal in place for Pinnacle Entertainment to sell these four casinos to the Boyd Gaming Group. Boyd, which is listed on the NYSE, paid approximately $575m (£442m) for these properties.
Penn National owns the Hollywood Casino in the Kansas Speedway and the Argosy Riverboat Casino in Kansas City. Boyd Gaming also has a presence in the region, the Sam’s Town Casino.
The FTC forced the sales of the four properties because “new entry or expansion is unlikely to deter or counteract the anti-competitive effects of the acquisition in any of the affected markets.”
There is a problem because all of the state’s available casino licenses have been issued. There will be a 30-day period in which the public can comment on the order.
After this period has elapsed, the commission will then decide whether to finalize the consent order. The Missouri Gaming Commission approved the acquisition of Pinnacle Entertainment in August.
Penn National has also received the necessary green light from the Nevada Gaming Commission and the Nevada Gaming Control Board for its acquisition. It is expected that the transaction will be fully completed by the middle of October.
Talking about this approval in Nevada, the CEO of Penn National, Timothy Wilmott said: “We are grateful to the Nevada Gaming Commission and Nevada Gaming Control Board for their thorough and diligent review of the applications and filings related to our pending transaction with Pinnacle Entertainment. With these approvals in hand, we look forward to the upcoming closing of the transaction in mid-October and officially welcoming Pinnacle Entertainment’s team members to the Penn National family.”