Churchill Downs to Buy ‘Substantially All’ Peninsula Pacific Assets for $2.48bn

  • Churchill Downs has agreed to acquire P2E assets in a deal expected to close this year
  • The operator will own and operate new locations in Iowa, New York, and Virginia
  • The agreement is set at $2.48bn but could rise to $2.75bn due to Hard Rock Sioux City
  • The acquisition represents a new phase of growth for the US-based horseracing company
Churchill Downs racetrack
Churchill Downs Incoprorated has agreed to purchase Peninsula Pacific assets in a $2.48bn deal, including properties in Iowa, New York, and Virginia. [Image: Shutterstock.com]

A new acquisition

Churchill Downs Incorporated (CDI) has agreed to acquire “substantially all of the assets” of Peninsula Pacific Entertainment (P2E)for a whopping $2.48bn. Both parties expect the deal to close at the end of the year.

The agreement will see CDI acquire capital in Virginia and New York, along with Sioux City casino property in Illinois. Now, both sides just need to meet the usual closing conditions before the deal goes through.

provides additional scale”

“This unique set of assets expands our geographic footprint and provides additional scale,” said Bill Carstanjen, chief executive officer of CDI.

The $2.48bn figure comes from nearly 9x the EBITDA (earnings before interest, taxes, depreciation, and amortization) of the properties, additional value from newly-opened Virginia facilities, and the cost of realizing development rights of historical horse racing in Virginia.

For the deal to go ahead, CDI still needs to obtain permission from the Virginia Racing Commission, New York State Gaming Commission, and Iowa Racing and Gaming Commission.

Adding locations

The agreement between CDI and P2E will see the horseracing company take hold of del Lago Resort & Casino in Waterloo, New York, Colonial Downs Racetrack in New Kent, Virginia, and six Rosie’s Gaming Emporium locations found in Collinsville, Hampton, New Kent, Dumfries, Richmond, and Vinton.

P2E cost estimates reached $400m for the project

Churchill Downs will also acquire the rights to build the Dumfries Project gaming resort in Northern Virginia, one of the more rapidly developing areas of the country. Previous P2E cost estimates reached $400m for the project, expected to open in 2023 with 1,800 horseracing machines.

CDI will also pay around for developmental rights to P2E’s effort to bring back One Casino & Resort in Virginia, a $565m casino.

P2E also expects to sell the rights to its Hard Rock Sioux City property in Iowa, which would then see CDI serve as the owner and leasing agent. If P2E cannot sell the location, the deal with CDI will also include its value, raising the total payable to $2.75bn.

A new phase of growth

The founding of Churchill Downs Incorporated in 1875 coincided with the opening of the most legendary horseracing track in America, found in Louisville, Kentucky. It is most famous for hosting the Kentucky Derby and has grown even more popular in the rise of widespread sports betting.

According to CDI CEO Bill Carstanjen, the company’s deal with San-Diego-based P2E represents a new phase in its growth. “P2E 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,” said the chief executive.

CDI reported revenue of $1.05bn in 2020 and experienced a historic third quarter in 2021, smashing its old quarterly record of $43.2m by raking in $61.4m. The operator will announce its fourth-quarter results on February 23, 2022.