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Potential Cedar Rapids casino operator sells some assets to Churchill Downs
$2.5B deal does not include investor group drafting Linn County casino proposal
The would-be operator of a Linn County casino is selling control of its Sioux City casino and other properties to Churchill Downs Inc., the racing, online wagering and gaming company anchored by the iconic Kentucky Derby.
The $2.5 billion deal announced Tuesday does not include the Iowa subsidiary drafting a proposal for a Cedar Rapids casino.
The deal is between Churchill Downs and Peninsula Pacific Entertainment (P2E), the parent company of the Cedar Rapids Development Group — the entity of mostly local developers that has an agreement with the city to apply for a license to operate a Cedar Rapids casino., should the state approve such a proposal.
Jonathan Swain, president of P2E, said the deal does not change investors’ plans to secure a gaming license from the Iowa Racing and Gaming Commission to build a casino in Linn County.
“We were born in Iowa 22 years ago, and when this is done, I'll be in my 60s,” Swain said. “This is kind of our last project, and we're going to make it the best one. It's been a long process. We’re very patient, and we look forward to the opportunity, if granted the ability to apply by the Iowa Racing and Gaming Commission.”
P2E was founded in 1999 as the holding company for Peninsula Gaming, which owned the Diamond Jo Casino in Dubuque. Peninsula Gaming was sold in 2012 to Boyd Gaming Corp. in a $1.45 billion deal.
Swain said his company has several developments in the works in other states but that he was unable to share details on those projects.
Cedar Rapids casino
A Cedar Rapids casino would be the “cornerstone” of the group’s properties, Swain said.
Swain declined to share any new details on the Cedar Rapids casino proposal, including the potential location. Officials have said the site of the now-demolished Cooper’s Mill on F Avenue NW is among the contenders, as city leaders want the casino downtown.
Swain said development of a Cedar Rapids casino is backed by economic studies that show a casino here could generate millions of new gaming revenue for the state as the growth of Nebraska and Illinois gaming sites threatens Iowa revenue.
Investors and city officials see the potential for a casino to support local nonprofits, infrastructure and additional entertainment options, and ultimately fuel economic development.
Swain hopes conversations with the state commission will present a chance for the county to apply for a casino license.
Should that happen, he said, “We're going to present something that is a significantly larger investment than we've ever done — the best project that we've ever proposed for Cedar Rapids. … We're very excited about what we've started working on as far as site and the amenities.”
The deal announced Tuesday includes the sale of Peninsula Pacific’s Hard Rock Hotel & Casino Sioux City. Churchill Downs plans to sell the downtown gaming complex to an undisclosed third party, which would lease the facility back to Churchill Downs to operate, under terms of the purchase agreement.
“If for some reason that doesn't happen, the Sioux City Hard Rock Hotel & Casino will get added to the overall deal between Churchill Downs Inc. and Peninsula Pacific Entertainment, and the price would be $2.75 billion, rather than $2.485 billion,” Churchill Downs said in a news release.
The deal also includes Churchill Downs buying Colonial Downs Racetrack, a thoroughbred racing complex in New Kent, Va.; six Rosie’s Gaming Emporium historical horse racing facilities across Virginia; and the 96,000-square-foot Lago Resort & Casino complex in Waterloo, N.Y.
The agreement is subject to regulatory approval from the Iowa Racing and Gaming Commission and New York and Virginia state regulators. The deal is expected to close by this end of this year.
“This unique set of assets expands our geographic footprint and provides additional scale,” Churchill Downs CEO Bill Carstanjen said in a news release. “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.”
The publicly traded company — CHDN on the Nasdaq exchange — owns and operate three pari-mutuel gaming venues with about 3,050 historical racing machines in Kentucky.
Churchill Downs’ holdings also include TwinSpires, an online wagering platform for horse racing, sports and gaming, as well as brick-and-mortar casino facilities in nine states with approximately 11,000 slot machines and video lottery terminals and 200 table games.
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