Penn National Pulls Out of Lawrence Racino Project
YOUNGSTOWN, Ohio — In what could be a fatal blow to the long lingering Lawrence Downs Casino and Racing Resorts project, Penn National Gaming Inc. announced today that it is withdrawing from its joint venture with Endeka Entertainment LP to build the $225 million racino in Lawrence County, Pa.
Penn National, based in Wyomissing, Pa., owns and operates the Hollywood Gaming at Mahoning Valley Race Course in Austintown, less than a 30-minute drive from the Mahoning Township, Pa., site selected for the racetrack.
Endeka’s application for that project has been pending before the Pennsylvania Gaming Control Board since May 2013 (READ DOCUMENTS). The project was first proposed in 2003 by local investors. In its latest financing proposal, Penn National was to develop and manage the Lawrence County racino and control 33% of its ownership. The facility was to include 1,250 slot machines, live gaming tables and harness racing (READ May 31, 2013, press release).
Said B.J. Fair, Penn National’s chief development officer, in a prepared statement, “We are disappointed to be withdrawing from this project. However, given the continued softness in the economy and the level of market saturation — not just in western Pennsylvania but across the commonwealth — we are regrettably unable to justify this investment at the statutorily required spending levels.”
A letter from the Gaming Control Board dated March 10 asked Endeka to provide a “status update” on the project at the regulatory board’s April 29 meeting. According to the Ellwood City Ledger, in January the board “was awaiting additional documents about other applicants and proposed financing, which have not been received.”
In conjunction with its announcement, Penn National today filed a complaint, including a request for declaratory judgment, in Berks County, Pa., Court of Common Pleas. “We are disappointed that our continued open dialogue with the partners in Endeka about the deteriorating market conditions in Lawrence County, and our multiple offers to cooperate fully in transitioning the project to a new operator, have been met only with threats of legal action,” said Fair. “We’re asking the court to reaffirm our rights regarding withdrawal.”
Penn National owns, operates or has ownership interests in 26 gaming facilities in 16 states and Ontario, Canada, with an aggregate of 31,000 gaming machines, 760 table games and 3,100 hotel rooms.
At its Austintown racino, betting on video lottery terminals was up about 1.3% in February compared to from January, newly released monthly reports show. But that increase was far less than the 8.8% gain at Hollywood Gaming at Dayton Raceway in Dayton, which opened in August, the month before the Austintown racino.
Today the El Dorado Resorts Inc., the parent company that operates Presque Isle Downs & Casino in Erie, Pal., announced it will seek approval to eliminate 170 slot machines and four table games at the facility. The company said revenues have declined since the opening of racinos in Ohio.
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