CDI Expands Live and Historical Horse Racing Geographical Reach

Racing, wagering and gaming entertainment company Churchill Downs Incorporated (CDI) announced today it entered into a definitive agreement to acquire assets of Peninsula Pacific Entertainment (P2E).

Acquire Additional Scale

The $2.485 billion acquisition deal will see CDI acquire all Peninsula assets in Virginia and New York and its operations of the Sioux City casino in Iowa dependent on usual and customary closing conditions, among which the requirement for CDI to obtain approvals from the regulatory bodies in the states the properties are located.

“This unique set of assets expands our geographic footprint and provides additional scale. 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.”

Bill Carstanjen, CEO, CDI

The total price consideration may reach $2.75 billion if the conditions set for the acquisition of operations at Hard Rock Sioux City in Iowa are not met by a certain date. These involve the sale of the property to a third party and leasing it from that third party.

In this case, CDI will also acquire the real estate property of the casino instead of acquiring just the operating company and lease the property that has a 54-room hotel, a casino featuring 639 slot machines and 20 table games, two live entertainment venues and a Hard Rock-branded sportsbook.

Casino Properties in Virginia and New York

Upon transaction close, CDI will acquire Colonial Downs Racetrack in New Kent, Virginia and six “Rosie’s Gaming Emporium” historical horse racing facilities located in Collinsville, Dumfries, Hampton, New Kent, Richmond and Vinton.

The facilities that feature approximately 2,700 historical racing machines will significantly expand the geographical diversity of live and historical venues and affirm CDI as a national leader in historical horse racing.

The other property that will be acquired by CDI is del Lago Resort & Casino in Waterloo, New York – a casino resort with a 205-room hotel, nine restaurants, a huge sportsbook area, and indoor entertainment and outdoor event venues. Del Lago casino operates around 1,700 slots and 80 table games.

Acquisition of Development Rights

Another significant aspect of the transaction is the acquisition of development rights for up to five additional historical racing entertainment venues in Virginia, as well as the Dumfries Project, a large gaming resort project in Northern Virginia, bringing the total amount of new horse racing machines across new developments to approximately 4,100.

The transaction also involves the rights to develop Rosie’s Gaming Emporium in Emporia and the rights to P2E’s ongoing developments for ONE Casino + Resorts in partnership with Urban One in Richmond. P2E will keep development casino rights in Cedar Rapids, Iowa, as well as the gaming license in Louisiana.

CDI revealed the price consideration of the transaction will be funded with a combination of new debt and cash on hand, including pending proceeds of the sale of land near Calder Casino. The transaction that represents a multiple of less than 9.0x adjusted EBITDA is expected to close by the end of 2022.