Churchill Downs Enters Pennsylvania Gaming Market

A convoluted series of maneuvers has come to fruition for Eldorado Resorts Inc., which has agreed to transfer the management of its Lady Luck Casino Nemacolin (l.) in Farmington, Pennsylvania to Churchill Downs Inc. for $100,000 cash. This will enable CDI to enter the Pennsylvania gaming market.

Eldorado Resorts, Inc. has reached an agreement with Churchill Downs Inc. (CDI) to transfer operations of its Lady Luck Casino Nemacolin Farmington, Pennsylvania for a consideration of $100,000 cash.

This managerial agreement was a condition of the closing of the previous agreement to sell Eldorado’s Presque Isle Downs & Casino to Churchill. CDI will pay a $5 million termination fee associated with the termination of the agreement to buy Eldorado’s Lady Luck Casino Vicksburg. The sales are expected to close in the fourth quarter of 2018.

The Louisville, Kentucky-based Churchill Downs announced in a press release last week that it would assume management of the Lady Luck. The convoluted negotiations between Churchill and Eldorado began several months ago when CDI agreed to buy both Presque Isle Downs and the Lady Luck, with the goal being to be in a position to enter the sports book industry.

Then the Federal Trade Commission objected to the transaction on anti-trust grounds. This prompted Eldorado to propose a revised offer that included managerial rights to another Lady Luck property.

In July Eldorado CEO Gary Carano announced the deal: “We are delighted to work with the team at Churchill Downs to move forward with our planned divestiture of Presque Isle Downs and believe the transfer of the management of Lady Luck Nemacolin to Churchill will allow Eldorado Resorts to realize meaningful tax benefits.”

The deals are contingent upon gaming licenses being issued by the Pennsylvania Gaming Control Board. Earlier the control board approved of the Presque Isle transaction.

It was also contingent upon the operational acquisition of the Lady Luck Nemacolin, which required early termination of the normal waiting period. The Federal Trade Commission granted the early termination August 3.

Once the deal is consummated CDI will have gaming interests in seven states. Ever since the Supreme Court lifted the federal ban on sports betting CDI has been maneuvering to be in a position to take advantage of that in as many states as possible.

Around the same time as the Supreme Court decision CDI finalized a partnership with SBTech to assemble an online platform “consisting of the consumer website, mobile apps, and back-office systems to manage iGaming and sports wagering.”

SBTech CEO Richard Carter said at that time that his company was “thrilled to have Churchill Downs as our first U.S. partner. The combination of Churchill’s leading presence in the U.S. market, coupled with SBTech’s deep expertise in regulated sports betting markets globally, makes for an ideal partnership as we enter this monumental chapter in the U.S. gaming industry.”

Concurrent to that partnership CDI announced plans to offer online gaming in New Jersey using the Golden Nugget gaming license.