Penn National Gaming, parent company of Boomtown Biloxi and Hollywood Casino Gulf Coast, has agreed to acquire two casinos in Tunica for $44 million.
The company announced Tuesday its cash purchase RIH Acquisitions MS I and II, the holding companies for the casino operations of Bally’s Casino Tunica and Resorts Casino Tunica. The transaction is expected to close this year.
Penn National said in a press release it will operate both Tunica properties and lease the real estate from Gaming and Leisure Properties, a corporate spin-off of Penn National Gaming, for an initial annual combined rent of $9 million.
Bally’s Casino Tunica is the closest casino in the Tunica area to downtown Memphis. It has a 40,000-square-foot casino with 947 slot machines and 16 table games, plus a steakhouse, buffet restaurant, 24-hour café and a live entertainment venue.
Resorts Casino Tunica, adjacent to Penn National’s Hollywood Casino Tunica, has a 35,000-square-foot casino with 800 slot machines and nine table games. Among the amenities are a 201-room hotel, steakhouse, buffet restaurant, 24-hour café and 18,000 square feet of meeting and event space.
“The acquisition will add two complementary casinos to our existing Hollywood Casino Tunica operations thereby presenting Penn National with the opportunity to benefit from a centralized local management structure,” said Timothy Wilmott, Penn National’s president and chief executive officer. “We intend to make modest cap-ex investments at the newly acquired casinos to elevate the guest experience while implementing our Marquee Rewards player loyalty program to allow guests to access Penn National’s growing portfolio of properties including our Tropicana Las Vegas resort.”
The casinos in Tunica have seen casino revenue shrink 44 percent over the last 10 years. Gross casino revenue fell from a high of $1.66 billion in 2006, when many of the casinos in South Mississippi were being rebuilt after Hurricane Katrina, to $932.5 million in 2016.
Bally’s Casino Tunica and Resorts Casino Tunica together generated adjusted EBITDA, or earnings before interest, tax, depreciation and amortization, of about $21 million for the year ending Dec. 31, 2016.
Penn National operated primarily as a regional casino company until purchasing the Tropicana Las Vegas in 2015. The company owns, manages or has ownership interests in 27 facilities in 16 states and Ontario, Canada, and recently expanded into social online gaming with Penn Interactive Ventures.