Churchill Downs Inc. To Purchase Colonial Downs, Virginia HHR Facilities, New York Casino

Deal also includes operating agreement for Hard Rock Hotel & Casino in Sioux City, Iowa
Colonial Downs

Churchill Downs Inc. announced Tuesday that it has reached an agreement to purchase Colonial Downs racetrack, as well as casino operations and historical horse racing parlors across three states.

CDI said in its announcement that the deal to acquire “substantially all of the assets of Peninsula Pacific Entertainment” is worth $2.485 billion but will require approvals from the Virginia Racing Commission, the New York State Gaming Commission, and the Iowa Racing and Gaming Commission.

Among the assets included in the acquisition is the Colonial Downs racetrack property in New Kent, Va., as well as six “Rosie’s Gaming Emporium” HHR sites in Virginia, which are operated by the Colonial Downs gaming group. HHR is technically a parimutuel game but has the look and feel of a slot machine. CDI will also have the opportunity to develop five extra HHR facilities in Virginia, including a resort property in Dumfries and a location in Emporia that is set to open in 2023.

Casinos in New York, Iowa also in play

Also included is the del Lago Resort & Casino in Waterloo, N.Y., and “the operations” of Hard Rock Hotel & Casino in Sioux City, Iowa. According to the CDI announcement, Peninsula Pacific is expected to sell the Sioux City property to a third party and CDI will lease and operate the facility.

“This unique set of assets expands our geographic footprint and provides additional scale,” said Bill Carstanjen, CDI’s chief executive officer, in the announcement. “[Peninsula Pacific] 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.”

Representatives from CDI did not immediately respond to requests for additional comment Tuesday.

Virginia HHR directly linked to racetrack

On the horse racing side of the equation, critics have pointed to CDI’s history of purchasing racetrack properties and either shutting down racing or eventually selling to entities that discontinued racing. The most recent example is the agreement to sell the Arlington Park property to the Chicago Bears. CDI also purchased Hollywood Park (which was sold and is now the location of SoFi Stadium in Inglewood, Calif.) and Calder Race Course (which no longer operates as a thoroughbred racetrack in Florida) in the 1990s.

Unlike those situations in California, Illinois, and Florida, however, Virginia’s HHR is directly linked to operating a racetrack, even more so than that of Kentucky, which has built upon Arkansas’ original HHR model and where CDI operates Churchill Downs Racetrack and HHR parlors.

In Virginia, like Kentucky, live racing is a prerequisite for operating HHR parlors. But Virginia’s regulations go even further, as gaming operators are required to have one race day per year for every 100 HHR machines, according to state regulation. According to industry sources, the Colonial Downs group had 2,676 HHR machines in Virginia in 2021, which would require 27 live race dates. That’s exactly how many live race dates Colonial Downs applied for in 2022, and that’s how many it will run.

Colonial Downs closed in 2014, after disputes with racing industry groups in the state, but was revived in 2019 by Peninsula Pacific, after Virginia legalized HHR in 2018.

Photo: Courtesy of Colonial Downs


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