Item 1. Business
ITEM 1. BUSINESS
Overview
With a gaming footprint that includes 44 properties across 20 states as of December 31, 2021, Penn National is a highly innovative omni-channel provider of retail casino gaming, online gaming, live racing, sports betting, and digital sports content. Our wholly-owned interactive division, Penn Interactive Ventures, LLC (“Penn Interactive”), operates retail sports betting in the Company’s retail properties, as well as online sports betting and online social casino, bingo, and iCasino products (collectively, “iGaming”). In October 2021, we acquired Score Media and Gaming, Inc. (“theScore”), a sports betting and digital media company. In addition, in February 2020, we entered a strategic partnership with Barstool Sports, Inc. (“Barstool Sports”), a leading digital sports, entertainment, lifestyle and media company. Combined with the power of theScore and Barstool Sports, Penn National has evolved into a leading North American digital sports content, gaming and technology company. The Company’s omni-channel approach is further bolstered by its my choice customer loyalty program (the “my choice program”), which rewards and recognizes its over 25 million members for their loyalty to both retail and online gaming and sports betting products with a dynamic set of industry offers, experiences, and service levels.
Reportable Segments
We have five reportable segments: Northeast, South, West, Midwest, and Interactive. Our retail gaming and racing properties are grouped into reportable segments by geographic region and each property is viewed as an operating segment except for our two properties in Jackpot, Nevada, which are viewed as one operating segment. We also consider our combined Video Gaming Terminal (“VGT”) operations, by state, to be separate operating segments. Interactive includes the operations of Penn Interactive, theScore, and our proportionate share of earnings attributable to Barstool Sports. See Note 18, “Segment Information,” for further information.
Retail Operations
As of December 31, 2021 we owned, managed, or had ownership interests in 44 gaming and racing properties in 20 states. This includes the addition of Hollywood Casino Perryville, located in Perryville, Maryland, which was acquired on July 1, 2021, Hollywood Casino York, located in York, Pennsylvania, which opened on August 12, 2021 and Hollywood Casino Morgantown, located in Morgantown, Pennsylvania, which opened on December 22, 2021. In addition, we are licensed to offer live sports betting at our properties in eleven states.
Operating Properties
The table below summarizes certain features of the properties owned, operated or managed by us as of December 31, 2021, by reportable segment (all area and capacity metrics are approximate):
Location Real Estate Assets Lease or Ownership Structure Type of Facility Gaming Square Footage Gaming Machines Table Games (1)
Hotel Rooms
Northeast segment
Ameristar East Chicago (2)
East Chicago, IN Pinnacle Master Lease Dockside gaming 58,566 1,273 46 288
Greektown Casino-Hotel (2)
Detroit, MI Greektown Lease Land-based gaming 100,000 2,155 64 400
Hollywood Casino Bangor Bangor, ME Penn Master Lease Land-based gaming/racing 31,750 654 14 152
Hollywood Casino at Charles Town Races (2)
Charles Town, WV Penn Master Lease Land-based gaming/racing 115,000 1,904 66 153
Hollywood Casino Columbus Columbus, OH Penn Master Lease Land-based gaming 179,000 1,761 65 —
Hollywood Casino Lawrenceburg (2)(3)
Lawrenceburg, IN Penn Master Lease Dockside gaming 149,500 1,349 60 463
Hollywood Casino Morgantown (2)
Morgantown, PA Morgantown Lease Land-based gaming 81,000 750 30 —
Hollywood Casino at Penn National Race Course (2)
Grantville, PA Penn Master Lease Land-based gaming/racing 99,500 1,550 56 —
Hollywood Casino Perryville (2)
Perryville, MD Perryville Lease Land-based gaming 34,500 766 13 —
Hollywood Casino Toledo Toledo, OH Penn Master Lease Land-based gaming 125,000 1,683 47 —
Hollywood Casino York (2)
York, PA Operating Lease (not with REIT Landlord) Land-based gaming 80,000 500 25 —
Hollywood Gaming at Dayton Raceway Dayton, OH Penn Master Lease Land-based gaming/racing 40,600 964 — —
Hollywood Gaming at Mahoning Valley Race Course Youngstown, OH Penn Master Lease Land-based gaming/racing 50,000 1,104 — —
Marquee by Penn (4)
Pennsylvania N/A Land-based gaming N/A 125 — —
Hollywood Casino at the Meadows (2)
Washington, PA Meadows Lease Land-based gaming/racing 125,000 2,047 96 —
Plainridge Park Casino Plainville, MA Pinnacle Master Lease Land-based gaming/racing 50,000 963 — —
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South segment
1 st Jackpot Casino (2)
Tunica, MS Penn Master Lease Dockside gaming 40,000 827 16 —
Ameristar Vicksburg (2)
Vicksburg, MS Pinnacle Master Lease Dockside gaming 70,000 1,058 23 148
Boomtown Biloxi (2)
Biloxi, MS Penn Master Lease Dockside gaming 35,500 597 22 —
Boomtown Bossier City (2)
Bossier City, LA Pinnacle Master Lease Dockside gaming 30,000 751 12 187
Boomtown New Orleans (2)
New Orleans, LA Pinnacle Master Lease Dockside gaming 30,000 1,024 26 150
Hollywood Casino Gulf Coast (2)
Bay St. Louis, MS Penn Master Lease Land-based gaming 51,000 800 20 291
Hollywood Casino Tunica (2)
Tunica, MS Penn Master Lease Dockside gaming 54,000 895 11 494
L’Auberge Baton Rouge (2)
Baton Rouge, LA Pinnacle Master Lease Dockside gaming 71,500 1,209 46 205
L’Auberge Lake Charles (2)
Lake Charles, LA Pinnacle Master Lease Dockside gaming 71,200 1,404 85 995
Margaritaville Resort Casino (2)
Bossier City, LA Margaritaville Lease Dockside gaming 30,000 986 50 395
West segment
Ameristar Black Hawk (2)
Black Hawk, CO Pinnacle Master Lease Land-based gaming 56,000 1,050 38 536
Cactus Petes and Horseshu Jackpot, NV Pinnacle Master Lease Land-based gaming 29,000 688 14 416
M Resort (2)
Henderson, NV Penn Master Lease Land-based gaming 96,000 1,048 40 390
Tropicana Las Vegas Hotel and Casino (2)
Las Vegas, NV Tropicana Lease Land-based gaming 72,000 631 33 1,470
Zia Park Casino Hobbs, NM Penn Master Lease Land-based gaming/racing 18,000 753 — 154
Midwest segment
Ameristar Council Bluffs (2)(5)
Council Bluffs, IA Pinnacle Master Lease Dockside gaming 35,000 1,345 20 444
Argosy Casino Alton (2)(6)
Alton, IL Penn Master Lease Dockside gaming 23,000 705 12 —
Argosy Casino Riverside Riverside, MO Penn Master Lease Dockside gaming 56,000 1,104 42 258
Hollywood Casino Aurora (2)
Aurora, IL Penn Master Lease Dockside gaming 53,000 976 27 —
Hollywood Casino Joliet (2)
Joliet, IL Penn Master Lease Dockside gaming 50,000 995 26 100
Hollywood Casino at Kansas Speedway (7)
Kansas City, KS Owned - joint venture Land-based gaming 95,000 1,530 20 —
Hollywood Casino St. Louis Maryland Heights, MO Penn Master Lease Dockside gaming 120,000 1,875 58 502
Prairie State Gaming (4)
Illinois N/A Land-based gaming N/A 2,287 — —
River City Casino St. Louis, MO Pinnacle Master Lease Dockside gaming 90,000 1,841 53 200
Other
Freehold Raceway (8)
Freehold, NJ Owned - joint venture Standardbred racing — — — —
Retama Park Racetrack (9)
Selma, TX None - Managed Thoroughbred racing — — — —
Sam Houston Race Park (10)
Houston, TX Owned Thoroughbred racing — — — —
Sanford-Orlando Kennel Club (11)
Longwood, FL Owned Greyhound racing/simulcasting — — — —
Valley Race Park (10)(12)
Harlingen, TX Owned Greyhound racing — — — —
2,595,616 45,927 1,276 8,791
(1) Excludes poker tables.
(2) Property offers a sportsbook for live sports betting.
(3) Includes 168 rooms at our hotel and event center located less than a mile from the gaming facility.
(4) VGT route operations.
(5) Includes 284 rooms operated by a third-party and located on land leased by us and subleased to such third-party.
(6) The riverboat is owned by us and not subject to the Penn Master Lease.
(7) Pursuant to a joint venture with NASCAR.
(8) Pursuant to a joint venture with Greenwood Limited Jersey, Inc., a subsidiary of Greenwood Racing, Inc.
(9) Pursuant to a management contract with Retama Development Corporation.
(10) Previously pursuant to a joint venture with MAXXAM, Inc. (“MAXXAM”); the remaining 50% was acquired by Penn National on August 1, 2021.
(11) In the fourth quarter of 2020, we sold the land underlying the Sanford-Orlando Kennel Club racetrack which discontinued our live racing operations. We continue to operate our simulcast racing business.
(12) In March, 2020 Valley Race Park closed due to COVID-19 and remains non-operational.
Northeast Segment
Ameristar East Chicago is located less than 25 miles from downtown Chicago, Illinois and offers guests a gaming and entertainment experience in the Chicago metropolitan area. In addition to gaming amenities, the property features a full-service hotel, a Barstool Sportsbook for live sports betting, a fitness center, dining venues, and a lounge.
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Greektown Casino-Hotel is located in the Greektown district of Detroit, Michigan, and is one of four casino hotels in the Detroit-Windsor area. In addition to slot machines, table games, poker tables and a Barstool Sportsbook for live sports betting, the property features a 30-story hotel, several food and beverage options from casual to fine dining, as well as 10,000 square feet of convention and banquet space.
Hollywood Casino Bangor is located less than five miles from the Bangor airport in Maine. It features slot machines, table games, a hotel with 5,100 square feet of meeting and multipurpose space; and dining and entertainment options. Bangor Raceway, which is adjacent to the property, is located at historic Bass Park and includes a one-half mile standardbred racetrack and a 12,000 square foot grandstand capable of seating 3,500 patrons.
Hollywood Casino at Charles Town Races is located within approximately an hour drive of the Baltimore, Maryland and Washington, D.C. markets. In addition to a hotel, slot machines, table games and poker tables, the property includes a Barstool Sportsbook for live sports betting, as well as a variety of dining options. The complex also features live thoroughbred racing at a 3/4-mile all-weather lighted thoroughbred racetrack with a 3,000-seat grandstand and simulcast wagering.
Hollywood Casino Columbus is a Hollywood-themed casino located in Columbus, Ohio. It features slot machines, table games and poker tables as well as multiple food and beverage outlets, and an entertainment lounge.
Hollywood Casino Lawrenceburg is a Hollywood-themed casino riverboat located along the Ohio River in Lawrenceburg, Indiana, approximately 15 miles west of Cincinnati, Ohio. In addition to slot machines, table games, and poker tables, the riverboat features a Barstool Sportsbook for live sports betting, as well as a variety of dining options. The hotel and event center, located within one mile from the casino, includes 18,000 square feet of multipurpose space and 19,500 square feet of ballroom and meeting space.
Hollywood Casino Morgantown is located less than an hour drive west of Philadelphia, Pennsylvania. The property features an outdoor gaming and entertainment area, a Barstool Sportsbook for live sports betting, slot machines, table games, and multiple food and beverage outlets.
Hollywood Casino at Penn National Race Course is located 15 miles northeast of Harrisburg, Pennsylvania. This gaming facility also includes a variety of dining and entertainment options, as well as a sportsbook for live sports betting and a viewing area for live racing. The property includes a one-mile all-weather lighted thoroughbred racetrack and a 7/8-mile turf track.
Hollywood Casino Perryville is a Hollywood-themed casino located near the Susquehanna River in Perryville, Maryland, approximately 45 miles east of Baltimore, Maryland. It features slot machines, table games and poker tables, and a sportsbook for live sports betting, as well as a variety of dining options.
Hollywood Casino Toledo is a Hollywood-themed casino, located on the bank of the Maumee River, in Toledo, Ohio. The property features slot machines, table games and poker tables, as well as multiple food and beverage outlets and an entertainment lounge.
Hollywood Casino York is a casino located within the York Galleria Mall, approximately an hour drive north of Baltimore, Maryland. It features slot machines, table games, and a Barstool Sportsbook for live sports betting, as well as casual dining options.
Hollywood Gaming at Dayton Raceway is a Hollywood-themed casino and raceway located in Dayton, Ohio. It features video lottery terminals, a 5/8-mile standardbred racetrack, as well as various restaurants and bars, amongst other amenities.
Hollywood Gaming at Mahoning Valley Race Course is a Hollywood-themed casino and raceway located in Youngstown, Ohio featuring video lottery terminals and a one-mile thoroughbred racetrack. The property also includes various restaurants, and bars, amongst other amenities.
Marquee by Penn is our licensed VGT route operator with a network of 23 truck stop establishments in Pennsylvania.
Hollywood Casino at the Meadows is located in Washington, Pennsylvania, approximately 25 miles south of Pittsburgh, Pennsylvania. In addition to gaming amenities, the property offers a sportsbook for live sports betting, several dining options, as well as an event and banquet center, a simulcast betting parlor, a 5/8th mile harness racetrack and a bowling alley.
Plainridge Park Casino is located 20 miles southwest of the Boston beltway just off interstate 95 in Plainville, Massachusetts. In addition to gaming offerings, Plainridge Park Casino features various restaurants and bars, along with a 5/8-mile live harness racing facility with a two-story clubhouse for simulcast operations, special events, and live racing viewing.
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South Segment
1 st Jackpot Casino is the closest Tunica-area casino to downtown Memphis, Tennessee. It features slot machines, table games, a café, a sportsbook for live betting and a live entertainment venue.
Ameristar Vicksburg, which is the largest dockside casino in central Mississippi, is located along the Mississippi River approximately 45 miles west of Mississippi’s largest city, Jackson. In addition to gaming amenities, the property features a hotel, multiple dining and bar facilities, 1,800 square feet of meeting and event space, a sportsbook for live sports betting and an RV park.
Boomtown Biloxi, located in Biloxi Mississippi, offers slot machines, table games, poker tables and a sportsbook for live sports betting, as well as two distinct dining options. The property also includes a recreational vehicle park, and a 3,600 square foot event center and board room.
Boomtown Bossier City features a hotel adjoining a dockside riverboat casino located less than one mile from the Louisiana Boardwalk. The property offers a sportsbook for live sports betting, a variety of dining options from a high-end steakhouse to casual dining restaurants, and 1,500 square feet of meeting and conference space.
Boomtown New Orleans is located in the West Bank area across the Mississippi River and approximately 15 minutes from the French Quarter of New Orleans, Louisiana. In addition to gaming amenities and a sportsbook for live sports betting, the property also features a five-story hotel, a fitness center, several restaurants, a 500-seat entertainment venue, and over 14,000 square feet of meeting and conference space.
Hollywood Casino Gulf Coast is located in Bay St. Louis, Mississippi and features slot machines, table games, poker tables and a sportsbook for live sports betting. The property also features a golf course, various dining options, and an RV park amongst other amenities. The waterfront hotel includes a 10,000 square foot ballroom, and nine separate meeting rooms offering more than 14,000 square feet of meeting space.
Hollywood Casino Tunica is a Hollywood-themed casino, located less than 10 miles from Tunica County River Park. In addition to gaming offerings, it features a sportsbook for live sports betting, a hotel, a 123-space recreational vehicle park, various dining and bar options, and banquet and meeting facilities.
L’Auberge Baton Rouge is located approximately ten miles southeast of downtown Baton Rouge, Louisiana. The property features a 12-story hotel, slots, table games, poker, a sportsbook for live sports betting, a variety of dining choices, and 13,000 square feet of meeting and event space.
L’Auberge Lake Charles offers one of the closest full-scale casino hotel facilities to Houston, Texas, as well as to the Austin, Texas and San Antonio, Texas metropolitan areas. The location is approximately 140 miles from Houston and approximately 300 miles and 335 miles from Austin and San Antonio, respectively. In addition to gaming amenities and a sportsbook for live sports betting, the property features several dining outlets, a golf course, a full-service spa, and more than 26,000 square feet of meeting and event space.
Margaritaville Resort Casino is one of the premier gaming, lodging, dining and entertainment experiences in Northern Louisiana. The property provides an island-style theme and includes gaming amenities, a sportsbook for live sports betting, a 15,000 square foot 1,000-seat theater, and 9,500 square feet of meeting space.
West Segment
Ameristar Black Hawk is located in the center of the Black Hawk gaming district, approximately 40 miles west of Denver, Colorado. The resort features slot machines, table games and a Barstool Sportsbook for live sports betting. In addition to gaming amenities, the resort features a hotel, a full-service day spa, several dining outlets, a live entertainment bar, and 15,000 square feet of meeting and event space.
Cactus Petes and Horseshu (collectively, “the Jackpot Properties”) are located just south of the Idaho border in Jackpot, Nevada. The Jackpot Properties collectively feature two hotels, several dining options, a 4,000 seat amphitheater, a showroom, a live entertainment lounge, and meeting and event facilities.
M Resort , located approximately ten miles from the Las Vegas strip in Henderson, Nevada, is situated at the southeast corner of Las Vegas Boulevard and St. Rose Parkway. The resort features slot machines, table games and a sportsbook for live sports betting, as well as a hotel and a variety of dining and bar options. The property also features more than 60,000 square feet of meeting and conference space, a spa and fitness center, and a 100,000 square foot event center.
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Tropicana Las Vegas , located on the strip in Las Vegas, Nevada, is situated at the corner of Tropicana Boulevard and Las Vegas Boulevard. In addition to gaming, the resort features a hotel, a sportsbook kiosk, full-service restaurants, a food court, and a variety of bar and lounge options. The property also includes entertainment venues, over 100,000 square feet of exhibition and meeting space, and a five-acre tropical beach event area and spa.
Zia Park Casino is located in Hobbs, New Mexico, and features slot machines, a hotel, restaurants, a one-mile quarter horse/thoroughbred racetrack with live racing from September to December, and a year-round simulcast parlor.
Midwest Segment
Ameristar Council Bluffs is located across the Missouri River from Omaha, Nebraska and includes the largest riverboat in Iowa. In addition to gaming amenities, the property also features a hotel, a fitness center, several dining facilities, a sports bar featuring a sportsbook with live sports betting, and 5,000 square feet of convention and meeting space.
Argosy Casino Alton is located on the Mississippi River in Alton, Illinois, approximately 20 miles northeast of downtown St. Louis, Missouri. Argosy Casino Alton is a three-deck riverboat featuring slot machines, table games and a sportsbook for live betting. Argosy Casino Alton includes an entertainment pavilion and features a deli, a VIP lounge and a 475-seat main showroom.
Argosy Casino Riverside is located on the Missouri River, approximately five miles from downtown Kansas City. In addition to gaming amenities, this Mediterranean-themed property features a nine-story hotel, a spa, an entertainment facility featuring various food and beverage areas, a VIP lounge and a sports/entertainment lounge and 19,000 square feet of banquet/conference facilities.
Hollywood Casino Aurora is located in Aurora, Illinois, the second largest city in Illinois, approximately 35 miles west of Chicago. This single-level dockside casino offers guests gaming amenities, including a poker room and a sportsbook for live sports betting and features multiple dining and bar options.
Hollywood Casino Joliet is located on the Des Plaines River in Joliet, Illinois, approximately 40 miles southwest of Chicago. The complex includes a barge-based casino which provides guests with two levels of gaming experience, as well as a land-based pavilion with several dining and entertainment options. In addition, the property includes a sportsbook for live sports betting, a hotel, 4,600 square feet of meeting space, and an 80-space RV park.
Hollywood Casino at Kansas Speedway , our 50% joint venture with NASCAR, is located in Kansas City, Kansas. It features slot machines, table games and poker tables and offers a variety of dining and entertainment facilities, and a meeting room.
Hollywood Casino St. Louis is located adjacent to the Missouri River directly off I-70 and approximately 22 miles northwest of downtown St. Louis, Missouri. The facility features slot machines, table games, poker tables, a hotel, and a variety of dining and entertainment venues.
Prairie State Gaming is our licensed VGT route operator in Illinois across a network of over 400 bar and/or retail gaming establishments in seven distinct geographic areas throughout Illinois.
River City Casino is located in the St. Louis, Missouri metropolitan area, just south of the confluence of the Mississippi River and the River des Peres in the south St. Louis community of Lemay, Missouri. River City Casino features a hotel, multiple dining outlets, an entertainment lounge, and over 10,000 square feet of conference space.
Interactive Operations
Penn Interactive. Penn Interactive is our interactive gaming division that operates our online sports betting and casino app called Barstool Sportsbook and Casino, which is currently live in twelve states, four of which also offer online casino gaming. In addition, Penn Interactive operates retail sportsbooks across the Company’s portfolio, including 24 internally-branded or Barstool-branded retail sportsbooks located at the Company’s properties in Colorado, Illinois, Indiana, Iowa, Louisiana, Maryland, Michigan, Mississippi, Pennsylvania and West Virginia. Further, Penn Interactive has entered into multi-year agreements with leading sports betting operators for online sports betting and iCasino market access across our portfolio of properties. Pursuant to these agreements, such sports betting and iCasino operators have commenced operations in Indiana, Louisiana, Pennsylvania, and West Virginia. Penn Interactive also creates interactive casino content through its in-house
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content development arm, Penn Game Studios. Penn Game Studios recently launched Barstool Blackjack and Barstool Slots on the Barstool Casino. Penn Interactive also operates multiple additional iGaming platforms across its portfolio.
theScore. On October 19, 2021, we completed the acquisition of theScore for a purchase price of approximately $ 2.1 billion. theScore’s media app delivers users highly-personalized live scores, news, stats, and betting information from their favorite teams, leagues, and players. ScoreBet, theScore’s sports betting app delivers an immersive and holistic mobile sports betting experience and is currently available to place wagers in New Jersey, Colorado, Indiana and Iowa and is preparing to launch in Ontario. The acquisition provides us with the technology, resources and audience reach to accelerate our media and sports betting strategy across North America. For additional information on our acquisitions, see Note 6, “Acquisitions and Dispositions.”
Barstool. Penn Interactive, through its wholly-owned subsidiary, holds a 36 % (inclusive of 1% on a delayed basis) equity interest in Barstool Sports, and entered into a strategic relationship with Barstool Sports, whereby Barstool Sports exclusively promotes the Company’s retail gaming and racing properties, online casinos and sports betting products, including the Barstool Sportsbook and Casino mobile app, to its national audience, and we have the sole right to utilize the Barstool Sports brand for all of our online and retail sports betting and iGaming products. As of February 28, 2022 we have launched the Barstool Sportsbook and Casino app in twelve states, four of which also offer iCasino products.
Other
Freehold Raceway. Through our joint venture in Pennwood Racing, Inc. (“Pennwood”), we own 50% of Freehold Raceway. The property features a half-mile standardbred race track and a 118,000 square foot grandstand. In addition, through our Pennwood joint venture, we own 50% of a leased OTW in Toms River, New Jersey, and operate another OTW, which we constructed, in Gloucester Township, New Jersey.
Retama Park Racetrack. We have a management contract with Retama Development Corporation (“RDC”), a local government corporation of the City of Selma, Texas, to manage the day-to-day operations of Retama Park Racetrack. In addition, we own 1.0% of the equity of Retama Nominal Holder, LLC, which holds a nominal interest in the racing license used to operate Retama Park Racetrack. Additionally, we own a 75.5% interest in Pinnacle Retama Partners, LLC (“PRP”), which owns the contingent gaming rights that may arise if gaming under the existing racing license becomes legal in Texas in the future.
Sam Houston Race Park and Valley Race Park. Sam Houston Race Park, which is located 15 miles northwest from downtown Houston along Beltway 8, hosts thoroughbred and quarter horse racing and offers daily simulcast operations, as well as hosts various special events, private parties and meetings throughout the year. Valley Race Park is a 91,000 square foot property that previously conducted greyhound racing and simulcasting. Valley Race Park has not been opened since March 2020. We acquired the remaining 50% of these properties, as well as a license for a racetrack in Manor, Texas, just outside of Austin, on August 1, 2021.
Sanford-Orlando Kennel Club. The former greyhound racetrack and related property was sold to a land developer during the fourth quarter of 2020. The remaining facility and parking lot area is owned by the Company and used to operate a restaurant and offers year-round simulcast operations.
Triple Net Leases
The majority of the real estate assets (i.e., land and buildings) used in our operations are subject to triple net master leases; the most significant of which are the Penn Master Lease and the Pinnacle Master Lease (as such terms are defined in the “Triple Net Leases” section below and collectively referred to as the “Master Leases”), with Gaming and Leisure Properties, Inc. (Nasdaq: GLPI) (“GLPI”), a real estate investment trust (“REIT”). In addition to the Penn Master Lease and the Pinnacle Master Lease, six individual gaming facilities used in our operations are subject to individual triple net leases. Under triple net leases, in addition to lease payments for the real estate assets, the Company is required to pay the following, among other things: (i) all facility maintenance; (ii) all insurance required in connection with the leased properties and the business conducted on the leased properties; (iii) taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor); (iv) all tenant capital improvements; and (v) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties.
The following summaries of the Master Leases are qualified in their entirety by reference to either the Penn Master Lease or the Pinnacle Master Lease, as applicable, all of which are incorporated by reference in the exhibits to this Annual Report on Form 10-K.
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Penn Master Lease
Pursuant to a triple net master lease with GLPI (the “Penn Master Lease”), which became effective November 1, 2013, the Company leases real estate assets associated with 19 of the gaming facilities used in its operations. The Penn Master Lease has an initial term of 15 years with four subsequent, five-year renewal periods on the same terms and conditions, exercisable at the Company’s option. If we elect to renew the term of the Penn Master Lease, the renewal will be effective as to all of the leased real estate assets then subject to the Penn Master Lease, subject to limitations on the final renewal term with respect to certain of the barge-based facilities.
Pinnacle Master Lease
In connection with the acquisition of Pinnacle Entertainment, Inc. in 2018 (the “Pinnacle Acquisition”), the Company assumed a triple net master lease with GLPI (“Pinnacle Master Lease”), originally effective April 28, 2016. Pursuant to the Pinnacle Master Lease, the Company leases real estate assets associated with 12 of the gaming facilities used in its operations from GLPI. Upon assumption of the Pinnacle Master Lease, as amended, there were 7.5 years remaining of the initial ten-year term, with five subsequent, five-year renewal periods exercisable at the Company’s option. Furthermore, in conjunction with the Pinnacle Acquisition, GLPI acquired the real estate assets associated with Plainridge Park Casino and leased back such assets to the Company pursuant to an amendment to the Pinnacle Master Lease.
Morgantown Lease
On October 1, 2020, we sold the land underlying our Morgantown development project to GLPI in exchange for rent credits of $30.0 million. Contemporaneous with the sale, the Company entered into a triple net lease with a subsidiary of GLPI for the land underlying Morgantown (“Morgantown Lease”). The initial term of the Morgantown Lease is twenty years with six subsequent, five-year renewal periods, exercisable at the Company’s option.
Perryville Lease
In conjunction with the acquisition of the operations of Hollywood Casino Perryville on July 1, 2021, the Company entered into a triple net lease with GLPI for the real estate assets associated with the property (“Perryville Lease”). The initial term of the Perryville Lease is twenty years with three subsequent, five-year renewal periods, exercisable at the Company’s option.
Meadows Lease
In connection with the Pinnacle Acquisition, the Company assumed a triple net lease of the real estate assets used in the operations of Hollywood Casino at Meadows Racetrack (the “Meadows Lease”), originally effective September 9, 2016, with GLPI as the landlord. Upon assumption of the Meadows Lease, there were eight years remaining of the initial ten-year term, with three subsequent, five-year renewal options followed by one four-year renewal option on the same terms and conditions, exercisable at the Company’s option.
Margaritaville Lease and Greektown Lease
In connection with the acquisition of the operations of Margaritaville on January 1, 2019, the Company entered into the Margaritaville Lease with VICI Properties, Inc. (“VICI”) for the real estate assets used in the operations of Margaritaville Resort Casino. In connection with the acquisition of the membership interests in Greektown Holdings, LLC on May 23, 2019, the Company entered into the Greektown Lease with VICI for the real estate assets used in the operations of Greektown Casino-Hotel. Both the Margaritaville Lease and the Greektown Lease have initial terms of 15 years, with four subsequent five-year renewal options on the same terms and conditions, exercisable at the Company’s option.
Tropicana Lease
On April 16, 2020, we sold the real estate assets associated with the operations of Tropicana Las Vegas Hotel and Casino, Inc. (“Tropicana”) property to a subsidiary of GLPI in exchange for rent credits of $307.5 million. Contemporaneous with the sale, the Company entered into a leaseback of the real estate assets for nominal cash rent. We are required to continue to operate the Tropicana for two years (subject to three one-year extensions at GLPI’s option) or until the real estate assets and the operations of the Tropicana are sold by GLPI. On January 11, 2022, Penn National entered into a definitive purchase agreement to sell its outstanding equity interest in Tropicana, which has the gaming license and operates the Tropicana, to Bally’s Corporation (“Bally’s”). This transaction is expected to close within the second half of 2022, subject to Penn National, GLPI, and Bally’s entering into definitive agreements and obtaining regulatory approval.
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Trademarks
We own a number of trademarks and service marks registered with the U.S. Patent and Trademark Office (“USPTO”), including but not limited to, “Ameristar ® ,” “Argosy ® ,” “Boomtown ® ,” “Greektown ® ,” “Hollywood Casino ® ,” “Hollywood Gaming ® ,” “L’Auberge ® ,” “M Resort ® ,” “Tropicana Las Vegas,” and “My Choice ® ” (“my choice ”) among other trademarks. We believe that our rights to our trademarks are well-established and have competitive value to our properties. We also have a number of trademark applications pending with the USPTO.
Among others, we have a licensing agreement with a third-party to use the “Margaritaville ® ” trademark in connection with the operations of Margaritaville in Bossier City, Louisiana. Upon closing of the transaction with Barstool Sports in February 2020, we have the sole right to utilize the Barstool Sports ® brand for all our online and retail sports betting and iGaming products.
Competition
The gaming, media and entertainment industries are characterized by an increasingly high degree of competition among a large number of participants. In a broad sense, both our land-based and interactive gaming operations face competition from all manner of leisure and entertainment activities, including shopping, athletic events, television and movies, concerts and travel. Legalized gaming is currently permitted in various forms throughout the U.S. and Canada. Other jurisdictions, including states adjacent to those in which we currently have properties, have recently legalized, implemented and expanded gaming. Competition is discussed in further detail within “Item 1A. Risk Factors,” of this Annual Report on Form 10-K and a discussion of the impact of competition on our results of operations, and cash flows is included within “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of this Annual Report on Form 10-K.
Government Regulation and Gaming Issues
The gaming and racing industries are highly regulated, and we must maintain our licenses and pay gaming taxes to continue our operations. Each of our properties is subject to extensive regulation under the laws, rules and regulations of the jurisdiction where it is located. These laws, rules and regulations generally concern the responsibility, financial stability and character of the owners, managers, and persons with financial interests in the gaming operations. Violations of laws or regulations in one jurisdiction could result in disciplinary action in other jurisdictions. For a more detailed description of the statutes and regulations to which we are subject, see Exhibit 99.1, “Description of Government Regulations,” to this Annual Report on Form 10-K, which is incorporated herein by reference.
Our businesses are subject to various international, federal, state and local laws and regulations in addition to gaming regulations. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages, environmental matters, employees, health care, currency transactions, taxation, zoning and building codes, and marketing and advertising. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. Material changes, new laws or regulations, or material differences in interpretations by courts or governmental authorities could adversely affect our financial condition, results of operations and cash flows.
Employees and Human Capital Resources
The Company’s key human capital management objectives are to attract, retain and develop diverse and high quality talent. Our commitment to an equal-opportunity and respectful workplace characterized by both diversity and inclusion, in which everyone feels valued, respected and supported, is a factor driving our success. Our talent and development programs are designed to develop, support and maintain talent succession pipelines in preparation for key roles and leadership positions; recognize, reward and support our team members through competitive pay and wellness programs; enhance the Company’s philanthropic culture by encouraging participation and championing programs in the communities in which we work and live; and invest in technology and resources to provide our team members with the most efficient tools to perform their jobs.
Some of the key programs and initiatives developed to attract, retain and develop diverse and high quality talent include:
• Executive and High Potential Talent Review Process
• Diversity and Veteran Recruitment Initiatives
• AwardCo Recognition Program and Property Engagement Committees
• Emerging Leaders Program
Through the dedicated efforts of our Corporate and property leadership teams, our charitable Foundation and the PENN Diversity Committee, we launched a number of major new initiatives in 2021 that will help to improve the lives of our team members, their families and those in need in our communities.
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Highlights from last year’s efforts include the launch of a $4 million STEM Scholarship Fund and internship program at historically black colleges and universities in states in which we operate. In addition, we started a new pilot program to help mentor and develop our hourly and early career team members who want to pursue leadership positions at our Company. We also kicked off our annual $1 Million Diversity Scholarship Program for the children of team members and are now reviewing applications for the 2022-2023 school year. In our inaugural year, we awarded over $1 million in scholarships to 58 individuals, the majority of whom were first generation college students.
As of December 31, 2021, we had approximately 21,973 full-time and part-time employees. As of December 31, 2021, we had 43 collective bargaining agreements covering approximately 4,341 active employees. Four collective bargaining agreements are scheduled to expire in 2022. Although we believe that we have good employee relations, there can be no assurance that we will be able to extend or enter into replacement agreements. If we are able to extend or enter into replacement agreements, there can be no assurance as to whether the terms will be on comparable terms to the existing agreements.
Available Information
We maintain a website at www.pngaming.com that includes more information about us. The contents of our website are not part of this Annual Report on Form 10-K. Our electronic filings with the U.S. Securities and Exchange Commission (“SEC”) (including all Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, and any amendments to these reports), including the exhibits, are available free of charge through our website as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC. Our filings are also available through a database maintained by the SEC at www.sec.gov.