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WIN OR LOSE ...: It's a good bet that Penn National is in it for the long haul
[November 23, 2008]

WIN OR LOSE ...: It's a good bet that Penn National is in it for the long haul

(Reading Eagle (PA) Via Acquire Media NewsEdge) Nov. 23--FOUR MONTHS after its takeover by a pair of private-equity firms was called off, Penn National Gaming Inc. is eyeing a possible stake in the nation's primary gaming Meccas.

It has two potential projects on the drawing board for Atlantic City.

And Chairman and Chief Executive Peter M. Carlino has acknowledged that Penn National remains interested in Las Vegas.

"We're continuing to poke around the market," Carlino said during the company's third-quarter earnings conference call in late October. "Las Vegas is doing a whole lot less well than we had envisioned. We'll cherry-pick the right opportunity if it appears."

For now, it appears that Atlantic City is the focus of its most ambitious efforts.

The areas the Wyomissing firm is exploring would not be along the boardwalk, a nexus of gambling establishments in the New Jersey resort, but rather in outlying areas that are likely to be opened to new gaming properties.

One, said Penn National spokesman D. Eric Schippers, is along Route 30, where the zoning has been changed to allow gaming.

He said Penn National has an option on a 23-acre site on Route 30, about a mile from the boardwalk.

In its preliminary plans, Penn National indicated it w o u l d l i k e t o b u i l d a 100,000-square-foot casino and 1,500-room hotel.

However, Schippers said, there are environmental issues at that site which would have to be resolved before plans could move forward.

The second location is at Bader Field, a former airport.

Atlantic City is seeking proposals for developing that area, and Schippers said Penn National intends to bid on property there.

In fact, it already has: In January it reportedly offered $800 million for the land, which it planned to subdivide, building a casino on one parcel and selling the other parcels to other casino developers. But Atlantic City subsequently opted for an open bidding process.

"There is a desire to have ... new-generation properties to come in to make Atlantic City more of a destination," Schippers said. "Atlantic City is in desperate need for more hotel rooms to help it compete with Pennsylvania, Delaware and ... Maryland."

Schippers acknowledged that Penn National would consider building casinos at both Atlantic City sites.

"We've been looking at Atlantic City for quite some time now," he said. "Penn National wants to get into Atlantic City as quickly as possible, but in a responsible manner and with an eye toward the future. A lot of this is not in our control."

Nor is the downturn in the economy in its -- or seemingly anyone's -- control, and the gaming industry has not been immune to the pain.

But Penn National said it is in somewhat of a better position than many of its peers as a result of the nearly $1.5 billion cash infusion it received from a combination of the termination in July of its acquisition agreement with Fortress Investment Group and Centerbridge Partners and the purchase of preferred equity by affiliates of Fortress, Centerbridge, Wachovia Bank and Deutsche Bank.

"We take a long-term view of (the economy) and believe fi rmly in the long-term prospects for the gaming industry and for Atlantic City in particular," Schippers said. "But the gaming industry is feeling the softness in the economy like other businesses and certainly has not been spared the impact of the credit crisis and the psychology of people not wanting to go out."

With that in mind, it might not have been the best timing that its ballyhooed $310 million Hollywood Casino at Penn National in Grantville, Dauphin County, opened in February, but the firm continues to believe that when the economy rights itself, that facility will be positioned for success. To that end, it recently opened a buffet at the facility and also will be adding a steakhouse.

"It's done very well in spite of the economy," Schippers said of the casino.

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