If Penn Entertainment is sold, there’s a chance the Missouri casino industry would look quite different than it does today.
Penn owns three properties in Missouri: River City Casino Hotel in St. Louis, Hollywood Casino & Hotel St. Louis in Maryland Heights and Argosy Casino Hotel & Spa in Riverside.
Those three properties generate more than a third of casino revenue in Missouri.
While a Penn sale is just speculation for now, two potential buyers have emerged. Either of them would have a significant impact on the Missouri casino industry.
Some Penn investors voice concerns
The state currently has 13 riverboat casinos in operation. Missouri online casinos remain illegal, as does sports betting.
Some of Penn Entertainment’s investors are voicing concerns over management of the company, which was founded in 1972.
For instance, in a letter to investors, David Einhorn of Greenlight Capital recently wrote that Penn’s previous deal with Barstool Sports was a “fiasco.” He said the move (before the company partnered with ESPN on ESPN Bet) left investors with “serious doubts about the company’s strategy and management’s competence to execute.”
Another investor, Will Wyatt of The Donerail Group, wrote that he believes Penn’s share price is “significantly below” its intrinsic value. His letter also showed disdain for CEO Jay Snowden. Wyatt scoffed over the board compensating him with “an exorbitant amount of money,” including “excessive” private jet usage. The letter also said Penn has shown an “inability to execute” interactive gaming.
Earnings + More reported that one source believes Penn “could be the subject of a white knight bid (hostile takeover) in the coming months.”
Penn’s Missouri casinos are high-performers
In 2023, Missouri’s casino industry generated $11.1 billion, resulting in $1.92 billion in adjusted gross revenue (AGR). Both were all-time highs, despite lower attendance compared to 2022.
River City totaled $254.8 million AGR last year, Hollywood clocked in at $243.6 million, and Argosy generated $173.2 million. Penn’s three properties totaled $671.7 million AGR in 2023, which represented about 35% of the statewide total.
The only Missouri casinos that fared better last year were Ameristar Casino St. Charles ($303 million) and Ameristar Casino Kansas City ($200.6 million).
Report names two potential buyers
According to Earnings + More, two companies could be the front-runners to purchase Penn if it is sold: Hard Rock and Boyd Gaming.
The former does not currently have a gaming interest in Missouri, while the latter operates two casinos in the state.
Hard Rock operates 22 casino resorts across North America, with four more coming soon, according to its website. The company does run some casinos in nearby states. For instance, there’s the Hard Rock Hotel & Casino Tulsa in Oklahoma, the Hard Rock Casino & Hotel in Sioux City, IA, and a Hard Rock Casino in Rockford, IL.
Hard Rock has deep pockets, so it could provide extensive upgrades at the Penn properties if it acquired them.
Boyd Gaming operates Ameristar Casino Hotel Kansas City and Ameristar Casino Resort Spa St. Charles in Missouri.
The company’s gloomy first quarter report was buoyed by the successes of its Midwest properties, said CEO and President Keith Smith.
“We are encouraged by the improving customer trends over the last several quarters. And those trends have continued across our Midwest and South segments in April.”
Even though there’s no law specifically prohibiting it, it would be up to the Missouri Gaming Commission to decide if Boyd could operate nearly half of the casinos in the state. It would likely have to sell one or more properties if it acquired Penn.
A good example of this is when Eldorado Resorts bought Caesars Entertainment. The company then owned six of Missouri’s casinos. Missouri regulators required Eldorado sell two properties before approving the deal.
