The Federal Trade Commission recently approved Penn National Gaming’s $2.8 billion buyout of Pinnacle Entertainment. The FTC had issued a second request for information on the deal in March, citing potential unfair competition issues. The merger has been approved by 13 state gaming regulators. The Nevada Gaming Control Board and Gaming Commission also approved the merger last week. Penn owns the M Resort and Tropicana in Las Vegas. Pinnacle also owned two Nevada casinos—the Horseshu and Cactus Pete’s in Jackpot near the Idaho border.
The FTC’s go-ahead clears one of the last obstacles for the deal to be completed. In a statement, the agency approved the deal pending Boyd Gaming Corporation’s acquisition of three Pinnacle-operated casinos in Cincinnati, St. Louis and Kansas City. Boyd agreed, when the Penn-Pinnacle deal originally was announced late last year, to acquire the operations of Pinnacle’s two Ameristar casinos in Missouri and Belterra operations in Indiana and Ohio for $575 million. Boyd will sign a lease agreement with real estate investment trust Gaming and Leisure Properties, the landlord for the Pinnacle-owned resorts.
The FTC statement noted Penn and Pinnacle “are close and vigorous competitors” in the St. Louis, Kansas City, and Cincinnati markets. “In St. Louis, the acquisition would reduce the number of competitors from four to three, resulting in a highly concentrated market with just two properties that would compete with Penn, only one of which has a casino that provides significant competition. In both Kansas City and Cincinnati, the acquisition would reduce the number of competitors from five to four and would substantially increase concentration levels.”
Including Pinnacle’s 12 remaining casinos, Penn National will become the largest regional gaming operator in the U.S., with 41 properties in 20 jurisdictions.
The merger is expected to close by mid-October.
