Editor’s note: Pennsylvania recently legalized online poker and casino games. This is the next installment in a series of articles about the casinos in Pennsylvania and their possible place in the online gambling market.
Presque Isle Downs & Casino is located near Erie, in the very northwest corner of the Keystone State. Unlike many of the properties in PA, it is a purpose-built racino with a short history.
Construction began in 2005, shortly after the state authorized slot machines at racetracks. The gaming floor opened in February 2007, and racing operations began a few months later. Table games followed in 2010.
Horses run from May to October, highlighted by the G2 $400,000 Presque Isle Masters Stakes. The one-mile thoroughbred track is one of the longest synthetic tracks in the country.
For the time being, Eldorado Resorts owns and operates Presque Isle. That’s set to change this year, though.
In March, Churchill Downs Inc. announced plans to purchase the property for $179 million in cash. The two parties expect the transaction to close later this year.
Kentucky-based CDI is on a spending spree of late, having acquired casino properties in multiple states. And not coincidentally, its growing portfolio is dotted with states that are moving toward online gambling and/or sports betting.
A racing company at heart, CDI likely maintains an interest in the property’s thoroughbred operations, as well.
Presque Isle is one of PA’s smallest casinos. A gaming floor of less than 50,000 square feet contains 30 table games and 1,600 machines, plus a small poker room. The property employs about 800 people between casino and racing operations.
In terms of revenue, you can see the small piece of pie Presque Isle consumes in the chart below. It generated just over $125 million in revenue during the 2016-17 fiscal year, among the bottom few on the leaderboard. About $70 million was paid back in taxes to local and state offices.
Revenue isn’t pouring in, but there’s really no cause for concern, either. CDI figures to have ambitions for Presque Isle that extend well beyond the property lines.
When CDI purchased the property, online gambling was at the front of the announcement.
“Presque Isle will give us a foothold in Pennsylvania which has recently passed legislation authorizing real money online gaming,” said CEO Bill Carstanjen.
As part of the purchase, the company acquired a second Eldorado casino in Mississippi, another state with sports betting ambitions. It also has properties in Louisiana, Kentucky and Illinois — again, three more moving toward online gambling and sports betting.
It’s not hard to understand CDI’s goal, then. It seems to have every intention of expanding its footprint within the digital realm.
The company is already quite present on one front. It operates one of the largest regulated horse betting sites in the US, TwinSpires. But online gambling and sports betting have become a new focus.
CDI has been seeking an entry point for several years, including an attempted purchase of the Showboat in Atlantic City. Now it’s taken up a key position in Pennsylvania, making no secrets about its plans.
Apart from its ambitions, we don’t know much about CDI’s path to real-money online gambling.
It spent years developing an in-house mobile social casino product called Big Fish, but it sold the platform off late last year. Some of the funds from the $990 million sale were no doubt used to cover the cost of Presque Isle. But it leaves CDI without a tech presence in the iGaming space.
The group will likely need to partner with a third party, then. Who that partner may be is anyone’s guess, but given the company’s public focus on expansion, a top-tier deal could be in the works.
Some of the competing properties in PA have already begun to align with the leaders in the space.
CDI’s portfolio spans multiple states, although Pennsylvania is the only one with legal iGaming. The state’s industry is incubating, set to roll out this year or next. Several other states involved are considering legalization on some level, but none have gotten a bill over the hump.
Any future network partnerships, then, will be contingent on legislation in other states.
CDI is bit of a wild-card when it comes to online gambling.
TwinSpires is established and successful, but the company will be entering new territory with online casino and/or poker. It doesn’t have a software solution lined up, at least not publicly. To back up a bit, the Presque Isle purchase isn’t even finalized yet. And it’s not clear if it will be before online gambling rolls out.
A lot of CDI’s success, then, will depend on its platform provider and how quickly it can deploy a product.
There’s also the issue of branding. The land-based casino isn’t exactly printing money at the moment, and neither Presque Isle nor Churchill Downs are known as iGaming brands. That’s an obstacle they’ll need to overcome, either through a partnership or a substantial marketing plan, in order to succeed.
What Presque Isle does have on its side is geography. It’s more than 100 miles from its nearest in-state competition, carving out a nice little pocket of control.
The property has an uphill climb ahead, no doubt, but CDI also seems to have the resources to throw at the problem, if it so desires.
Past installments of this series:
Image via Presque Isle Downs website