UPDATED: Churchill Downs parent to take over Hard Rock Sioux City casino as part of $2.5B deal
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SIOUX CITY -- The parent company of the iconic Kentucky Derby would gain control of the Hard Rock Hotel & Casino Sioux City as part of a blockbuster $2.485 billion deal announced Tuesday that also includes the sale of gaming properties in Virginia and New York.
Under terms of its purchase agreement with Peninsula Pacific Entertainment, Churchill Downs Incorporated would sell the downtown Sioux City complex to an undisclosed third party, which would then lease the property back to CDI to operate.
"If for some reason that doesn't happen, the Sioux City Hard Rock Hotel & Casino will get added to the overall deal between Churchill Downs Incorporated and Peninsula Pacific Entertainment and the price would be $2.75 billion, rather than $2.485 billion," CDI said in a news release.
The deal, expected to close by this end of this year, is subject to regulatory approval from the Iowa Racing and Gaming Commission and state regulators in New York and Virginia.
A Peninsula Pacific Entertainment spokesman said it was business as usual Tuesday at the Hard Rock property, with no immediate changes expected in day-to-day management or operations of the casino or hotel.
Since 2020, Peninsula Pacific Entertainment, a Los Angeles-based company headed by Iowa native M. Brent Stevens, has been the sole owner of the Hard Rock-branded casino.
In 2013, after the Iowa Racing and Gaming Commission invited applications for Woodbury County's first land-based casino, Stevens formed a 50-50 partnership with Bill Warner, owner of Las Vegas-based Warner Gaming. Warner had earlier struck an agreement with Missouri River Historical Development, the non-profit that currently holds the state gaming license for the Hard Rock.
In April 2013, the state Racing and Gaming Commission, by a 3-2 vote, selected selected the Hard Rock's group $128 million proposal, which included renovating the historic Battery Building in the 300 block of Water Street, over two other potential operators and three different sites. The other applicants included Penn National Gaming, which owned the former Argosy Sioux City riverboat casino, and Ho-Chunk Inc., which proposed a downtown casino at the site of the historic Warrior Hotel.
The Hard Rock, which opened on Aug. 1, 2014, today features a 45,000-square-foot casino with 639 slot machines, 20 table games, a Hard Rock-branded sportsbook, two live entertainment venues, a 100-piece music memorabilia collection, a 54-room hotel and 1,511 parking spaces with 530 in a covered ramp.
In December 2019, Peninsula Pacific Entertainment, or P2E, announced it had acquired Warner's 50 percent interest in the Hard Rock.
At its December 2020 meeting in Sioux City, the Racing and Gaming Commission formally approved the deal.
"We think about Sioux City as the cornerstone of our operations in Iowa," Stevens told the commission at the meeting. "From here, we hope to take the Hard Rock in Sioux City to new and greater places."
Under the 20-year agreement MRHD signed in 2013 with the Hard Rock, the nonprofit gaming group collects 4.25 percent of the casino's revenues for distribution to charities, civic groups and local governments in Woodbury County. The deal included two, five-year extensions that would kick in upon mutual agreement of the two parties.
MRHD executive director Katie Colling noted Tuesday that Churchill Downs Inc.'s deal for the Hard Rock is in the "very early stages."
"We’ve had a fantastic relationship with Hard Rock so we hope that’s the precedent going forward...really what we know is what's in the public," Colling told The Journal.
Founded in 1999 by Stevens, P2E was originally created as the holding company for Peninsula Gaming, which owned the Diamond Jo casino in Dubuque, Iowa. Pacific Gaming was sold in 2012 to Boyd Gaming Corp. in a $1.45 billion deal.
In the deal with P2E announced Tuesday, Churchill Downs Hills Incorporated, or CDI, also would acquire Colonial Downs Racetrack, a thoroughbred racing complex in New Kent, Virginia, six “Rosie’s Gaming Emporium” historical horse racing facilities across Virginia and Lago Resort & Casino, a 96,000-square-foot casino complex in Waterloo, New York.
“This unique set of assets expands our geographic footprint and provides additional scale,” CDI CEO Bill Carstanjen said in a statement. “P2E has done an exceptional job developing and managing this collection of assets, which we are very excited to acquire and plan to strategically grow in the years ahead."
P2E’s casino development rights in Cedar Rapids, Iowa, and its gaming license in Louisiana, are not included in the transaction.
CDI is an industry-leading racing, online wagering and gaming entertainment company anchored by its flagship event, the Kentucky Derby, the first leg of thoroughbred racing's Triple Crown, held each May at the Churchill Downs track in Louisville.
The publicly-traded company, CHDN on the NASDAQ exchange, owns and operate three pari-mutuel gaming entertainment venues with approximately 3,050 historical racing machines in Kentucky. Its holdings also includes TwinSpires, an online wagering platforms for horse racing, sports and gaming, and brick-and-mortar casino gaming in nine states with around 11,000 slot machines and video lottery terminals and 200 table games.
