03/02/2012 10:11AM

Churchill Downs, Delaware North plan to buy Ohio harness track, open casino


Churchill Downs Inc. and Delaware North have reached an agreement to purchase Lebanon Raceway in Lebanon, Ohio, northeast of Cincinnati, an acquisition that will allow the two companies to gain a foothold in a state that last year approved slot machines at racetracks.

The two companies will pay $60 million for the track, with an additional $10 million due to the previous owners "if certain conditions are met with respect to the performance of the [casino] over time," the companies said in a release. Each company will own 50 percent of the track and casino, the companies said.

The companies said that they plan to move the track to a yet-to-be-determined location that will "provide easier access to I-75," the major corridor between Cincinnati and Dayton, if the companies are successful in getting a casino license. Lebanon is currently located approximately five miles west of the nearest interchange at I-75.

Over the past two and a half years, Ohio has legalized 11 casinos. Four stand-alone casinos were legalized in a 2009 referendum in Ohio’s largest cities, and last year, Gov. John Kasich signed an executive order allowing the state’s seven racetracks to open casinos. The executive order has been challenged by anti-casino groups that have contended that the expansion of gambling is subject to a public vote.

Churchill officials did not immediately return phone messages on Friday morning.

The approval of slot machines has set off a gold rush in the state to acquire potential gambling properties. All three of Ohio’s Thoroughbred tracks – River Downs in Cincinnati, Beulah Park in Columbus, and Thistledown in Cleveland – have been sold in the past three years to gambling companies.

Churchill and Delaware North said they plan to apply for a 10-year casino license that will allow the track to build a casino housing 2,500 slot machines. Under terms of rules approved by regulators last year, the companies will be required to pay a $50 million license fee and invest $175 million in its project.

The companies said that they would plan to begin construction on the new facility late this year pending the "resolution of any gaming-based litigation" and the acquisition of a new site. The legislature passed a law last year allowing racetrack owners to relocate their facilities.

In 2010, Churchill purchased a standalone casino in Mississippi. The company also operates casinos at its Calder Race Course in Miami and Fair Grounds racetrack in New Orleans. Last week, the Kentucky Senate shot down a measure that would have put a referendum on the 2012 ballot asking voters to approve casinos, a measure supported by Churchill and the rest of the Kentucky racing industry.