05/25/2010 11:00PM

Harrah's buys Thistledown at auction


The privately held casino company Harrah's Entertainment has reached a second deal to buy Thistledown racetrack near Cleveland, but this time at roughly half the price.

Harrah's prevailed in a private auction in New York on Tuesday over Penn National Gaming Inc. to buy the track from MI Developments with a final bid of $43 million, according to officials close to the auction. The auction was scheduled after Harrah's scuttled a deal struck last year to buy the track for $89.5 million because of changes on the Ohio gambling landscape.

Harrah's and Penn National were the only two companies who participated in the bidding, according to the officials, who said they could not be named because of plans by Harrah's to announce the deal later Wednesday. A spokesperson for Harrah's, Jacqueline Peterson, declined to comment about the deal on Wednesday afternoon.

Thistledown is one of three Thoroughbred racetracks in Ohio, along with Beulah Park in Columbus and River Downs in Cincinnati. All three tracks have struggled financially over the past decade as interest in racing has waned amidst heavy competition from casinos in neighboring states.

But interest in the tracks remain high because of a referendum scheduled for November that will ask voters to approve slot machines at all seven of Ohio's racetracks. Last year, voters approved a measure that authorized standalone casinos in Ohio's four largest cities. Penn National received the right in that referendum to operate the casinos in Toledo, where Penn owns Toledo Raceway, and in Columbus, where the company has an agreement to buy Beulah.

Harrah's plans for the track will likely remain unclear until the November referendum. It currently runs a six-month race meet, from late April to late October.

Thistledown was transferred to MI Developments in the spring as part of the bankruptcy reorganization plan for Magna Entertainment. MI Developments was Magna's parent company and largest creditor, and as part of the plan, MI Developments took the company's racing assets while making a payment of $89 million to Magna's unsecured creditors.

Under the plan, the unsecured creditors will receive $23 million of the $43 million Thistledown sale, according to the reorganization plan.