Updated on 09/30/2010 10:04AM

Penn National agrees to become half-owner of Sam Houston


Penn National Gaming Inc., one of the largest casino operators in the United States, has reached an agreement to buy 50 percent of the Texas assets owned by the parent company of Sam Houston Race Park in Houston, the two companies announced on Wednesday.

The agreement, which is subject to approval by Texas regulators, is yet another step by Penn National to expand its interests into jurisdictions with the potential for slot machines. Earlier this year, Penn National purchased a 50 percent stake in Laurel Park and Pimlico Race Course in Maryland from MI Developments. The company also bought Beulah Park near Columbus in 2010 after securing licenses in a 2009 referendum to operate two free-standing casinos in Ohio, including one in Columbus.

The companies said that the agreement will create a joint venture that splits ownership of Sam Houston and its 323 acres; Valley Race Park, a greyhound track in Harlingen, Texas; and an option to purchase 135 acres in Laredo for a racetrack that has not yet been built but for which Sam Houston owns a license. No purchase price was disclosed, but Penn National, a publicly traded company, will need to disclose the details in regulatory filings at a later date.

Andrea Young, the president of Sam Houston, said that the transaction is not expected to have a significant impact on the track's current plans. Last week, Sam Houston received approval to run a 27-day Thoroughbred meet, from Jan. 21 through March 7, after dropping a plan to merge its meet with Lone Star Park near Dallas.

"We're thrilled about the meet we just got approved," Young said. "It's the right size for us given the market conditions."

Texas racing has been struggling for a decade, with a long, slow slide in purses and handle at its three major racetracks. The struggles have led the industry to lobby aggressively for casinos and slot machines, but those efforts have been unsuccessful so far. Racing officials are quick to blame slot machines in surrounding states for the declines, though the recession and the industry's maturity have also exacerbated the sport's long-standing problems.

"Given the state of the economy, we are eager to begin work with state and local stakeholders on establishing legislation that will quickly reinvigorate operations throughout Texas and provide recurring tax revenue to fund local and state-wide projects," said Peter Carlino, Penn National's chief executive, in the release.

The Texas legislature is set to start its 2011 session in January. Efforts to obtain approval for slot machines have been problematic in the past because of staunch opposition from anti-gambling advocates in the state and the influence of casino owners in surrounding states.