Missouri Gaming Commission vote makes Penn spin-off GLPI St. Louis monopoly

St. Louis area casinos will all soon have a single landlord after on Wednesday, June 24, 2020, the Missouri Gaming Commission gave REIT (real estate investment trust) Gaming and Leisure Properties Inc. (GLPI) the green light to buy the real estate of downtown casino Lumière Place.

The casino will continue to be run by the current operator, Reno-based hotel and casino entertainment company Eldorado Resorts Inc., which will also remain the owner of the Lumière business, according to local newspaper, the St. Louis Post-Dispatch.

Opposition voiced:

Not everyone on the five-member gaming commission voted for the sale, however, with Gaming Commissioner Dan Finney the lone dissenting vote on Wednesday.

Finney, a former assistant circuit attorney in the City of St. 7BALL Louis, sat on the commission in 2018 and at the time opposed GLPI, which is a tax-free spin-off from Penn National Gaming, Inc., owning all of  St. Louis casino real estate.

Tropicanna Entertainment sale:

At the time, Eldorado was in the process of closing its $1.85 billion purchase of Lumière’s former owner Tropicana Entertainment. Under the terms of the deal, GLPI would pay $1.2 billion for seven of eight of Tropicanna’s venues. The agreement was to also involve Eldorado paying about $640 million for the rights to run the offloaded venues for the next 15 years.

To assuage regulator’s concerns, GLPI entered into an agreement with the Missouri Gaming Commission that would see it lend $246 million to Eldorado to help it acquire Lumière Place’s real estate.

Monopoly created:

That same year, Pinnacle was acquired by Penn National Gaming, which added River City Casino to a portfolio that also includes Casino Argosy Alton, located in the Metro East area outside of St. Louis, and Hollywood Casino in Maryland Heights, a north suburb of St. Louis.

However, the Casino Queen in East St. Louis and Ameristar St. Charles were already owned by GLPI, while the REIT is also the owner of all of Penn National’s real estate. At the time, the only casino in the St. Louis market that was outside GLIPI’s ownership was Lumière Place, which was owned by Tropicana Entertainment.

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The mergers made GLPI landlord to all six properties in the region.

Lingering concerns:

Fast forward to Wednesday and Finney said that he still had “very real concerns,” and that the commission that he was with before, “all the commissioners were concerned about giving GLPI a monopoly,” according to the news service.

Gaming Commission Chairman Mike Leara, however, did not share his fellow commissioner’s concerns, noting instead that GLPI is a passive real estate organization, according to the  St. Louis Post-Dispatch.

Unite Here opposition:

Opposed to Pinnacle’s deal that allowed it to transfer (pdf) its casino properties in Missouri to GLPI was the Unite HERE union, which said at the time that the agreement gave ownership to GLPI casinos that produce 66 percent of gambling revenue in Kansas City and 86 percent in the St. Louis area and was anticompetitive. Prior to that, the union said, “It also sets a dangerous precedent just as other national gaming companies are considering creating their own REITs and leasing their properties to captive or third-party operators.”

GLPI is based in Wyomissing, Pennsylvania, and was created on November 1, 2013, to take advantage of a loophole that allows REIT’s to avoid paying corporate income taxes as long as most of the revenue is returned to shareholders.