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IEB Report for Penn National 9.18.13

IEB Report for Penn National 9.18.13

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Published by masslive
Penn National — unsuccessful in two previous bids to enter the Massachusetts gambling market — recently announced it had signed an option to purchase Plainridge and would honor the terms of the previous agreement.
Penn National — unsuccessful in two previous bids to enter the Massachusetts gambling market — recently announced it had signed an option to purchase Plainridge and would honor the terms of the previous agreement.

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Published by: masslive on Sep 18, 2013
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Peter CarlinoTimothy WilmottEt al
August 26, 2013
Executive Summary
On January 3, 2013, Springfield Gaming and Redevelopment, LLC (“Springfield Gaming”), a subsidiary and affiliated entity of Penn National Gaming, filed an application for agaming license. The application sought a category 1 gaming license for a site located inSpringfield, MA. At the time of its application, Springfield Gaming had two members: WesternMass Gaming Ventures, LLC (“Western MA”) (a wholly owned subsidiary of Penn NationalGaming) and Picknelly Gaming. Picknelly Gaming had a ownership interest in Springfield Gaming, with an option to increase to . Western MA held the remaining interest.Springfield Gaming was one of two applicants vying to build a category 1 gaming establishmentin Springfield.On April 30, 2013, the City of Springfield notified the Applicant that it had selected BlueTarp, a subsidiary of MGM Resorts International, as the proposed applicant from Springfield.Following that decision, Western MA and Picknelly Gaming decided to rescind their jointventure agreement and Picknelly Gaming, along with its individual qualifiers, asked to withdrawas a qualifier on the applicant’s application. Since this withdrawal occurred prior to any actiontaken on the application, it was allowed without Commission action pursuant to Commissionregulations. Springfield Gaming remained as the applicant and Western MA remained as aqualifier.In June, 2013 Penn National advised the Commission that the Applicant wished tocontinue in the suitability process because it was considering applying for a category 2 slotslicense. On July 11, 2013, the Applicant announced plans for a slots facility in Tewksbury, MA.The facility would be located at 300 Ames Pond Drive, near the intersection of Interstate 495 and State Route 133. The applicant’s proposal for the 30 acre site will include its Hollywood casino brand, multiple dining options and other amenities. On July 18, 2013, Western MA entered intoa host community agreement with Tewksbury. Tewksbury approved the host communityagreement and took the necessary steps to call for the required election. On August 20, 2013, aspecial town meeting vote was held in Tewksbury which defeated a proposed zoning changewhich would have been necessary for the proposed slots parlor. As of the submission of thisreport, the Applicant does not have a site for the proposed facility.
3Springfield Gaming and its affiliated entities submitted the requisite entity disclosureforms. A table of organization for the Applicant and its various affiliates relating to the casino project is attached as an exhibit to this report . In addition, numerous individualssubmitted Personal History Disclosure Forms as qualifiers of the Applicant and were subject to athorough background investigation. The reports on their individual qualifications are included herein.Springfield Gaming, Tewksbury Gaming and Western Mass are relatively newcompanies, created to facilitate the entry of Penn National into Massachusetts. As such, there isno meaningful history for these entities, and the level of investigation reflects that practicalreality. Similarly, Delvest is the holding company generally utilized by Penn National for itsgaming ventures, but has no operational responsibilities for any of Penn National’s gamingoperations in general or the Massachusetts project in particular.By contrast, the parent company, Penn National, is an experienced gaming facility owner and operator in a myriad of jurisdictions throughout the United States and one in Canada.Therefore, the license investigation necessarily focused on the qualifications of Penn National,the ultimate parent company. We emphasize that it is the responsibility of the applicant for agaming license to demonstrate by clear and convincing evidence that it and all of its qualifiersare suitable pursuant to Massachusetts’s statutory standards. In essence, the suitability of theApplicant is inextricably linked to a determination of suitability of Penn National.On November 15, 2012, Penn National announced plans for a major restructuring, withthe formation of a publicly traded real estate investment trust (“REIT”), which subsequently wasnamed Gaming & Leisure Properties Inc. (“GLPI”). This new entity will hold the company’svast real estate interests while Penn National will continue separately and independently as agaming operating company. Penn National received a private letter ruling from the InternalRevenue Service related to the treatment of the separation and the qualification of GLPI as aREIT, which is subject to certain qualifications and based on certain representations and statements made by Penn National. On May 16, 2013, GLPI filed an initial registration statementon Form S-11 with the Securities and Exchange Commission (“SEC”). Penn National expectscompletion of the restructuring, with all necessary regulatory approvals, by January 2014. The

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