Unite Here Casino Union Challenges Pinnacle Casino Sale
Pinnacle Entertainment Inc owns and operators 15 casinos in the United States which are spread across Iowa, Indiana, Colorado, Nevada, Ohio, Mississippi, Louisiana, and Missouri. The company announced in July 2015 that it was planning to sell 14 casinos to Gaming & Leisure Properties Inc.
Penn National Gaming formed Gaming & Leisure Properties Inc in 2013 to be a real estate investment trust (REIT) that focuses on casino properties based in Pennsylvania. The company currently owns 21 casino properties across the nation and operates two of them. Gaming & Leisure Properties agreed to purchase these 14 casino properties from Pinnacle Entertainment for a total sum of $4.75 billion plus whatever debt was outstanding.
The Unite Here union has opposed this deal and has asked the Indiana Gaming Commission to not approve the deal as it violated state law. The Union which represents over 275,000 hospitality employees throughout the nation and nearly 100,000 of those representatives are casino employees. The Union has highlighted the fact that state law allows a company to only own two properties in the state and if this acquisition is approved, then Gaming & Leisure Properties will have more than two properties.
In a statement, the Union said
Given its level of control, licensing GLPI as a supplier is not just an absurdity. 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.
The Union also cautioned the Indiana Gaming Commission that GLPI had obtained a suppliers license from Penn Gaming back in 2013 and will most likely use this argument in an attempt to justify its ownership of more than two casinos in the state.
Bill Clifford, Gaming & Leisure’s chief financial officer stated in an email that Unite Here is completely misinterpreting the law and manipulating the facts in order to create unnecessary obstacles to delay and prevent the same from going through. Considering the fact that Unite Here has had a long running dispute with Pinnacle’s East Chicago casino over contractual terms, it appears unlikely that a truce will be reached over the sale of these 14 casinos.
A number of casinos are selling properties to REIT operators or looking to transform them into real estate investment trusts as it allows them to trade at higher stock market prices since they are not required to pay any federal income taxes.
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