WYOMISSING, PA-Penn National Gaming Inc. has picked up the pace of expansion and geographic diversification following its June agreement to sell to a private equity buyer for $8.9 billion. It has executed a definitive agreement on its previously announced intent to acquire Rosecroft Raceway in Fort Washington, MD and become the first applicant for a license as lottery gaming facility manager at a planned $295-million casino resort in the newly established Southeast Gaming Zone of Kansas.

A new Kansas gambling law, passed this April, allows for development of a casino in each of four zones in the state and slot machines at three dog- and horse-racing tracks. It requires a developer to invest at least $225 million in a complex, and all of the facilities will be owned by the state and overseen by the Kansas Lottery Commission. The Southeast zone includes Cherokee and Crawford counties.

Penn National’s application seeks consideration to become a developer, manager and operator in Cherokee County, and, according to a Penn National statement, has earned “an exclusive endorsement” from the county and “an opportunity to enter into a pre-development agreement with our host community.” However, the original Sept. 7 deadline for applications has been extended to allow Crawford County 90 days to seek a prospective gaming facility developer.

Penn National has been silent while its $8.9-billion buy-out by affiliates of Fortress Investment Group LLC and Centerbridge Partners LP is pending. According to published reports, the cost of Penn National’s proposed Hollywood Casino-Cherokee County hotel and casino jumped from an initial $250 million with the addition of $45 million for the land off Interstate 44 near Baxter Springs and Galena, KS and Joplin, MO. The company is purchasing, rather than leasing the land.

Under the law, the Kansas Lottery Commission has until March 5, 2008 to negotiate contracts and forward them to the state’s Lottery Gaming Review Board. The board then has until May 4, 2008 to name casino developer/managers.

Penn National’s application exceeded 1,500 pages with exhibits, delivered in 33 boxes. “We took the time to do our homework on this proposed development project,” says Peter Carlino, Penn National’s chairman and CEO, in a statement. “Our timely filing is a reflection of our eagerness to proceed with this tremendous economic development opportunity in Southeast Kansas.”

Meanwhile, the proposed acquisition of the Rosecroft facility from Cloverleaf Enterprises Inc. awaits approval by the Maryland Racing Commission and is expected to close this fourth quarter. The terms are undisclosed. The 130-acre standardbred harness racing facility in Prince George’s County outside Washington, DC opened in 1949.

Locally based Penn National operates 18 facilities in 14 jurisdictions. They encompass more than 23,000 slot machines, 400 table games, 1,731 hotel rooms and approximately 808,000 sf of gaming floor space, and it has the nation’s second largest portfolio of horse racing assets.

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