As the sports world continues to be shut down, it was only natural that companies in the sports and gaming industry would take a major hit as well. Penn National Gaming has had to readjust some of their current plans, and their stock prices have been plunging of late.
Penn National is headquartered in the state of Pennsylvania, and they are the biggest regional casino operator in the country. There are a couple of major reasons for this, but the fear of spreading the coronavirus is at the heart of both of these issues.
Penn National Gaming will have a chance to rebound in the coming weeks, but things are going to be rough for the company until the sports world resumes.
Construction of Satellite Casinos Comes to a Halt
Pennsylvania Governor Tom Wolf recently announced that all non-essential businesses be shut down immediately, and that had an immediate impact on Penn National. Casinos fall under the non-essential business mandate, and it has forced Penn National to shut down work on a pair of satellite casinos being built in York and Morgantown, Pa.
Even though Penn National has casinos throughout the region, there was a chance to expand their operations in 2018. Pennsylvania allowed for Category 4 satellite casinos to be built throughout the state, but only the 12 licensed casinos were allowed to submit a bid for the new locations.
There were five total auctions that generated a ton of money for the Pennsylvania economy, and Penn National Gaming was not going to be outbid for the locations that they wanted.
Penn National paid over $50 million in January 2018 in an auction that was held by the state for the ability to build new casinos. In the deal, Penn National was able to secure a 15-mile radius in York County, where the York Casino was set to be built.
Penn National was able to purchase an area in Berks County for a price of $7.5 million, and they chose to build their new casino in Morgantown. It has been reported that it will cost Penn National $120 million to build the casino in York and another $111 million to build the casino in Morgantown.
Both of these projects have been underway for the last few weeks, but construction has now come to a halt. Penn National Gaming initially planned to continue working as the coronavirus spread through the United States, but the Governor’s announcement changed things and put their plans on hold.
Penn National Stock Plunging
Penn National Gaming has seen some major changes to their stock market prices in opposite directions over the past few weeks. The company just recently just spent $163 million to buy into 36% of Barstool Sports, and that saw their stock prices increase drastically.
Stock prices soared to nearly $40 a share, and there was plenty of excitement around the company. Experts applauded Penn National for making an innovative investment that should set them up for future growth in several different areas.
On Monday morning, shares plunged to an eight-year low of just $8.50 a share. That is a price decrease of 40 percent in the span of a few weeks.
As casinos and sportsbooks are closing all around the country, it was almost a guarantee that stock prices would drop. Investors are also concerned that Penn National will be able to continue making payments to their real estate investment trusts or REITs.
Penn National is not the only sports betting company that is taking a huge hit of late, but there is reason for some investors to start to panic.