Penn National Gaming says M Resort ‘first-rate,’ but still eyes Strip

Penn National Gaming executives have been high-fiving each other over their purchase of the M Resort’s debt for $230.5 million -- and the right to acquire the $1 billion property outright.

The “first-rate” property is but a “one-off” purchase that doesn’t meet the company’s ultimate objective of owning a Strip resort in Las Vegas, they said.

But that didn't diminish their excitement.

“I would easily rank this in the top five properties in (the Las Vegas) market,” Peter Carlino, CEO of the Pennsylvania-based casino chain, said during the company’s third quarter conference call last month. Still, it’s 10 miles from the Strip.

Some M customers figured that out the hard way early on when they decided to walk to the Strip from the resort rather than take a cab, Carlino said.

While the M looks deceptively close from its clear vantage point in the desert, “an hour and a half later they had some red-faced and bedraggled-looking people coming back much the worse for wear.”

President and Chief Operating Officer Tim Wilmott said it’s unlikely the company will buy something on the Strip anytime soon because resorts are priced too high relative to earnings.

“We’re still not going to rush out and pay a ridiculous price for a Strip asset,” he said.

Penn expects to improve earnings at M, in part by giving Penn customers nationwide the opportunity to stay at the 390-room resort using points earned by gambling. The property’s dependence on local gamblers will dampen that upside, however, Wilmott said.

Overall, the M represents a small financial commitment for the company, which plans to spend more than $1 billion in the coming years pursuing casinos in several states including Ohio and Kansas.

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