Summary
Penn National Gaming (PENN) is one of the few gaming companies with a pile of cash. After spending millions to defeat a proporsal for casinos in Ohio in last year's election, it has now switched sides. It will probably lose, but it won't cost that much money, and the potential return on investment is enormous.
Analysis
PENN spent millions fighting, and defeating a proposal from Lakes Entertainment (LACO) to bring a casino to Ohio. PENN saw this as a direct threat to its nearby riverboat casinos. Now PENN is going to be spending millions itself, in an attempt to win over Ohio voters in November 2009 for four casinos. The chances are not good. Voters almost always defeat statewide proporsals for casinos. And the campaign can be costly. LACO opened a successful tribal casino in Sacramento in December, but had spent so much on its unsuccessful Ohio campaign that it showed a loss for last year. Still, PENN knows this market well, including the politics. Ohio is desperate for jobs. Given PENN's treasure chest of more than $1 Billion cash, this is a small bet, that it will probably lose -- but if it wins, it will win big.
