Penn National Files Suit Over OTW

Published: June 17, 2010 04:24 pm EDT

Penn National Gaming, Inc. announced today that it has filed suit in Camden County, NJ, to force its joint venture partner in Freehold Raceway – Greenwood Racing, Inc. – to compel development of an Off-Track Wagering location

in that county.

Off-Track Wagering was approved in the State of New Jersey in 2001 and through a statutory “Participation Agreement” with the New Jersey Sports & Exposition Authority, Pennwood Racing, Inc., (the parent company of Freehold Raceway - “Pennwood”), a joint venture of Penn National Gaming, Inc., and Greenwood Racing, Inc., was granted the right to develop up to four OTWs in South and Central New Jersey, including Camden County. The partnership opened an OTW in Toms River in April 2008 and since opening, the facility (which employs 43 people) has generated over $40 million in annual wagering. The Toms River facility is one of three OTWs currently operating in the state.

The eight-count lawsuit cites multiple breaches of fiduciary duty by the three appointed Greenwood Racing, Inc., directors who sit on the Pennwood Racing board as well as anti-trust claims under federal and state laws. Penn National Gaming, Inc. claims that since 2003, Greenwood Racing, Inc.’s appointed board members for Pennwood Racing, Inc., have used multiple delay tactics culminating in an outright refusal to develop an OTW in Camden County. Penn National believes the reason for these actions is based on Greenwood Racing, Inc.’s ownership of OTW locations in and around Philadelphia, Pennsylvania and in Vineland, New Jersey.

Penn National is seeking an award of damages, which could be trebled under the anti-trust laws, as well as injunctive relief directing Greenwood Racing, Inc. directors to consent to the proposal to develop a Camden County OTW.

(With files from Penn National)