The .1 trillion omnibus spending bill passed December 18 by the U.S. Congress and signed into law by President Barack Obama not only averted a shutdown of the U.S. government—it averted a proposed shutdown of using real estate investment trusts as a business model in the casino resort industry.
Retiring U.S. Senator Harry Reid of Nevada stripped a provision from the omnibus bill that would have closed the tax loophole allowing casino operators such as Penn National Gaming and Caesars Entertainment to spin off assets into REITs in tax-free transactions, and then leasing the properties back from the REIT for a fee, with all profits going to the REIT—itself generally a subsidiary of the operator.
Reid, who is retiring from the Senate this month, made the move as a farewell gift to his state’s big economic contributors, such as Caesars, MGM and Penn, whose REIT Gaming and Leisure Properties Inc. recently purchased the Las Vegas Tropicana.
