Icahn selling out

Apr 24, 2007 6:34 AM

Casino operator Carl Icahn is selling his Southern Nevada casino properties, and the announced buyer is the Goldman Sachs-sponsored Whitehall Funds.

Bear Stearns is quarterbacking the sales effort with a reported price of $1.3 billion, a figure that says much more about the perceived value of casino-oriented real estate than the cash flow generated by the actual properties.

That’s what the casino business has come to during the last couple of years as the Las Vegas market has boomed and those with the money to take on the biggest deals have recognized the value of the dwindling volume of well-located real estate.

MGM Mirage has been responsible for much of this changing view of the business with its focus on what can be done to boost the cash flows associated with under-developer acreage.

Whitehall managers have maintained a high level of interest in casino acquisitions since the moment the fund was licensed last year as a 25 percent owner of the Las Vegas Hilton. Most recently, Whitehall was among the bidders for the Sahara Hotel.

The Icahn properties include the Stratosphere, the two Arizona Charlie’s and the Laughlin property that is now doing business as the Aquarius (most followers of the southern Nevada casino business may still think of it as the Flamingo Laughlin).

"Our gaming investments are a successful example of our strategy of acquiring undervalued and out-of-favor assets, and improving operations and enhancing value," Carl Icahn said in a statement on Monday. "The management team has done a great job turning this business around."

Whitehall was seen as igniting a trend when a handful of its managers submitted themselves for licensing and became eligible to take one of the seats on the board of the Colony Capital subsidiary that owns the Las Vegas Hilton.

The big thinkers of the industry who know a trend when they see one were quick to postulate that there would be other private equity investments in the gaming industry. This is just another example of one.

The parties expect to close the transaction in about eight months.

Ungar film honored

Stu Unger was a feared figure at the high limit tournament tables. He won three main events at the World Series of Poker, the last in 1997, a bit more than a year before he was found dead in a Las Vegas hotel room.

His frail body had succumbed to the accumulated ravages of years of drug abuse. Ungar’s problem with drugs was no secret and it has since led to the start of the Stu Ungar Foundation aimed at helping others deal with the issues that Ungar was unable to conquer in his lifetime.

But the appetite for information about Ungar has remained strong. His life and brief but bright career as a poker pro has inspired book and film projects.

One of those, a documentary from Red Line Films entitled "The Rise and Fall of Stu Ungar," was introduced about the time of last year’s World Series of Poker.

It has since been nominated for four Emmys and Ungar’s former wife Madeline and daughter Stephanie are on their way to New York this week to be part of the award ceremonies.

The Ungar documentary was nominated in four categories, including best documentary, writing, editing and audio.

Wireless closer to fruition

Cantor Fitzgerald’s Phil Flaherty is back in Carson City this week pushing forward with efforts to widen the market for its wireless gaming devices.

Flaherty says everyone Cantor has talked to about its wireless devices has an interest in using them to service the interests of race and sports bettors

But Cantor was recently unsuccessful with efforts to attach an amendment to legislation that would authorize the use of the devices at gaming operations without an existing book.

One obvious solution would seem to have Cantor buying the books operated by Leroy’s and the Cal Neva — collectively that comes to nearly a hundred. But that has not happened, not yet, anyway.

It was Leroy’s and the Cal Neva that opposed the amendment that would allow Cantor to service casinos without operating from a "bricks and mortar book."