Regulators ok casino deals

January 15, 2008 5:53 AM
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Last week, Nevada’s Gaming Control Board recommended for approval the $1.3 billion sale of the Stratosphere’s parent company, the $32 million sale of Binion’s Gambling Hall, and the licensing of the Hard Rock casino’s new owners.

The Nevada Gaming Commission will meet Jan. 24 to consider and presumably ratify the recommendations.

The Stratosphere, along with both Arizona Charlie’s and the Aquarius in Laughlin, are part of Carl Icahn’s American Casino & Entertainment Properties, which is being purchased by Whitehall Street Real Estate Funds, an affiliate of Goldman Sachs.

Whitehall managing director Stuart Rothenberg told regulators most of the gaming company’s executives and property management will remain in place after the sale’s closure, which is scheduled for next month.

American Casino Chief Executive Officer and President Richard Brown, who ran the company for eight years under Icahn, will continue to run the company’s day-to-day operations.

"The first part of the transaction will be focused on tightening up our operations," Brown said after the hearing. "It’s about operating more efficiently and driving more revenue."

Brown said that while Icahn was brilliant in the way he was able to maximize his returns with well-placed capital investments, he wasn’t willing to commit to a large redevelopment of the Stratosphere.

Gaming Control Board Chairman Dennis Neilander said he was looking forward to seeing what direction the new owners will take the company.

"Icahn has gotten everything he can out of it," Neilander said during the hearing. "It’s a good thing to have new tutelage and retooling."

The purchase is being backed by a $4.8 billion Whitehall fund.

Regulators were told $54 million from the financing will be used for capital-expenditure projects immediately: $25 million for renovations at the Stratosphere, $10 million at Arizona Charlie’s Decatur for a new bingo room, and $19 million for room renovations at the Aquarius.

The buyout is Whitehall’s second foray into local gaming, with the investment branch holding a 40 percent share in the Las Vegas Hilton.

In downtown Las Vegas, MTR Gaming Group is selling Binion’s Gambling Hall to Terry Caudill’s TLC Casino Enterprises, Inc., which also owns the Four Queens across Fremont Street.

The companies agreed to the $32 million cash transaction last June.

Edson R. (Ted) Arneault, CEO of MTR Gaming Group, stated, "We are pleased to be nearing the close of the Binion’s sale to (Terry Caudill), as we believe it is in the Company’s best interest to concentrate our efforts and resources on our core properties in West Virginia, Pennsylvania and the Midwest. Terry Caudill has a proven track record and we believe he has the knowledge and expertise to lead Binion’s to its next stage of growth."

Terry Caudill, President of TLC Casino Enterprises, Inc., commented, "We are looking forward to operating Binion’s alongside the Four Queens, and are very enthusiastic about the prospects for the property and incorporating the Binion’s employees into our organization."

Finally, the Gaming Control Board’s recommendation brings the new owners of the Hard Rock Hotel and Casino in Las Vegas a step closer to operating the casino under their own license.

The Board recommended approval for a casino license for joint venture partners DLJ Merchant Banking Partners and Morgans Hotel Group Co.

If confirmed by the Gaming Commission, the owners will be able to profit from casino revenues a year after taking over ownership from the boutique resort’s founder, Peter Morton.

The casino has been operated by Blake Sartini’s Golden Gaming Inc. since February, although Larry Wolfe has been mentioned as a possibility as the next casino manager.