The Nevada Gaming Commission unanimously approved the licensing of the new owners of the Palms hotel-casino today.
George Maloof, the name and face of the Palms since the property opened 10 years ago, will continue to manage the 700-room off-Strip resort that has become a hangout for celebrities and hipsters and the home of the nation's only Playboy Club.
A series of licenses was approved after commissioners questioned representatives of FP Holdings LP, a partnership between TPG Capital, — formerly known as Texas Pacific Group — and Los Angeles-based Leonard Green & Partners LP.
Fort Worth, Texas-based TPG is familiar to gaming regulators as one of the partners that in 2007 acquired Harrah's Entertainment, now Caesars Entertainment, and is invested in the Aliante Station hotel-casino.
Leonard Green, which manages $9 billion in equity capital — mostly in public pension funds — also sailed through the licensing process with a clean record.
Commissioner Tony Alamo said the licensing was bittersweet, given that Maloof and his family opened the Palms but fell into financial trouble with at the onset of the recession.
"I think you got caught when the music stopped, and there were no more chairs," Alamo said. "What happened to the Palms happened to 17 other casino companies by my count, and you've had to go through the same thing."
The Palms breached its financial covenants last year after missing a payment on a loan. In June, it was announced that Maloof had reached agreement with the new institutional investors, who restructured $400 million in debt.
The new owners said they would leave the management of the property to Maloof and President Joe Magliarditi, who formerly headed the rival Hard Rock Hotel and held a management position at the M Resort.
Maloof, who has a 10-year management contract, assured regulators that he and Magliarditi would operate the Palms.
Maloof has a 1.98 percent stake in a holding company, and his family collectively holds 8.75 percent. Brian Greenspun, whose family owns the Las Vegas Sun and VEGAS INC, has a minority stake in the holding company.
Commissioner Randolph Townsend said that while it had no bearing on his decision on the Palms licensing, he would like to see Gov. Brian Sandoval's Gaming Policy Board discuss the role of institutional investors and gaming management on the operation of casinos.
"The ones who do well are the ones who are there every day and grinding it out," Townsend said. "It seems to work best when the general manager leaves the spreadsheets in his office and goes out on the floor to find out what's going on."
Commission Chairman Peter Bernhard cautioned the commission against discussing gaming public policy regarding investment and management. He said it would be up to the Gaming Policy Board to initiate the discussion.
At the state Gaming Control Board's meeting earlier this month, Magliarditi said new capital would be used to freshen the property's nightlife offerings and upgrade more than 200 of the casino's slot machines. He noted that the Ghostbar Day Club, which opened last month, was enjoying success in its bid to bring summer pool parties indoors.
In other business, the commission approved the licensing for three executives of Las Vegas-based Shuffle Master as officer, directors and key employees of the company. Approved for licensing were CEO Michael Isaacs, chief financial officer Linster Fox and chairman Garry Saunders.
The commission did not act on a conditional recommendation from the Control Board allowing Ronald Johnson to operate the Las Vegas Hilton as a court-appointed receiver. A Clark County District Court judge has not issued a ruling on whether Johnson would be appointed receiver of the property, but Colony Resorts made the request in anticipation of the move.
The commission preferred waiting for the judge to appoint a receiver before permitting Johnson to manage the property.