Owner weighing options for River Palms casino in Laughlin
8 February 2012
Tropicana Entertainment Inc. disclosed Wednesday that it’s weighing strategic options for one of its three Nevada hotel-casinos.
Investor Carl Icahn’s Las Vegas-based company said in a regulatory filing it’s “exploring strategic alternatives to maximize value” for its 1,001-room River Palms hotel-casino in Laughlin.
“Strategic alternatives” is usually industry-speak for a possible sale, consolidation or a major repositioning. A request for comment was placed with Tropicana on exactly what options are being considered for the property, which is on the far south side of Laughlin’s Casino Drive.
Along with Harrah’s Laughlin, the River Palms is separated from the main group of Laughlin casinos on the Colorado River that includes the Golden Nugget, Pioneer, Colorado Belle, Edgewater, Aquarius and Riverside.
In its regulatory filing, which includes a presentation to investors, Tropicana Entertainment noted the $468 million (annual gaming revenue) Laughlin gaming market has been hit hard during the recession, but should bounce back as a “value alternative” to Las Vegas, which is 90 miles away.
Laughlin receives about 3 million visitors annually and serves the Los Angeles and Phoenix markets, which are 285 and 220 miles away, respectively.
Besides the River Palms, Tropicana Entertainment owns the 1,495-room Tropicana Laughlin hotel-casino, which is across Casino Drive from the Pioneer and the Colorado Belle.
While “strategic alternatives” are being considered for the River Palms, Tropicana Entertainment said in Wednesday’s filing it’s looking to add a themed restaurant and potentially expand the pool and build a bowling alley at Tropicana Laughlin.
“Additional recreational activities bolster Laughlin’s perception as an attractive low-cost alternative to Las Vegas and target profitable guests in Southern California’s Inland Empire (in the Los Angeles area) and Phoenix,” Tropicana Entertainment said in Wednesday’s filing.
Tropicana Entertainment hasn’t yet reported fourth-quarter financial results. In the third quarter, it posted a profit of $14.9 million on net revenue of $175.4 million.
The company’s two Laughlin properties saw net revenue fall $1.5 million on a year-over-year basis in the third quarter as the recession continued to pound that market.
Nevada Gaming Control Board statistics show Laughlin casinos won $38.6 million from gamblers in November, down from $52.6 million in November 2006 during the economic boom.
Tropicana Entertainment also has a hotel-casino in Lake Tahoe and properties in Atlantic City, Aruba, Indiana, Louisiana and Mississippi.
With the Tropicana Las Vegas is owned by another investment group, Icahn’s Tropicana Entertainment doesn’t have a property in Las Vegas, the nation’s largest gaming market.
The investment presentation made public Wednesday doesn’t mention any plans for Las Vegas, where Icahn is known as a shrewd investor.
He generated a $1 billion profit, or a greater than 300 percent return on his investment, by buying the Stratosphere and its sister properties in Las Vegas and Laughlin beginning in 1998 and then selling them a decade later for $1.2 billion.
Icahn separately owns the stalled Fontainebleau casino-resort project in Las Vegas, but it’s unknown if that will be folded into his Tropicana Entertainment gaming company.
Tropicana Entertainment, in Wednesday’s investor presentation, said Icahn is interested in using “Tropicana Entertainment to build a leading, geographically-diverse gaming company by improving operations, achieving synergies across the platform and opportunistically acquiring assets in attractive markets at reasonable valuations.”
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