The purchase of the Golden Nugget properties in Laughlin and Downtown Las Vegas in June 2003 did not hit the jackpot for Poster Financial Group Inc. The two properties were bought for $215 million from MGM Mirage and the Golden Nugget Laughlin was then sold off for $31 million. The sale of the Golden Nugget Las Vegas to Landry’s Restaurant Inc is worth somewhat more, as it will see that company assume a $155 million debt and pay an additional $140 million in cash.

In the present climate of record valuations and rising profitability in the casino industry, the purchase of the Golden Nugget Las Vegas should prove to be an excellent first step into the lucrative gambling market for Landry’s. The hotel casino was built in 1946 and is the largest property in the Downtown area; analysts consider that previous poor performance is no indication of its future success or failure. Poster Financial’s policy of attracting high rollers did not pay off and the casino had major cash flow problems.

Landry’s Restaurants has over 30,000 employees working in its 300-plus eating venues that include the Joe’s Crab Shack chain and Landry’s Seafood Houses. The company’s revenues broke the $1 billion barrier in 2003. After the announcement of the Golden Nugget purchase, still to be approved by the Nevada regulators, Landry’s share price rose by over 12%.

As the chairman and president of Landry’s Restaurants is Tilman Fertitta, cousin to Station Casino’s Frank and Lorenzo Fertitta in Las Vegas, family advice may be forthcoming. At present future plans entail enlarging the property and taking advantage of the increasing demand for gaming and entertainment in Las Vegas. The well-known Golden Nugget brand should give Landry’s a head start in its foray into gaming. (E-02.07.05)

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