State Board Endorses $1.8B Casinos Deal

Locally-based Cannery Casino Resorts is 58% owned by Millennium Gaming, which is co-owned by casino veterans Bill Paulos and William Wortman. The remaining 42% is controlled by a subsidiary of investment management corporation Oaktree Capital Management. The deal for the owner of two gaming properties in suburban Las Vegas and another in Pennsylvania was announced in December 2007.

Cannery Casino Resorts owns the Cannery and Eastside Cannery casino-hotels, in North Las Vegas and east Las Vegas, respectively. The company also manages the Rampart Casino in the JW Marriott in Summerlin, NV, and owns a temporary casino next to the Meadows Racetrack outside Pittsburgh, where it is building a permanent facility. Crown owns and operates properties in Australia, Britain, Canada and Macau. Assuming the Commission affirms the Board's endorsement, Cannery Casino Resorts will be held as a subsidiary of Crown Ltd., which is publicly traded on the Australian Securities Exchange.

The Eastside Cannery Casino & Hotel opened for business in August 2008 at 5225 Boulder Hwy., which sits between East Flamingo Road and Tropicana Avenue seven miles east of the Las Vegas Strip. The new casino, which sits across from the Walmart-anchored Crossroads Shopping Center, incorporates a 16-story hotel with 65,000 square feet of casino space, 20,000 square feet of meeting space, 307 hotel rooms and six restaurants. The Cannery Casino, opened in January 2003 at 2121 E. Craig Road in the City of North Las Vegas, has 200 hotel rooms, a 50,000-square-foot casino, a race and sports book and two restaurants.

The area around the Eastside Cannery is known as the Boulder Strip, where gamblers losses' fell 16% in November, tracking performance statewide and on Las Vegas Strip, according to data released today (Friday, Jan. 9, 2008) by the state Control Board. Gamblers losses in the North Las Vegas market bucked the larger trend, falling less than 2%. For the fiscal year-to-date, however, gamblers losses in the two markets are both down by approximately 14.5% when compared to the same year-earlier period. Both markets are considered "local's markets," meaning the bulk of revenues come from residents of the region as opposed to tourists, although the new Eastside Cannery is expected to attract some tourists.

Cannery Casino Resorts would be Crown's second gaming-related investment in Las Vegas in the past two years, and the third for James Packer, Crown's chairman and majority shareholder. In April 2007, Australia's Publishing and Broadcasting Ltd., which is controlled by Packer, agreed to take a 19.6% stake in locally based casino resort developer Fontainebleau Resorts LLC for $250 million. The company's $2.8 billion, 61-story Fontainebleau mixed-use project at the north end of the Las Vegas Strip is scheduled to open later this year with 3,812 rooms, a a 100,000-square-foot casino, a 300,000-square-foot retail center and 27 restaurants.

The following month Crown made a $22.5-million cash payment for a 37.5% stake in LVTI, the holding company for the Crown Las Vegas project proposed for a 27-acre Wet 'n Wild site on the Las Vegas Strip that it had put under contract. However, in June 2008, with one month left to pull the trigger on the acquisition--and having made an estimated $70 million in non-refundable option payments--LVTI dropped its option to acquire 27-acres on the Las Vegas Strip from Archon Corp. for $475 million and wrote off its $42-milion investment in the project and the partnership, which also included Texas developer Christopher Milam's IDM Properties and New York City-based fund manager York Capital Management.