Ex-gaming analyst finds new niche inside industry

LAS VEGAS -- Marc Falcone always knew that one day he would quit being a spectator and get into the action.

So it was no surprise in October 2009 that he gave up a 15-year career as a Wall Street gaming industry analyst to become chief financial officer for the newly created Fertitta Gaming.

The only question at the time: What exactly would Fertitta Gaming own?

The company was formed by brothers Frank Fertitta III and Lorenzo Fertitta at the outset of the bankruptcy reorganization of Station Casinos, Inc. Falcone was their first and, for many months, only employee.

Joining a startup business wasn't an issue for Falcone.

"I was originally hired to pursue non-Station related gaming opportunities," he said. "I had conviction in the commitment that Frank and Lorenzo had to gaming. "

The 2011 reorganization left Station Casinos relatively intact. Fertitta Gaming - since renamed Fertitta Entertainment - became the largest owner and the operator of Station Casinos' 17 Southern Nevada properties and operated an Indian casino in Michigan.

Falcone, 39, is chief financial officer for both Fertitta Entertainment and Station Casinos.

Falcone, who served as an equity research analyst for investment banks, a buy-side analyst for a private equity hedge fund, and as a portfolio analyst for a gaming industry investor, followed a trend of Wall Street analysts winding up on the other side of the desk.

Lottomatica CEO Bruce Turner, MGM Resorts International Chairman and CEO Jim Murren and former MGM Mirage Chief Financial Officer/ex-Pinnacle Entertainment CEO Dan Lee all started out as gaming industry analysts.

Falcone said that there has always been a clear path for analysts to move into the corporate environment.

"I had conversations at points in time with some executives about coming into the gaming industry," Falcone said. "I received a lot of good advice along the way. The uncertainty was when would be the best time to go."

Question: How different is being a CFO from being an analyst?

Answer: I knew that it would take a learning perspective to a different level to what we as analysts did at the time. From an analysts' perspective, there is a considerable amount of information that we just don't know. We have enough information to be educated. But there is so much more that goes into these businesses.

Question: Did you have any preconceived notions about becoming a gaming company CFO?

Answer: I thought the job would be different than it is. I had a perspective of what I thought the job would be. The complexity of the business is far deeper than what I would have known, so my expectations have changed as my job responsibilities have changed.

Question: What might surprise the analyst community about the gaming industry?

Answer: The Las Vegas locals market, which we operate in, is the most competitive operating market in the business. I have a fiduciary responsibility as the CFO of the organization to understand the inner workings of our business. I try to spend time at the properties and meet with the different corporate directors to understand what they do on a day-to-day basis. I want to understand all the operating aspects of the business.

Question: Is Station Casinos a different company since the restructuring?

Answer: I think we owe a tremendous of amount of patience and gratitude to our team members for sticking with the company through the difficult restructuring period. Our focus has been since the restructuring to rebuild and regain credibility with customers and team members. The management team, with the exception of myself, has been here in excess of 15 years. There is a stable senior leadership.

There is no question we've been given a second opportunity, but that wouldn't have happened without the financial commitment of Frank and Lorenzo to the restructuring process.

Question: Will Station Casinos ever go public again?

Answer: Under the agreements with our equity holders, there is no requirement to go public before the fifth-year anniversary of the restructuring agreement, which is June 2016. It's a company decision up until then. After that time, the equity owners could force an (initial public offering).

Question: Do you believe other analysts might be attracted to working in the gaming industry?

Answer: It's always important to attract good talent to Las Vegas. Part of the opportunity I saw was that I could be an asset to the gaming industry. But I've learned as much in three years at this job than I learned in 15 years on Wall Street.

Question: Why did you leave the equity side of Wall Street and move to a hedge fund?

Answer: I thought I could use my knowledge, my contacts and my relationships nurtured over 10 years in gaming, lodging, real estate and leisure and put that to use on the buy side. A significant amount of capital at the time had an attraction or a particular appeal toward investing in the gaming business. That was really the first time you saw significant interest from private equity in gaming.

Question: What did you take from spending time with the hedge fund?

Answer: I was able to use my skill base to help private equity invest in the gaming business. But for the first time, I thought about having the ability to understand how these companies worked in a more granular capacity. If you were involved with an investment, you have an ability to understand how that business is run.