Penn National gets early approval for gaming license

LAS VEGAS, Nevada -- Penn National Gaming took a "modest first step" Wednesday toward realizing the company's goal of acquiring a Las Vegas casino.

The Wyomissing, Pa.-based casino operator received preliminary approval from the Nevada Gaming Control Board to acquire 1 percent of a small slot machine manufacturer and distributor.

Officials for the regional casino and racetrack operator weren't shy about their true intentions for going through the licensing process for such a small stake, though.

Chairman and Chief Executive Officer Peter Carlino told regulators Penn National "wants very much now to be in" Las Vegas.

By going through licensing now, the company will be able to move quickly if an opportunity for an acquisition becomes available, he said.

"Nevada is important to us," Carlino said during the hearing in Carson City. "We are angling as much as we can to find the right point of entry."

Penn National bid on the Fontainebleau Las Vegas before backing out of the auction for the suspended project last year. The company has also been rumored to be in negotiations to acquire properties from Harrah's Entertainment and MGM Mirage.

Carlino indirectly referred to those rumors during the hearing.

"Getting here is not as easy as we might have hoped," Carlino said. "You have two companies essentially controlling all the major properties in town."

Harrah's Entertainment owns eight hotel-casinos along Las Vegas Boulevard and the Rio just west of Interstate 15 on Flamingo Road. MGM Mirage owns 10 hotel-casinos on the Strip.

Penn National is also mentioned as a possible bidder in the Station Casinos bankruptcy auction scheduled for August. Penn National has also been mentioned as a possible suitor for the Cosmopolitan of Las Vegas, either as a buyer or as a manager for the Deutsche Bank-owned property.

Chief Operating Officer Timothy Wilmott described the company as a midmarket operator with a database of nearly 11 million customers.

Penn National operates racetracks and 16 casinos in U.S. cities other than Las Vegas and Atlantic City. The company is developing new casinos in Kansas, Maryland and Ohio.

Penn National established a subsidiary, Delvest Corp., to give the company the ability to move quickly should a Nevada acquisition become available, Chief Financial Officer Bill Clifford told regulators.

The subsidiary is not restricted by credit agreements and other financial restrictions that the parent company would have to be consider before making an acquisition.

Penn National is scheduled to appear before the Nevada Gaming Commission on June 17 for final approval.