Family renovating Continental hotel-casino buys Jackpot route

Tuesday, July 11, 2000 | 11:18 a.m.

The family behind a chain of gas stations and the defunct Continental hotel-casino has acquired the slot route operated by Jackpot Enterprises Inc. of Las Vegas.

The Herbst family's E-T-T Inc. on Monday agreed to buy the route from J Net Enterprises Inc. -- Jackpot's new name -- for $45 million in cash.

The deal follows Monday's announcement that Alliance Gaming Corp. of Las Vegas is selling its slot route operation, United Coin Machine, to an investment group for $118 million.

Jackpot is moving out of the gaming business in order to focus on managing investments in fledgling Internet businesses. Since March, the company has established the $100 million J Net Ventures I investment fund, buying stakes in several Internet companies including Digital Boardwalk and TechTrader Inc., two software vendors.

Members of the Herbst family own Herbst Oil Co., which operates the Terrible Herbst gas station chain, and last year acquired the building housing the Continental hotel-casino after the property went bankrupt. They plan to renovate it and reopen it.

Jerry Herbst also owns a stake in Coast Resorts Inc., which owns the Gold Coast, Barbary Coast and Orleans hotel-casinos. His sons Edward, Timothy and Troy Herbst own and operate Terrible's Town and Terrible's Lakeside hotel-casinos in Pahrump.

In February, E-T-T announced that it would partner with E.A. Collins Development to build a third Pahrump project, a 225-room hotel-casino.

Stephen Koffler, president of Koffler & Co., Los Angeles, which brokered the deal, said he was happy with the bidding process that eventually resulted in the sale to E-T-T. He said the company initially contacted 50 prospective buyers before narrowing the field.

He said E-T-T is expected to keep most of the company's slot route employees after the ownership transition. E-T-T already has a small slot route operation and with Jackpot's 3,500 machines will have the second largest operation behind United Coin, which has 8,000.

"We are pleased to have entered into the deal with E-T-T," said Allan Tessler, chairman and chief executive officer of J Net. "Their strong reputation in the Nevada marketplace will ensure continued high-quality service to Jackpot's customers. In addition, the fact that they are licensed in the state should assist in a prompt closing."

The deal is expected to close within four to six months, subject to regulatory approvals.

Representatives of privately held E-T-T could not be reached for comment on other details of the acquisition this morning.

Jackpot stock was up 6 cents to $12 this morning.

Meanwhile, a gaming analyst said Alliance Gaming's planned $118 million sale of the United Coin slot route not only would reduce company debt, but also would refocus the company's slot manufacturing business.

Jason Ader, a Bear Stearns analyst, said the move may be just what Alliance needs to jump-start its position in the slot manufacturing industry.

"They needed to sell this asset," Ader said. "It looks like a good strategic transaction for them."

Ader said Alliance's Bally Gaming Inc. slot manufacturing unit "has not been at the cutting edge" of slot technology, but getting out of the slot route business may allow the company to refocus.

"Betty Boop (a progressive slot game introduced by Bally in Nevada) started out strong, but its popularity has fallen off quickly," Ader said. "Lately, IGT (International Game Technology) and Williams (Gaming) have been fighting it out for market share."

Alliance announced Monday that an investor group headed by a Las Vegas gaming developer and an Iowa riverboat executive plan to buy the slot route. UC Acquisition LLC, headed by Michael Luzich of Las Vegas and Dan Kehl, the head of two Iowa riverboat casinos, plans to acquire the slot route, which has more than 8,000 slot machines, mostly in bars, supermarkets and convenience stores.