Herbst Gaming eyes IGT casino, slot route assets

Thursday, Aug. 1, 2002 | 11:08 a.m.

Nevada slot route and casino operator Herbst Gaming Inc. acknowledged Wednesday it's considering a purchase of casino and slot route assets from International Game Technology.

Last week IGT formally announced it would sell casino operations accumulated in its acquisition of Anchor Gaming last year, including two casinos in Colorado and a slot route in Nevada. Wall Street analysts had expected the sale because it would allow the company to focus on its core slot machine manufacturing business.

Should Herbst Gaming acquire the assets, the deal would likely require a combination of financing methods, the company's Chief Financial Officer Mary Beth Higgins told investors on an earnings conference call.

IGT has said it wants to close a sale by the first quarter of next year, Higgins said. "If we're the purchaser, that would be the timeline ... but it would be tough to speculate."

Several years ago, IGT sold off riverboat casinos, saying it had no desire to be in the casino business. Operating a slot route puts the company in competition with casinos and other potential customers that purchase or lease its slot machines.

Privately held Herbst Gaming is one of the largest slot route operators in Southern Nevada, which accounts for about 70 percent of the company's revenues. It also owns four regional casinos, including Terrible's Hotel and Casino east of the Las Vegas Strip.

IGT had no further comment on the proposed sale Wednesday. Herbst Gaming representatives couldn't be reached for comment.

IGT's Nevada route, which includes a contract with the Smith's grocery store chain, contains about 950 slot machines. Colorado Central Station Casino, in Black Hawk, contains about 750 machines. The Colorado Grand casino, in Cripple Creek, contains about 220 machines. The assets represent a lucrative business, analysts say.