Las Vegas Sun

March 29, 2024

Herbst expanding with Midwest riverboat deal

A Las Vegas gaming company that built Nevada's largest slot route from its roots as an oil company and convenience store operator announced Tuesday it's expanding its casino holdings out of state with the purchase of three riverboats.

Herbst Gaming Inc. on Tuesday announced the purchase of the St. Jo Frontier Casino, in St. Joseph, Mo.; the Mark Twain Casino in La Grange, Mo.; and the Lakeside Casino Resort in Osceola, Iowa, from W.M. Grace Entertainment Inc. for $287 million in cash.

The St. Jo Frontier Casino has 514 slot machines and 16 table games, the Mark Twain Casino has 504 slots and 17 table games and the Lakeside Casino Resort has 921 slots, 33 table games and an adjacent 60-room hotel.

Herbst, which owns five Southern Nevada casinos, including its flagship Terrible's hotel-casino at Paradise and Flamingo roads, may be best known as the owner of more than 80 gasoline stations bearing the name of Terrible Herbst.

Herbst officials this morning declined to comment until a conference call set for this afternoon.

An expert familiar with the transaction, who declined to be named, said the purchase makes sense for Herbst because it will be acquiring smaller casinos that aren't much different from its Nevada operations.

Grace's largest casino, the Lakeside Casino Resort in Iowa, is similar in size and scope to Herbst's Lakeside Casino in Pahrump, for example, the expert said.

Herbst has "probably grown as far as they can grow with the route business," the source said. "They've got all the major grocery store chains locked up."

The company also has finished integrating two acquisitions, including the purchase of slot route operations from Jackpot Enterprises and International Game Technology.

"I think they've done well with what they've had but there's not a lot more growth within their niche," the source said. "I think they want to expand with small local casinos, which is what they've done well with."

Herbst employs more than 2,000 people and is controlled by brothers Ed, Tim and Troy Herbst. Ed Herbst serves as president and chief executive officer while Tim and Troy are company vice presidents. The company has been handed down through three generations after being founded by the brothers' grandfather, Ed Herbst, in 1959.

The purchase of the three riverboat properties is subject to regulatory approval in three states. The companies did not say when the sale is expected to close.

The seller, W.M. Grace Entertainment, is operated primarily by the estate of William M. Grace, who died of a heart attack while undergoing treatment for leukemia in April.

Grace was majority owner of The Woodlands race track, Kansas City, Kan., and several Midwestern casinos. In addition to the three riverboats being sold to Herbst, Grace Entertainment manages the tribal-owned Casino White Cloud, near White Cloud, Kan., and Bucky's Casino, a tribal operation with a hotel near Prescott, Ariz.

Grace also controlled W.M. Grace Hospitality Inc., W.M. Grace Construction Inc. and W.M. Grace Development Inc., with diversified holdings in housing units for the elderly, shopping centers, hotels and real estate in several states. The companies also have several commercial holdings in St. Joseph and a 4,000-acre farm and cattle ranch near Albany, Mo.

For Herbst, the acquisition represents the company's first gaming foray out of state. In addition to a Nevada slot route that includes more than 7,000 slot machines, Herbst operates Terrible's Town Casino and Terrible's Lakeside Casino in Pahrump; Terrible's Town Casino, Henderson; and Terrible's Casino, Searchlight, in addition to the Las Vegas property, the former 373-room Continental hotel-casino. Herbst became the dominant slot route operator with last year's acquisition of Anchor Coin Inc. from International Game Technology.

Terrible Herbst gasoline stations are in Nevada, Arizona and California. The Herbst family is also a major player in off-road auto racing.

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