Herbst weighs new incentives for players

Thursday, July 22, 2004 | 10:56 a.m.

Representatives of Herbst Gaming Inc. said Wednesday that trips to the company's Las Vegas property may be offered as incentives to loyal players at the Midwestern riverboat casinos the company is acquiring.

Mary Beth Higgins, chief financial officer for the Las Vegas company, said in a conference call that marketing executives for the three riverboats already have begun considering how they would be able to leverage the deal into incentives that would draw additional player response.

Las Vegas-based Harrah's Entertainment Inc. is one of the leading companies using that strategy, offering its Total Rewards members discounts, complimentary rooms and food at the company's Las Vegas properties after collecting points for play at Harrah's numerous properties nationwide.

Herbst announced Tuesday that it is acquiring 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 deal is scheduled to close in six to nine months. Herbst officials already have met with gaming regulators in Missouri and Iowa to begin the licensing process, she said.

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

Higgins said in the conference call that the company initially did not seek out the riverboat properties, but that the more they were studied, the more they looked like a good match for the Herbst company.

"The more we dug, the more compelling it became," Higgins said of the deal. "The look and feel of the casino size is what we're used to managing. It gives us another leg on our table."

She said the company has begun exploring upgrading the riverboats' casino floors and offering a better food product at the properties.

Higgins said Herbst was one of six companies that initially bid for the riverboats and that her company was not the high bidder. She did not disclose who the rival bidders were. She said Grace Entertainment selected the Herbst offer because it was a better match for the properties and that Grace was comfortable with the tightly held family management style of the Herbst company.

Higgins said it hasn't been determined whether Herbst would rebrand the riverboat properties, since they have a strong, visible presence in their respective communities.

"We don't know about rebranding. They (the riverboat casinos) have pretty good identities, but we love that cowboy," she said in reference to the cartoon logo the company uses at its five casino properties in Southern Nevada and the more than 80 gasoline stations it operates as Terrible Herbst in Nevada, Arizona and California.

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 its flagship Las Vegas Terrible's property, the former 373-room Continental hotel-casino at Paradise and Flamingo roads.

Herbst became the dominant slot route operator in Nevada with last year's acquisition of Anchor Coin Inc. from International Game Technology.

Earlier Wednesday, Herbst Chief Legal Counsel Sean Higgins said the company hadn't been seeking casino opportunities in other states but decided on the purchase after touring the properties.

"When we came out and toured the facilities and looked at the sites, we found that the sites are very much like the markets we operate in Southern Nevada," Higgins said. "These are small markets and small casinos. That's where we got our start."

The company was notified of a casino auction after Grace Entertainment Chief Executive William M. Grace died of a heart attack while undergoing treatment for leukemia in April, he said.

Grace was majority owner of The Woodlands race track, Kansas City, Kan., and continues to manage two tribal casinos, the Casino White Cloud, near White Cloud, Kan., and Bucky's Casino, an operation with a hotel near Prescott, Ariz.