Penn National gets OK for small investment, but eyeing Strip

By Cy Ryan

Wednesday, June 2, 2010 | 12:35 p.m.

CARSON CITY - Penn National Gaming gained preliminary approval today to enter the Nevada market with a small investment. But company executives told gaming regulators that they're considering making much bigger acquisitions in the state.

The state Gaming Control Board recommended approval of Penn National's purchase of a 1 percent stake in Nevada Slots and Supplies of Las Vegas.

But Peter Carlino, chief executive officer and chairman of Penn's board, indicated this could be the start of larger investments.

"We're angling to find the right point of entry," he said.

Penn has been mentioned as a possible bidder in the Aug. 6 auction of 11 casinos owned by the bankrupt Station Casinos.

Asked if Penn might be interested, Carlino said, "If it is alive and breathing, we would be talking to it. But our strategic goal is on the Strip."

Penn owns or manages 16 casinos and has 15,000 employees. It is expanding into Kansas, Ohio and Maryland. The company previously tried to buy Harrah's and the Fontainebleau but was unsuccessful, Carlino said.

Timothy Wilmott, president and chief operating officer of Penn, told the board it "is looking for the right opportunity in Las Vegas." Like the rest of the casino industry, the company has not lost any significant market share but its customers are spending less, Wilmott said.

Dennis Neilander, chairman of the control board, called Penn "a very healthy company," which spent $1 billion last year and is going to spend another $1 billion this year on expansion.

William Clifford, senior vice president of finance and chief financial officer, said Penn has $300 million in cash, its parent company could supply $900 million and it "could raise additional capital in a couple of weeks."

Neilander told company officials, "This is one of the few companies the banks are coming to."

Frank Schreck, Las Vegas attorney for Penn, said it is buying a small interest "to get ahead of the curve." If the company finds the right opportunity, its applications to state gaming officials would not be slowed down by having to start a new investigation from scratch.

The parent State Gaming Commission meets June 17 to take final action on the application.