Crowded portfolio: Seven casinos in Las Vegas, Laughlin and Pahrump bought by VICI
When I interviewed John Farahi, owner of Atlantis Hotel and Casino, last summer, he expressed his opposition to real estate investment trusts. “In the short term, you gain something when you sell to a REIT, but then what? We will not sell our real estate.” That hasn’t stopped VICI.
Programming note: There will not be an Indy Gaming next week. The newsletter will return on Nov. 26.
Top executives from real estate investment trust VICI Properties have been interested in Golden Entertainment for several years, hoping to include the company’s Southern Nevada casinos among its expanding portfolio. Chief Financial Officer David Kieske said it was a priority in the last few years to meet with Golden’s leadership when they were in Las Vegas.
Last week, that vision came to fruition as VICI announced a $1.16 billion sale-leaseback transaction with Golden. The deal gives the real estate investment trust ownership of seven casinos in Las Vegas, Laughlin and Pahrump.
VICI, which owns the land and buildings of more than a dozen resorts on the Strip, South Lake Tahoe and Laughlin, was looking to acquire casinos in downtown Las Vegas and the locals market, two regions absent from a portfolio that covers 54 casinos in 15 states.
Kieske floated that idea two years ago during a discussion at Preview Las Vegas, a year after VICI paid $4 billion to buy The Venetian, Palazzo and Venetian Expo.
“Las Vegas is a resilient market and with the diversification of the economy over the last several years, we see a tremendous opportunity,” Kieske told The Nevada Independent on Friday.
He also praised the state’s regulatory environment.
“They’re not going to let in [online gaming] and they’re not going to let in prediction markets,” he said. “We like the importance of gaming to the Nevada tax base. The employment base is also a positive.”
VICI is acquiring the STRAT Hotel, Casino & Tower, the two Arizona Charlie’s casinos on South Decatur Boulevard and the Boulder Highway, the Aquarius and Edgewater in Laughlin, and the Pahrump Nugget and Lakeside RV Park & Casino in Pahrump. VICI agreed to pay off $426 million of Golden’s debt.
When the deal closes next year, the operations will then be leased by Golden Chairman and CEO Blake Sartini, who is taking the company private by paying $30 a share for the outstanding stock. The cost is 41 percent higher than Golden’s closing price on Nov. 5.
Golden will pay VICI $87 million in annual rent for the casinos. But the figure will increase by 2 percent annually starting in the third year of the 30-year contract.
“We’ve known Blake and [Golden President] Charles [Protell] for six years,” Kieske said. “Every time [VICI President John Payne] and I went to Vegas, we met with them.”
Before last Thursday’s announcement, VICI found ways to invest in Las Vegas and with Las Vegas-based companies.
In 2022, VICI funded $350 million of a $2.2 billion construction financing package obtained by developers of the Fontainebleau Las Vegas ahead of its 2013 opening. Last year, VICI provided Apollo Global Management with $700 million to partially fund a planned $1.5 billion renovation for The Venetian, Palazzo and Venetian Expo over the next few years.
In April, VICI agreed to loan $510 million to Central California’s North Fork Mono Rancheria Tribe to underwrite the construction of a hotel-casino being developed by Red Rock Resorts. The Las Vegas company will operate the casino under a management agreement.
Kieske said on the company’s quarterly conference call in April that VICI would like to find additional partnership opportunities with Red Rock.
“We felt really good about what [they] are doing there,” Kieske said last week, adding Red Rock has “a nice management contract” with the tribe and wants to get the property open next year.
However, during Red Rock’s quarterly conference call in May, Chief Financial Officer Stephen Cootey said “no” to a question about using VICI as a potential development partner in Las Vegas, where the company has six vacant land parcels.
“We really appreciate the relationship with VICI. They’ve always been in very close contact with us,” Cootey said.
So what moved the deal forward with Golden?
“It took most of the year,” Kieske said. “We met off and on for the last several months. We know they were meeting with others. But we came up with a structure and a solution that works for everybody. We like Blake and the team. He’s well-connected to Vegas and entrepreneurial. He'll be a good partner.”
The two Arizona Charlie’s casinos are on opposite sides of Las Vegas and attract nearly 100 percent local Las Vegas-area customers, fulfilling VICI’s goal of entering the locals market.
The prize for VICI is The Strat, which has nearly 2,500 hotel rooms and the 1,149-foot-tall tower that includes a 360-degree revolving restaurant.
The property is situated within the Las Vegas city limits, so its gaming revenue is factored into the downtown results by the Gaming Control Board. But it is often marketed as a Strip resort given its location on Las Vegas Boulevard just north of Sahara Avenue — the border line between unincorporated Clark County and the city of Las Vegas.
VICI has owned Harrah’s Laughlin, which is operated by Caesars Entertainment, since 2017. Adding Aquarius and Edgewater helps expand its presence in a market where 16 casinos produced $488.5 million in gaming revenue in the last 12 months.
Golden will retain control of the Colorado Belle casino, which has been closed since 2020. VICI has the right of first refusal for a sale-leaseback of the property should it reopen. Golden is also retaining ownership of the company's 72 tavern operations in Nevada.
“Blake has a vision to potentially reinvigorate that property, maybe not so much as a gaming asset,” Kieske said. “He’s thinking about ways to bring new traffic to Laughlin. Potentially, we could help them fund something.”
Pahrump, which is 60 miles south of Las Vegas in Nye County, was a bit of an unknown to VICI, but the location has increased gaming revenue by 5.1 percent in the last 12 months to $71 million.
“It’s a retirement community, and the Nugget is probably the main property out there,” Kieske said.
The Golden deal, which requires shareholder and Nevada regulatory approval, is expected to close in mid-2026. But it doesn’t mean VICI is done with the Nevada locals market.
Other potential sellers, however, don’t seem interested.
Boyd Gaming, which has 10 casinos in Las Vegas, operates four regional casinos — two in Missouri and one each in Indiana and Ohio — through a lease agreement with Gaming and Leisure Properties that was offloaded as part of Penn Entertainment’s 2018 purchase of Pinnacle Entertainment. The company has expressed a reluctance to a similar deal in Las Vegas.
“There are a couple of single [casino] owners that we’ve spoken with over the years,” Kieske said. “We would love to do more deals in Las Vegas over time.”
Penn to open M Resort expansion on Dec. 1
Penn Entertainment CEO Jay Snowden confirmed the company’s $206 million expansion at M Resort will open Dec. 1, doubling the size of the Henderson hotel-casino to 765 rooms.
But there wasn’t much discussion about the property on the company’s third-quarter conference call last week. The focus was on Penn’s announcement that it was ending its ESPN Bet sports wagering agreement two years into a 10-year deal that was worth $1.5 billion.
ESPN countered that it would enter into a new partnership with DraftKings as the network’s exclusive sportsbook and betting odds provider.
Meanwhile, Penn said it was rebranding its sports betting business as theScore Bet, with its initial launch taking place in Missouri on Dec. 1. It’s unclear if Penn will bring theScore Bet to M Resort, which has a William Hill-branded location. A change would require Nevada regulatory approval.
What I'm reading
☑️ How New Jersey gaming could be impacted by Democratic governor’s win — Ryan Butler, Covers
An Atlantic City smoking ban, online gaming taxes and new casinos could be shaped by Democrat Mikie Sherrill’s victory.
🏝️ Kevin Mullally steps down as CEO of UAE regulator, replaced on interim basis by Jim Murren — Ben Blaschke, Inside Asian Gaming
Murren, who is chairman of the agency’s board, is also chairman of Resorts World Las Vegas and CEO of Ritz-Carlton Yacht Collection.
News, notes and quotes
🙌 Culinary Union marks the organization’s 90th year
Culinary Workers Union Local 226 is celebrating its 90th anniversary as an organization this month. The union was chartered on Nov. 1, 1935, and currently has more than 60,000 members. Secretary-Treasurer Ted Pappageorge remarked that the union has achieved 100 percent representation on the Strip. The Culinary also owns the record for the longest continuous strike in U.S. history for the six-year, four-month and 10-day picket line in front of the Frontier Hotel and Casino that ended in February 1998. “We’ve fought for laws that keep workers safe, won billions in raises and benefits, and elected shop stewards to office,” Pappageorge said.
🎓 Former UNLV President Bob Maxson dies at age 89
Former UNLV President Maxson died Sept. 28 at his home in the San Juan Islands, Washington. He was 89. Maxson was UNLV’s fifth president, serving from 1984 to 1994. His daughter, gaming attorney Kimberly Maxson-Rushton, said he was proud that two of his grandchildren currently attend UNLV. Maxson expanded graduate education at UNLV and oversaw the construction of several buildings, including the Thomas T. Beam Engineering Complex, the Rod Lee Bigelow Health Sciences Building and the Robert Bigelow Physics Building.