Landry’s Completes Acquisition of Two Golden Nugget Casinos

The Nevada Gaming Commission on Tuesday approved the sale of the Golden Nugget casinos to Landry’s Restaurants Inc., marking the dining company’s first foray into the highly competitive gambling industry.

With the commission’s OK, the Houston-based firm completed the deal Tuesday to take over the Golden Nugget properties in downtown Las Vegas and Laughlin, Nev. Landry’s paid $140 million and assumed $155 million in debt for the hotel-casinos in a transaction that was announced in February.

Tilman Fertitta, Landry’s chairman and chief executive, said his company would begin renovating the Golden Nugget Las Vegas immediately and start an expansion next year that could cost $150 million to $200 million.

Fertitta wants to enlarge the casino’s gambling floor, add upscale restaurants, a 1,200-seat showroom and a 400-room hotel tower. He expects work to be completed within the next two years.

The Golden Nugget Las Vegas will be Landry’s biggest asset, and Fertitta said it would get “a lot of tender loving care.” Built in 1946, it’s the largest of the 14 hotel-casinos in the downtown area, with nearly 40,000 square feet of gaming area and three hotel towers containing 1,907 rooms and suites.

Landry’s owns and operates more than 300 restaurants including Chart House, Landry’s Seafood House, Joe’s Crab Shack and Willie G’s Seafood & Steakhouse. The company is the nation’s second-largest developer of aquariums and operates several hotels. Landry’s employs 36,000 people and had $1.2 billion in revenue in 2004.

The commission, which licensed Landry’s key executives including Fertitta, seemed upbeat about Landry’s purchase of the properties from the previous owners, Timothy Poster and Thomas Breitling of Poster Financial Group. The hotel-casinos had been underperforming, gambling analysts say, because Poster Financial had embarked on a risky strategy of luring high rollers who exposed the casino to serious losses.

Fertitta told the commission that he would discontinue that strategy and go after the “masses and some of the classes.” He was adamant about improving the bottom line at both properties.

“The Golden Nugget does not operate at a very high level right now and it hasn’t for years,” Fertitta said.

Fertitta projected a 25% increase in Golden Nugget revenue by 2008, but warned that success would take time.

“It ain’t going to happen overnight,” he said. But “I think you all are going to be pleasantly surprised.”