Classic Casinos Bid Adieu

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By Glenn Haussman

The thing about casino resorts is that even the most venerable of them are constantly at risk of closure. No, it’s not because gaming isn’t a profitable industry -- in fact its one of the most profitable. The reason most close is so they could be razed and replaced by something bigger and better. The properties of yore simply can’t meet the needs of today’s casino gaming enthusiast and lack the basic amenities they crave.

Its happened time immemorial, especially in Las Vegas. Even the most renowned properties eventually find their way to the chopping block. Casino resorts such as Sands, Dunes, Aladdin and Desert Inn have all become part of Vegas yesteryear as they were replaced by major resort projects such as Venetian, Wynn Las Vegas and an all new Aladdin resort (soon to be a Planet Hollywood).

Now it looks as if the Riviera could be the next old school Vegas gambling parlor set for redevelopment. That’s because its owner, Riviera Holdings Corporation (Amex: RIV) has announced its received a non-binding proposal from real estate developer Ian Bruce Eichner and the D. E. Shaw group, on behalf of an entity to be formed by them, to acquire by merger all of the outstanding shares of Riviera at a cash price of $21 per share, or about $261.7 million. Their proposal is conditioned upon satisfactory completion of due diligence, negotiation of definitive transaction documents, and receipt of necessary board, stockholder, third party, and regulatory approvals.

Following receipt of the proposal, Riviera entered into a 30-day exclusive negotiating agreement with Eichner and a member of the D. E. Shaw group, effective November 13, 2006. Riviera Holdings Corporation owns and operates the Riviera Hotel and Casino on the Las Vegas Strip and the Riviera Black Hawk Casino in Black Hawk, Colorado.

If the purchase goes through, chances are the property will be replaced. The Riviera is located adjacent to the Stardust, which closed earlier this month after a 48 year reign. When it opened, it was the largest casino in the state.

Now its from Stardust to dust as the casino will soon make way for Echelon Place, a 63-acre resort complex. The development, scheduled to open in early 2010, is expected to be among the most significant projects in Las Vegas' ongoing evolution, which continues to transform the city into one of the leading resort destinations in the world.

When complete, the site will combine the $2.9 billion wholly-owned Echelon Resort with hotel and retail joint ventures. The final project is expected to include a 140,000 square foot casino, 25 restaurants and bars, and lushly landscaped pool and garden areas. Echelon will be a contemporary and upscale resort, complemented by extensive, high quality and innovative business and meeting facilities. There will be a 4,000-seat theater and a more intimate 1,500-seat theater. Other hotels in site will include a 400 room Shangri-La Hotel, a 600 room Delano Hotel and a 1,000 room.

Also recently closed is the Boardwalk hotel, which had been expected to close since MGM-Mirage purchased the land back in 1998. This hotel, with its heyday Coney Island theme was a small hole in the wall kind of joint that will be razed to make way for MGM-Mirage's 66-acre Project CityCenter, a $ billion development between Bellagio and Monte Carlo that will include a 4,000-room hotel-casino, small boutique hotels, a shopping mall and high-rise condominiums.

In Atlantic City, the Sands Casino Hotel bid adieu last week after 26 years. Originally home to acts such as Frank Sinatra the property was the king of shore in the early days of legal gaming in Atlantic City. Now, its antiquated infrastructure is going to make way for another yet to be determined casino.

Pinnacle Entertainment Inc. purchased the privately owned property for about $250 million, with construction set to commence in 2008. A new hotel should be open in five years.

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