Proposal Would Allow Bigger Institutional Bets In Nevada Gaming
2009年5月23日 - 6:43AM
Dow Jones News
Institutional investors may soon get the chance to place a
bigger bet on black in Nevada's capital-starved casino
industry.
Nevada gaming regulators are weighing a proposal that would
allow institutional investors to acquire greater stakes in public
casinos without going through an onerous licensing process that can
cost hundreds of thousands of dollars and take up to a year to
complete.
Currently, institutional investors fly under the gaming-license
radar if they keep stakes in publicly traded casino companies at
15% or less. However, Frank Schreck, a Las Vegas gaming attorney
whose clients include Wynn Resorts Ltd. (WYNN) and Harrah's
Entertainment Inc. (HET), has put forth a proposal to grant waivers
for stakes of up to 25%.
"Now that the breadth of investor has expanded tremendously,
especially when you start considering private equity, this takes
some of the old reluctance away that used to be there for investing
in gaming," Schreck told Dow Jones Newswires.
Institutional investors include banks, insurance companies and a
slew of funds. Typically, two-thirds of daily trading in U.S.
equities markets is done on behalf of institutional investors.
Schreck spearheaded regulation in 1992 that allowed
institutional investors in a restructuring to convert debt to
equity without having to be licensed if they were granted a waiver
in Nevada. In addition, he successfully petitioned Nevada
regulators to raise the investment stake for waivers to 15% from
10% for institutional investors.
"Certainly the original institutional investor provision going
from 10% to 15%...was very good for the state and the industry," he
said. "It was a new source of capital that didn't exist."
Mike LaBadie, chief of the corporate securities division for
Nevada's Gaming Control Board, said Schreck's new proposal will
likely be addressed at a public workshop before going to the
state's gaming board and commission for approval. He said the time
frame of the approval process is uncertain, but could take a couple
months or longer, depending on logistics.
The move to find new or larger investments comes at a time when
concerns about unsustainable debt burdens and severe declines in
consumer spending have ravaged casino stock values of the industry
titans like MGM Mirage (MGM) and Las Vegas Sands Corp. (LVS).
Bill Lerner, a gaming consultant at Union Gaming Group, said the
licensing requirement "has historically been a barrier for some
institutional investors to take larger stakes in gaming companies.
Given the inherent nature of the licensing process and the
commitment associated with it...if it were removed, I think that
you might see some more concentrated ownership in the gaming
companies, simply because it's easier to do so."
Schreck said the definition of institutional investor may also
need to be broadened to allow other companies that aren't federally
regulated to invest more.
-By A.D. Pruitt, Dow Jones Newswires; 201-938-2269;
angela.pruitt@dowjones.com