Regional operators stalking Las Vegas

Regional casino operator Isle of Capri flirted with Las Vegas earlier this decade, buying and selling the now-closed Lady Luck.

The company eventually turned its attention toward the booming riverboat casino market, expanding in the South and Midwest.

But Las Vegas is back in play.

During the Global Gaming Expo, executives from St. Louis-based Isle of Capri made it known that the company is interested in financially distressed casinos in Las Vegas and other markets -- not to buy, but to manage.

Bankruptcy and other financial dealings will land troubled casinos in the hands of banks and creditors who have little interest in operating the resorts. Isle of Capri President Virginia McDowell said the company offers an alternative.

"There are going to be management opportunities in the U.S.," she said. "We're putting ourselves out there as a stable and experienced team that could come in and operate on a two- or three-year basis."

That time frame would allow for recovery of the economy and give Isle of Capri managers time to assess the casinos' value. The company might look to purchase those casinos. Isle of Capri owns 14 casinos, including riverboats and race tracks, in six states, as well as casinos in the United Kingdom and Bahamas.

Regional rival Penn National Gaming is also shopping for casinos. The company has $1.5 billion at its disposal. Isle of Capri isn't flush in that sense, but did turn a profit in fiscal 2009, its first since 2006.

Clearly, McDowell has targets, although she's not tipping her hand.

One company that makes the most sense is bankrupt Herbst Gaming Corp. A judge has said all of Herbst, including casinos in Nevada, Iowa and Missouri, will be controlled by creditors.

Isle operates casinos in both Iowa and Missouri, so licensing approval wouldn't be an issue. Nevada would welcome a steady management team.

Some Station Casinos properties could shake free as the company winds its way through bankruptcy, giving Isle of Capri another potential target.

McDowell said operating a casino in the Las Vegas locals market is similar to how the company manages its properties regionally. Customers are discerning and want value.

Like most gaming companies, Isle of Capri has cut costs. But McDowell said many of the changes were accomplished with the input of customers.

At its Waterloo, Iowa, casino, Isle of Capri tossed a high-end steakhouse in favor of a restaurant with more reasonably priced fare. Business subsequently increased.

Wall Street likes what Isle of Capri has done.

"Our positive thesis on Isle remains," Oppenheimer gaming analyst David Katz said recently. "We believe the company's cost of capital and capital needs remain stable relative to other casino names."

Howard Stutz's Inside Gaming column appears Sundays. E-mail him at hstutz@ reviewjournal.com or call 702-477-3871. He blogs at lvrj.com/blogs/stutz.