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Gaming Guru

Howard Stutz

Brandywine clears step to run Herbst Gaming sports books

5 September 2008

LAS VEGAS, Nevada -- Gaming regulators on Thursday gave sports book operator Brandywine preliminary approval to operate sports and race wagering facilities at six Herbst Gaming properties.

Meanwhile, an attorney for Herbst said the financially troubled casino operator is still negotiating with its lenders and hopes to have a resolution to debt issues by the end of the month.

The deal with Brandywine, which gives the sports book operator control of the race and sports books at Terrible's on East Flamingo Road, the company's three Primm casinos and two casinos in Pahrump, still allows Herbst to share in any revenues.

"It's a great deal for us," Herbst general counsel Sean Higgins said following a brief hearing in front of the Nevada Gaming Control Board. Brandywine will pay Herbst a percentage of the revenues earned by the race and sports books.

"There is a guaranteed minimum, and they plan on accepting higher wagers," Higgins said. "The sports books were never our focus, and it made sense to bring in a company that will make them successful."

Higgins said Herbst Gaming, which faces a Sept. 30 deadline to come up with a financial restructuring plan covering nearly $1.2 billion in debt, is meeting with its lenders.

"We're still actively talking with our lenders and we're working on a deal," Higgins said.

In March, Herbst said it was looking at a possible bankruptcy filing. Herbst, which is privately held by brothers Ed, Tim and Troy Herbst, hired Wall Street investment firm Goldman Sachs to explore restructuring alternatives. The company's two outside board members are evaluating the restructuring proposals.

Everything from selling the company to disposing of assets -- Herbst has 15 casinos in Nevada and the Midwest and a 7,200-machine Nevada slot route operation -- is on the table.

The deal with Brandywine, which will operate the Herbst sports books under the Lucky's Race and Sports Book brand, could give the company some added revenues.

Brandywine Chief Executive Officer Joe Asher said the company will acquire roughly 30 employees from Herbst as part of the transaction. Glynis Mickelius, who oversaw the three Primm casinos' sports books for Herbst, will join Brandywine as director of the company's Southern Nevada operations, which also includes the sports book at the Plaza downtown.

The transaction still needs approval from the Nevada Gaming Commission on Sept. 18. Asher said Brandywine could take over the operations by the end of the month.

Once the deal closes, Asher said, Brandywine will have roughly 70 employees. The company also runs race and sports books at the Grand Sierra in Reno, Casino Fandango in Carson City and two casinos in Elko.

Asher told control board members that the company, which began operations in July, wanted to get a handle on its operations before looking at other wagering enhancements, such as telephone accounts and bringing in Rapid Bet Live, a live sports wagering product offered by Progressive Gaming International Corp.

"We want to get the essentials up and going before we attack some different areas," Asher said of the rapidly expanding company.

"We've had you on the agenda every month for the last five months," control board Chairman Dennis Neilander told Asher.

Brandywine clears step to run Herbst Gaming sports books is republished from