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Howard Stutz

Herbst Gaming says casinos will be upgraded

23 March 2007

LAS VEGAS, Nevada -- Interstate 15 travelers may soon be greeted by a giant cowboy.

Once Herbst Gaming completes its $400 million acquisition of the three Primm casinos on the Nevada-California border next month from MGM Mirage, the company plans on installing a giant replica of its Terrible Herbst cowboy sign at the casinos' gateway.

"It wouldn't be surprising to see the largest cowboy in the state of Nevada out there on I-15," Herbst Gaming President Ed Herbst said Thursday after the Nevada Gaming Commission gave its formal blessing to the deal. "It's high on the priority list."

Herbst said the sign would be significantly larger than the 65-foot-tall Terrible Herbst cowboy near the intersection of U.S. Highway 95 and Rancho Drive.

Initially, however, Herbst Gaming plans on making Whiskey Pete's, Buffalo Bill's and Primm Valley the company's flagship properties. Herbst executives told the gaming commission that the casinos, located 35 miles south of Las Vegas, will receive upgrades to their amenities, especially in the casino where new slot machines will be purchased.

"We'll bring the gaming floors up to speed and the Terrible's brand will be introduced right away," Herbst said. "Hopefully that I-15 value-conscious person will become 'terribilized.' Our focus is on the existing customer base that we have today."

The Primm resorts, which encompass more than 2,600 hotel rooms and more than 138,000 square feet of casino space, will be integrated into the company's marketing campaigns that target Southern Nevada residents. Herbst Gaming also operates the off-Strip Terrible's Casino on East Flamingo Road and slot machines in more than 100 Terrible's gasoline stations and convenience stores around the valley.

Ed Herbst, who operates the privately held gaming company with his brothers, Troy and Tim, said the Primm casinos are the company's largest investment. Herbst Gaming is part of the Terrible Herbst Oil Co., founded by the brothers' grandfather, Ed Herbst. Jerry Herbst, the brothers' father, is chairman of Terrible Herbst.

"We were born and raised in Nevada and we've known the Primm family for many years," Ed Herbst said. "We're excited to carry out the legacy they started."

Nevada gaming commissioners praised the Herbst brothers on the deal. Chairman Pete Bernhard said he had expected that MGM Mirage, which has owned the Primm casinos since the late 1990s, would eventually divest itself of the properties. The company has focused its efforts on larger developments, such as building the $7 billion Project CityCenter.

"I'm glad to see you're the ones who will pick them up," Bernhard said.

The Primm casinos have lost business over the past decade because of the increasing number of American Indian casinos in Southern California that have attracted customers from neighboring San Bernardino County.

Michael Puggi, president of the Primm casinos for MGM Mirage, who will remain in the same position once Herbst takes over, said cash flow at the casinos had fallen almost 60 percent since 2000.

Puggi said customers might return because Herbst Gaming plans to improve the product.

Puggi said an upgraded entertainment lineup would be brought to the 6,000-seat Star of the Desert Arena at Buffalo Bill's.

The three Primm casinos employ 2,900 workers.

The transaction will be the second major casino purchase by Herbst this year. In January, the company closed a $119 million purchase of the Northern Nevada-based Sands Regent, which includes the Sands Regency in Reno, the Rail City Casino in Sparks and two smaller casinos. Herbst Gaming General Counsel Sean Higgins said the Rail City was being re-branded to include the Terrible's theme.

In addition to Terrible's in Las Vegas, the company operates two casinos in Pahrump, one in Henderson and one in Searchlight. It also has riverboat properties in Missouri and Iowa. The company is one of the state's largest slot route operators, with more than 8,400 games in noncasino locations, such as grocery stores, drugstores, convenience stores, bars and restaurants.

"In the future, we will be learning about every gaming market that we need learn," Ed Herbst said. "For now, Primm operates fine on its own and with the current management team and employees we have, the sky's the limit."