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Best of Liz Benston

Gaming Guru

Liz Benston

Expansion in Store for Herbst Property

26 October 2004

Terrible's casino expects to begin construction next month on a new parking garage that will mark the first phase of a larger casino expansion.

"We've been planning it for some time," Herbst Gaming Inc. Chief Executive Ed Herbst said. "At peak times we're out of parking. That's a nice problem to have."

The 450-space garage will be built behind the casino and will run parallel to Flamingo Road. It will have four levels and feed into the back of the property. Some rooms will be torn down to accommodate the garage, which will fit onto the property's 10-acre lot. Terrible's, located at 4100 Paradise Road, now has about 850 parking spaces.

After the parking garage is complete, the company is expected to begin work on a casino expansion, Herbst said. The project will likely double Terrible's 35,000-square-foot casino, which now has about 800 slot machines, he said.

Bear, Stearns & Co. bond analyst John Mulkey said the expansion makes sense.

"It would be difficult for Herbst to grow cash flows from Terrible's without more parking to satisfy peak demand on the weekends," Mulkey said. "A parking garage should help stage an eventual expansion of the casino, which we believe is warranted given its capacity constraints over the weekends."

Herbst hasn't expanded the property since it opened its flagship Terrible's hotel and casino in 2000 with about 400 hotel rooms. The property, the site of the former Continental Hotel, has drawn a following from local gamblers as well as budget-conscious travelers.

Herbst said business is "fantastic" at the property.

"We're bullish on the (Paradise Road) corridor," he said. "Without parking we can't expand. That's our No. 1 need right now. At peak times and during the summer, any local gaming place needs covered parking."

Herbst Gaming, which is privately owned by the Herbst family but has publicly traded bonds, is expected to report third quarter earnings next month.