New York financier and billionaire investor Carl Icahn has decided to sell the Stratosphere and three other southern Nevada casinos to an associate of the Goldman Sachs investment firm for $1.3 billion, pushing Wall Street further into the gambling business. Wall Street has since long been a significant financer to the gaming industry and a sponsor of its securities. However, now twisting the long strategy banks are taking stakes as they seek to capitalize on the thriving casino business.
Goldman’s latest acquisition comes after Morgan Stanley last year paid $74 million for a beach facing casino site in Atlantic City, New Jersey. Morgan Stanley also posses a 18 percent stake in Trump Entertainment Resorts. On the other hand, Goldman has a stake in the Las Vegas Hilton. The Las Vegas Strip, home of many of the world’s biggest casinos, had generated $6.69 billion in revenue last year, representing a jump of 11 percent from 2005, says the Nevada Gaming Control Board.
Market analysts are of the view that Goldman is making a decent long-term investment in where the Strip is heading and said that the Stratosphere and the land could be more valuable imploded and built up with something else. Evidently, Icahn’s American Real Estate, a holding company with a market value of $6.7 billion, had sensed the booming trend in the time to come much earlier and began investing in the casino business in 1998 with the purchase of the Stratosphere. It bought the other Las Vegas casinos in 2004.
The agreement between American Real Estate Properties, a unit of Icahn’s American Real Estate Partners and Whitehall Street Real Estate Funds also comprises 17 acres of undeveloped land at the Stratosphere. The takeover is subject to approval by the Nevada Gaming Commission and the Nevada State Gaming Control Board. The companies hope to complete the transaction in about eight months.
