On October 6, the Las Vegas Review-Journal reported that Tilman Fertitta has filed plans with the Clark County Commission to add another major resort to the Las Vegas Strip. According to County records, the proposed project is a 43-story, 2,420-room hotel-casino that will feature villas, convention space, a spa, auto showroom and a 2,000-plus seat theater.
Feritta purchased the six-acre plot on which the proposed development will sit in mid-June for $270 million, or roughly $45 million per acre. It’s at the southeast corner of Las Vegas Boulevard and Harmon Avenue, just south of Planet Hollywood and across the street from the Cosmopolitan and Aria.
The Clark County Commission will consider the project plan next week, on October 19.
Through his company, Fertitta Entertainment Incorporated, Fertitta owns the NBA’s Houston Rockets, as well as 60% of Landry’s Inc., which has a portfolio of hundreds of restaurants, hotels and casinos.
The last few years have been very busy for Fertitta and his company, as they have been for most of the US gambling industry.
Expanding the Terrestrial Footprint
This new property, by virtue of its location in the heart of the Strip, will face a level of competition that Fertitta’s existing casinos, even the old Golden Nugget on Fremont Street, simply do not. On the bright side, multiple projects are underway that will drive foot traffic to the location, as New York’s Flag Luxury Group is building a four-story retail and dining complex at the southwest corner of the intersection. Another nearby project that will include 300,000 square feet of retail, dining and outdoor entertainment space has also received approval.
In addition to the Fremont Street property, Fertitta’s land-based casino holdings consist of Golden Nugget-branded properties in:
- Atlantic City, NJ
- Biloxi, MS
- Lake Charles, LA, and
- Laughlin, NV
Fertitta is in the process of a $43 million deal to acquire the Wildwood Casino and Hotel in Cripple Creek, Colorado. This, too, will take on the Golden Nugget name. Construction is also underway on a 60,000-square foot Golden Nugget property in Danville, Illinois. Despite rising costs, this is reportedly on track for its targeted March 2023 opening.
Despite this past commitment to the Golden Nugget name, rumor has it that the new resort will have its own brand. That may be to avoid confusion with the Fremont Street property, or it may represent a new page in Fertitta’s strategy book.
The 2020-2021 SPAC Frenzy
The most significant of Feritta’s recent spate of deals came in February 2021, when Fertitta Entertainment announced that it would go public via its $6.6 billion acquisition by Fast Acquisition Corp., a special purpose acquisition company. The deal was to be Feritta’s fourth involving a SPAC in the span of just over a year. (SPACs are also referred to as “blank check” companies. They conduct no activities of their own but pool investor money to take a privately-owned company public as an alternative to an IPO.)
The valuation of Fertitta Entertainment was seen as high at the time, at 9.25 times its estimated 2022 EBITDA. However, some felt it was justifiable given the company’s ownership of about half the shares of Golden Nugget Online Gaming (GNOG). GNOG had gone public via a SPAC deal of its own in December 2021.
Others were more skeptical of GNOG’s prospects, pointing out, for instance, its excessive debt.
Despite all the hype at the time, the situation has since changed dramatically. Fertitta backed out of the Fast Acquisition Deal and GNOG is no longer a public company.
Selling Off the Online Business
In August 2021, DraftKings announced an all-shares deal to acquire GNOG for what was, at the time, about $1.56 billion worth of DraftKings stock. The completion of that deal in May 2022 coincided with the liquidation of Fast Acquisition.
This new Vegas Strip project may be in part a result of that GNOG deal. The infusion of cash must have helped Fertitta’s liquidity considerably.
By losing GNOG, Fertitta has stepped back in time, with a portfolio consisting almost exclusively of real estate dedicated to retail, dining and land-based casinos. This is at a time when most competitors are focusing, in their own ways, on their online ambitions. For instance:
- iGaming market leader BetMGM is a joint venture between MGM Resorts and online gambling company Entain
- Caesars’ interactive division remains in-house
- Rush Street Gaming spun off Rush Street Interactive as a publicly traded company (RSI on the NYSE), but the two entities remain partners on the Rivers/BetRivers brand
What does that mean for Fertitta’s strategy going forward?
While he continues to expand the Golden Nugget brand in Colorado and Illinois, part of the benefit of that visibility is now going to DraftKings and not his own company. Whatever brand he does go with for the Strip resort may represent the beginning of a new direction for Fertitta Entertainment.