GOLDEN NUGGET Gambling on Vegas casino

The casino's location far from the glamorous Strip is a big disadvantage.
LAS VEGAS (AP) -- Dot-com millionaires Tim Poster and Tom Breitling knew how to get a deal at a hotel-casino and book flights to Las Vegas, but were far less expert about the gambling business.
Yet the entrepreneurs have transformed themselves into gaming executives with the purchase of downtown Las Vegas' famed Golden Nugget.
Poster and Breitling, who founded and later sold the travel Web site Travelscape, bought the hotel-casino and the Golden Nugget in Laughlin, Nev., last June, paying $215 million to MGM Mirage.
The pair hope to restore glamour to the Golden Nugget brand with high-end gamblers, a Fox Television reality show called "The Casino" and headliners harkening back to the days of Frank Sinatra.
The Golden Nugget is already a successful operation, but with its location in the faded downtown area, far from Las Vegas' glittering Strip, it's at a disadvantage compared with megaresorts like Bellagio and Mandalay Bay. So it's a risky proposition for a pair of young mavericks with limited casino industry experience.
In his office at Golden Nugget, Poster waved aside any doubts. Like famed casino developer Steve Wynn, who once owned the Golden Nuggets, Poster said he takes chances.
"I always fancied myself as a gambler," the Las Vegas native said. "I come from a family of gamblers. In my previous business ... we took risks all the time."
That business, Travelscape, specialized in discount prices for hotel reservations and air-hotel packages. Poster, 35, and Breitling, 34, sold it to Expedia for about $105 million in 2000, before the dot-com crash.
What they did
In 2003, the pair began raising money to buy the two Golden Nuggets. They eventually secured $175 million through a debt offering and loan, plus $50 million in equity.
As part of the equity, the two staked $37.5 million of their own money and persuaded tennis star Andre Agassi and former International Game Technology chairman Chuck Mathewson to each invest $5 million. Former Expedia executive Rich Barton also sank $2.5 million into the venture.
Poster and Breitling needed to assure skeptics that gambling novices could run big-time casinos. So they persuaded senior management at the casinos to stay under lucrative contracts.
So far, they've gotten a good reaction in financial circles.
"These guys are fired up," said Marc Falcone, a Deutsche Bank gambling analyst in New York. "They have an energy level that hasn't been seen in this business in a long time."
Operations
With licensing behind them, the new owners began running the company about two months ago. Poster, who once served on the board of directors for Station Casinos, handles the gambling side while Breitling manages the rest of the operations.
The Golden Nugget Las Vegas is considered the jewel of downtown with 1,907 hotel rooms and 2,800 employees, the largest of the 14 hotel-casinos in the downtown area. Unlike some of its neighbors, the casino hasn't fallen into a state of disrepair -- MGM Mirage spent about $35 million renovating its rooms, restaurant and convention area before the sale.
Part of the pair's strategy recalls Las Vegas' past, when big-name acts were among the biggest draws. The Golden Nugget's grand opening weekend March 5-7, featured performances by Tony Bennett and Grammy Award winner Jewel.
To cement their gambling strategy, Poster said he has reached a deal to replace coin-operated slot machines with more modern ones, an important change because slots dominate the casinos' revenues.