Stratosphere Casino Purchase by Mutual Fund Approved
With most stocks and investments looking decidedly uncertain in the present economy, financial fund operators are seeking to find long-term safety without sacrificing decent return on investment, and the casino world has drawn attention as being a great solution to the problem. Thursday, the Nevada Gaming Commission gave approval to the purchase of the Stratosphere Casino and Hotel by a fund run by Goldman Sachs and Company.
The Sachs fund will pay $1.3 billion to a company owned by famed entrepreneur Carl Icahn in exchange for the Stratosphere, two Arizona Charlie's casinos also in Las Vegas, and the Aquarius Casino Resort in Laughlin, Nevada.
Interestingly, the managing director of Golman Sachs, Jonathan Langer, said the Stratosphere's market positioning as a destination for budget travelers was key to the attractiveness of the deal. As the Vegas Strip, and particularly the north end occupied by the Stratosphere, evolves to become an exclusive playground for the wealthy and elite, Langer and his analysts see a demographic being largely ignored.
"We feel that the middle-class customer, which we feel is the biggest piece of the demographic pie in terms of who's coming here, is potentially being priced out of the Las Vegas Strip," Langer said. "We feel this presents an opportunity for the Stratosphere to take advantage and cater specifically to that customer."
Funds have been turning to Vegas as the closest thing to a sure bet in a rocky financial market. Goldman Sachs was a minority part of the $5.4 billion deal to take Station Casinos private in November, and Texas Pacific Group is set to purchase Harrah's Entertainment for $17.1 billion, a deal which should close later this month.
After careful studies of trends and revenue streams, Wall Street has learned what any gambler could have told it in a heartbeat: nothing pays like being the house.
