Question of the Day - 06 December 2005

At the time of this writing, the Powerball jackpot stands at approximately $47 million, which would yield a prize of about $23 million if you went for the one-off cash payment as opposed to taking the full prize as an annuity over time. That figure is then subject to state and federal taxes, which would likely reduce it by about half. The biggest Powerball jackpot to date was hit back in October of 2005, when the prize had climbed to a staggering $340 million, for a one-time cash payment of approximately $164 million. Even though taxes would eat into that figure significantly, that would still leave you with around $80 million to play with.

Are these figures enough to buy a Las Vegas casino? Of course, sale prices vary considerably, based on a range of factors including the size, location, and financial health of the property and whether it’s being bought as a going concern or if it’s a strategic purchase made with redevelopment in mind. Here are the numbers on some recent sales to give you a ballpark idea:

• In 2003, the bankrupt Aladdin (center Strip) was sold for $635 million.
• In February 2004, Harrah’s sold Binion’s Horseshoe to MTR Gaming for a reported $20 million.
• The following month, Jackie Gaughan sold his downtown Plaza, Western, Gold Spike, and Las Vegas Club properties, plus some additional neighboring real estate, for $82 million.
• The same year, the Las Vegas Hilton (off-Strip) changed hands for $280 million.
• In May 2005, 2.7 acres near the intersection of Ogden Ave. and Third Street downtown, a parcel of land which included the Lady Luck casino, was sold for $10.26 million.
• In July ’05, Station Casinos snapped up the bankrupt Castaways (east Las Vegas) for $33.7 million.
• Harrah’s massive 2005 spending spree included the purchase of Bourbon Street (off-Strip) for $61 million and Imperial Palace (center Strip) for $370 million, not to mention $9 billion for the entire Caesars Entertainment Group.

The above figures -- from $20 million for Binion’s to $9 billion for Caesars Entertainment -- represent the kind of bankroll you might need to buy a property in various locations around Las Vegas. But in relative terms, getting hold of the cash is probably the easiest stage in becoming a Las Vegas casino owner. The trickier part lies in getting officially licensed to run the joint, and that’s where things start getting a lot more complicated, not to mention additionally expensive.