Company's cash holdings prompt rumors of a possible spending spree on the Strip

Penn National Gaming, rumored for months to be on the prowl for bargains on the Las Vegas Strip, has applied for a Nevada gaming license.

The pretext for the application was Penn’s purchase of a one percent stake in Morris Goldstein and Associates, an independent slot machine distributor run by the former CEO of Alliance Gaming, now Bally Technologies.

Publicly traded Penn, which operates 19 casinos and racetracks in the United States, has roughly $1.5 billion in cash and has been mentioned since last year in numerous acquisition rumors along the Strip. Observers have linked Penn to casinos operated by MGM Mirage and Harrah’s Entertainment.

“The strategy is ultimately to have the mechanism ready to do something, should something fall into place,” spokesman Joe Jaffoni told the Las Vegas Review-Journal.

Bill Lerner, principal with investment analysts Union Gaming Group, said getting licensing approval now could help Penn negotiate a better price multiple for a Strip casino down the road.

“If closing a deal more quickly is important, a seller might be willing to give up some dollars in exchange for speed,” he suggested. “It’s a good heads-up move by Penn National to move forward.”

During its first-quarter earnings conference call this spring, Chairman and CEO Peter M. Carlino said the company was carefully evaluating various Las Vegas assets.

“Time alone will tell whether we can find the right opportunity at the right price,” he said.