April 22 (Bloomberg) -- Peter Carlino, chief executive officer of Penn National Gaming Inc., likens himself to a wolf stalking bigger prey.

Armed with $1.48 billion, Carlino says he’s waiting until debt-laden MGM Mirage, Harrah’s Entertainment Inc. and other ailing casino owners are forced to sell properties along the 4.5-mile Las Vegas Strip. Once financial restructuring moves are exhausted and companies face default, he will make his move.

“We’re watching things very closely but will pounce only when the sun, moon and stars align,” Carlino said in an e-mail last month. “Penn National can wait as long as need be to make acquisitions that will be opportunistic and, more importantly, return-focused.”

Penn National, a Wyomissing, Pennsylvania-based racetrack owner that expanded into slots, has cash at a time when the world’s biggest casino operators don’t. Revenue at Strip properties like Harrah’s Caesars Palace and MGM Mirage’s Bellagio has fallen, making it harder for their owners to service debt loads. Boyd Gaming Corp. and Wynn Resorts Ltd. are also in a position to bid for assets.

Penn National is expected to report first-quarter earnings of 34 cents a share tomorrow, excluding some items, on sales of $609 million, the average of analysts’ estimates compiled by Bloomberg.

Carlino’s spending money came as a divorce settlement from Fortress Investment Group LLC and Centerbridge Partners LP, private equity companies that abandoned their takeover of Penn National in July. They paid the gaming company a $225 million breakup fee and invested $1.25 billion in interest-free preferred stock.

‘The Wolf’

Carlino, 62, has been on the prowl for at least six months. “Picture a great plain and a low rise of a hill, the wolf sitting there, staring out at the horizon” and looking for weakness, he said in an Oct. 27 conference call.

Penn National was preparing to bid for Treasure Island when MGM Mirage CEO James Murren accepted a $775 million offer from investor Phil Ruffin in December, Penn Chief Financial Officer William Clifford said in an interview last month.

Ruffin’s bid was far higher than what Penn was willing to pay, Clifford said.

“We’ve passed on everything he’s sold, but he’s managed to sell everything to date,” Clifford said of Murren. “We’re not going to be one of his success stories.”

Penn rose 84 cents to $27.71 at 4 p.m. New York time in Nasdaq Stock Market trading and has gained 30 percent this year. MGM, down 61 percent this year before today, climbed 12 cents to $5.52.

Spare Cash

Las Vegas-based Boyd mothballed a resort under construction on the Strip in August and has $2 billion available to borrow. The company, operator of 16 casinos, offered to buy some assets from Station Casinos Inc., whose owners have proposed a prepackaged bankruptcy.

“We remain interested and focused on our proposal for Station’s assets,” Boyd spokesman Rob Stillwell said yesterday. He wouldn’t say whether Boyd will consider other casino offers.

Wynn Chairman Stephen Wynn, who built the Mirage, Treasure Island and Bellagio, is buying back as much as $1 billion in debt to reduce interest costs.

“We keep a quarter of a billion in case something good comes up, we keep money on the side in addition to that,” Wynn said in the November interview.

Wynn officials couldn’t be reached, Samanta Stewart, a company spokeswoman, said yesterday.

“Wynn has typically been a developer; the acquirers, you would have thought more Boyd and Penn,” Michael Paladino, an analyst at Fitch Ratings, said in a phone interview. “Still, given this environment and that MGM has basically everything up for sale, I don’t think you could discount Wynn potentially looking to take back Bellagio or Mirage.”

Kissing ‘Frogs’

Gambling revenue on the Strip fell 15 percent in January and 23 percent in February, according to Nevada’s Gaming Control Board. Last year’s 11 percent decline was the most since record keeping started in the 1980s.

MGM Mirage, the biggest casino operator on the Strip, has until May 15 to produce a plan to restructure about $13 billion in debt. The company, controlled by 91-year-old Kirk Kerkorian, is also trying to complete the multibillion-dollar CityCenter project with state-owned Dubai World.

Harrah’s, the world’s biggest casino company, has conducted two debt exchanges to lower obligations from the company’s $30.7 billion buyout by Leon Black’s Apollo Management and TPG Inc. in January 2008. The owners are buying Harrah’s debt to retain control of the company should it face bankruptcy.

Jacqueline Peterson, a Harrah’s spokeswoman, declined to comment on asset sales.

Carlino said he’s interested in mid-scale Strip resorts that fit with Penn’s regional clientele. His properties include Hollywood Casino Tunica in Mississippi and Charles Town Races & Slots in West Virginia.

“There’s a dozen properties in town here that would match perfectly,” Carlino said. “You kiss lots and lots of disgusting frogs because I know there’s a princess there someplace.”

Price Gap

MGM’s Murren has resisted fire-sale deals. Months ago, he rejected Penn’s offer to buy bonds at a discount and exchange the debt for a casino, Clifford said.

“He fixated on the multiple we’d pay,” Clifford said. “I suspect that attitude may have some flexibility now.”

Investor Carl Icahn has suggested MGM Mirage restructure in bankruptcy. Icahn, 73, has proposed swapping debt for equity, Reuters reported last week.

While shopping the Strip, Penn will probably bid for bankrupt Detroit casino Greektown, Clifford said.

“We are looking at every single asset,” Clifford said. “I can’t imagine an asset sale today without us doing some diligence work on it.”

To contact the reporter on this story: Beth Jinks in New York at bjinks1@bloomberg.net

Last Updated: April 22, 2009 16:43 EDT