LAS VEGAS (AP) - Nevada casino owner and slot machine operator
Herbst Gaming Inc. faces bankruptcy unless it can reorganize and repay more than $1 billion in debt, according to documents filed with the U.S. Securities and Exchange Commission.

In reports filed Monday and Tuesday with the SEC, the Las Vegas-based owner of Terrible's casinos in Nevada, Iowa and Missouri said poor financial results during the second half of 2007 have continued in 2008.

The company blamed the slumping economy and a ban in Nevada on
smoking in taverns and restaurants where it manages slot machines.
It also cited competition from tribal casinos in Southern California.

Herbst Gaming is privately held by brothers Ed, Tim and Troy Herbst, but has about $800 million in debt in publicly traded bonds.

Herbst Gaming general counsel Sean Higgins declined comment, telling the Las Vegas Review-Journal the SEC filing would speak for the company.

Company revenues were $849.2 million in 2007, almost 43 percent higher than 2006, after spending $543 million to acquire two major casino companies and nearly doubling the size of its casino holdings.

Herbst Gaming now owns 16 casinos in Nevada, including three properties in Primm that it bought last April from MGM Mirage Inc., and properties in Reno, Sparks, Verdi and Dayton that it acquired in January 2007 from Sands Regent Casinos. Herbst owns Missouri properties in LaGrange and St. Joseph, and a casino in Osceola, Iowa. It also operates about 7,200 slot machines in Nevada bars and restaurants.

A 20 percent loss in revenues from its slot route business, coupled with a doubling of the company's costs, expenses and interest payments, sent Herbst Gaming to a net loss of $127.2 million last year.

In February, Herbst hired Wall Street investment house Goldman Sachs to evaluate strategic alternatives for the company, which could include anything from a debt recapitalization to a sale of some of its businesses.

According to an independent audit of the company's finances by Deloitte & Touche, Herbst Gaming has "going concern" qualification, which is a default under its credit agreement with its bond holders. The company plans to meet with bond holders to try to restructure the debt.

"We and our advisers are actively working toward such a transaction that would address the decline in our operating results and our capital structure, including our outstanding indebtedness," the company said in the filings.

If it cannot refinance or restructure, the company said it may be required to seek Chapter 11 bankruptcy protection.

Gaming Control Board Chairman Dennis Neilander said state gambling regulators have monitored Herbst financial issues in recent months.

Neilander recalled that the Aladdin resort on the Las Vegas Strip and Fitzgeralds hotel-casino in Reno operated in the past under bankruptcy protection.

"This is not a new scenario for us," he said.