Apr. 17, 2008 --Facing competition from Northern California's Indian casinos, a major Lake Tahoe casino is changing hands and might exit the gambling business.

The Horizon Casino Resort's landlord said Wednesday he is considering turning the resort into a residential-retail complex when he takes control of the property in three years. That would end four decades of gambling at the Horizon, one of the big four casinos on Tahoe's south shore. In its heyday it hosted the likes of Elvis Presley and Muhammad Ali.

Park Cattle Co., a major Tahoe-area landowner, is gaining control of the Horizon by settling a long-running lawsuit accusing the hotel's owner and operator of running the place into the ground.

Craig Sullivan, chairman of Park Cattle, said the Horizon's days as a casino will end "in all likelihood." He cited "the realities of gaming in California. That's already an over-occupied market, and it's going to get worse."

The Cache Creek and Thunder Valley casinos north of Sacramento have been taking business from Lake Tahoe and Reno for years, and the Shingle Springs Band of Miwok Indians plans to open the Foothill Oaks Casino on Highway 50 later this year.

In the first eight months of Nevada's fiscal year, the south shore casinos' gambling revenue fell 5 percent, according to the Nevada Gaming Control Board.

The end of gambling at the 539-room Horizon could have unsettling implications for its three competitors at the south shore. John Packer, a spokesman for Harveys and Harrah's resorts, said the change could hurt the industry even as it would remove a competitor. Customers enjoy coming to a market where there are several options.

"I don't think we would like to see a reduction in the gaming in the market," Packer said. "We like competitors. ... People like the variety." Harrah's Inc. owns both Harveys and Harrah's Lake Tahoe.

The fourth big casino, the MontBleu, is owned by Tropicana Entertainment LLC, which also owns the Horizon. Tropicana agreed to surrender the Horizon to Park Cattle, which owns the land under both properties, to settle their lawsuit.

Under the settlement, Tropicana and its owner, casino executive William Yung, will vacate the Horizon in three years and pay Park Cattle damages totaling $165 million. Yung has operated the Horizon since 1990.

Park Cattle had sued Tropicana's subsidiaries, claiming they had allowed the Horizon to fall into disrepair. In a court document, Park Cattle said the Horizon developed "shocking" problems with asbestos, mold and "general filth and decay."

Park Cattle said Yung used a "slash and burn philosophy with the Horizon's maintenance and housekeeping crews" and added that he "failed to budget a dime" for upkeep.

The case was settled after eight weeks of trial in state court in Minden, Nev. Although the agreement was supposed to remain confidential, Tropicana disclosed the terms earlier this month in a filing with the Securities and Exchange Commission. One of Park Cattle's lawyers, Bill Warne of the Downey Brand firm in Sacramento, confirmed the details and called it one of the largest settlements ever negotiated by a Sacramento law firm.

Lawyers for Tropicana couldn't be reached for comment.

Warne said Park Cattle insisted that Yung and Tropicana keep running the Horizon for three more years. That will give Park Cattle time to figure out its plans for the resort.

As part of the settlement, Tropicana and Yung pledged to keep the Horizon "decent, safe and sanitary," and Park Cattle will monitor the situation closely, Warne said.

Sullivan said Park Cattle might try to develop the Horizon into some kind of residential-commercial complex that would dovetail with the adjacent Edgewood-Tahoe Golf Course. The course is owned by Park Cattle.

"We don't know what we're going to do with it," Warne said. "We're going to take three years to study our options."

The settlement gives Park Cattle an option to buy out Tropicana's lease on the MontBleu in 2018, or 10 years ahead of schedule.

The Horizon was built in 1965 by Del Webb, who called it the Sahara Tahoe. Ali fought there in 1972 (he knocked out Bob Foster), and Presley performed there several times in the mid-1970s.

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