The Nevada Palace on Boulder Highway will be torn down to make way for a second Cannery casino. Photo by Gary Thompson.

Operators of the Nevada Palace told state gaming regulators Thursday they will replace the Boulder Highway casino with a newer version of the Cannery, a North Las Vegas casino run by the same management group.

The Gaming Control Board granted preliminary approval of a corporate restructuring of Cannery Casino Resorts, which operates the Cannery and the Rampart Casino in Summerlin. As part of the restructuring, the Nevada Palace will fall under the same management team. The Nevada Gaming Commission will vote on the issue Sept. 21.

Oaktree Capital Management, a Los Angeles-based private investment firm that oversees $31 billion, won the blessing of regulators to purchase one-third of Cannery Casino Resorts. The stake will grow to 42 percent when the gaming operator closes a transaction to buy the casino portion of a Pennsylvania racetrack.

Bill Wortman, a principal in Millennium Management, the casino operating subsidiary of Cannery Casinos, said Oaktree's involvement brings in outside investment that will allow the casino company to raise the necessary money that will allow for expansion both outside of Nevada and throughout the Las Vegas Valley.

"We're already looking at opportunities," Wortman said. "We're very interested in doing other projects in Southern Nevada."

The restructuring allowed Wortman to buy out two minority partners in Nevada Palace and bring the casino under the Cannery Casinos operating arm.

The next step is to replace the Nevada Palace, which opened in 1980. Wortman said the company will construct Eastside Cannery, a newer version of the North Las Vegas casino, around the Nevada Palace, operating the older casino until the new property is completed after an 18-month building process.

"The Nevada Palace sits close to the highway, so this allows us the opportunity to keep the casino open and keep our employees working while we build the new property," Wortman said. "It's outgrown its usefulness and we need a more modern facility."

With growing competition along the Boulder Highway from Sam's Town, Arizona Charlie's and Boulder Station, Wortman said the new Cannery property would have 307 hotel rooms, a casino large enough for 2,000 slot machines and other amenities. He said the current staff of 327 employees would be expanded.

Wortman, who bought Nevada Palace in 1984, didn't give a price for the new casino, saying plans and a budget were still being approved. However, he hoped to break ground in January.

The North Las Vegas Cannery has 201 hotel rooms, a 65,000-square-foot casino and several food and entertainment offerings.

Gaming regulators called the corporate restructuring somewhat complicated, with various subsidiaries and other pieces fitting into the new corporate make-up. But the emergence of a private investment firm with a wide range of businesses allows Cannery Casinos to expand and increase its presence.

"It gives a Nevada licensee the ability to grow in ways it wasn't able to before," Gaming Control Board Chairman Dennis Neilander said.

Millennium Management is equally owned by longtime casino operator Bill Paulos and Wortman. Former state gaming regulator Guy Hillyer has a 5 percent stake in the business.

Wortman and officials with Oaktree Capital told gaming regulators Millennium Management would oversee the day-to-day operations of the gaming properties.