Commission Chairman Peter Bernhard questioned Colony Capital executives about possible conflicts that might arise between Station and Colony Capital officials trying to protect their own corporate interests.

Bernhard was most concerned about a separate Colony Capital fund that has a 60 percent ownership stake in the Las Vegas Hilton.

Tom Barrack, founder, chairman and chief executive officer of Colony Capital, said he would recuse himself and defer to the Fertittas if any conflicts arise over the companies' role in the locals market.

Bernhard, however, pressed further, asking if agreements were in place on dispute resolution so Barrack and the Fertittas would not have to "work it out" as problems arise.

Jonathan Grunzweig, Colony's chief investment officer, assured the commission that the buyout agreement leaves Station Casinos free to pursue other business opportunities away from the Strip.

The agreement also lets Colony Capital pursue other gaming opportunities as long as Station Casinos has rights of first refusal, he said.

Grunzweig said other issues, such as disagreements on operating budget, are also covered by contracts.

"What makes me comfortable is there are no strangers here," Commissioner Arthur Marshall said, alluding to both parties already being licensed in the state.

Lorenzo Fertitta, who attended the hearing but did not testify Thursday, told the state Gaming Control Board on Oct. 4 that part of the gaming company's reason for going private was so it could pursue acquisitions and development more aggressively and more efficiently than public companies can.

Michael Green, a College of Southern Nevada history professor, said Station Casinos has already been aggressive in the locals market. But he said the deal could allow the company to be more flexible without having shareholders looking over its shoulder.

"Would they not have built if they hadn't gone in this direction?" Green said. "They may indeed move faster and try more innovative things. There may be more of an element of risk they're able to take now that they won't have to make sure stockholders are on the same page with them."

The new company's board will be controlled by Station Casinos Chairman and Chief Executive Officer Frank Fertitta III, Vice Chairman and President Lorenzo Fertitta and Barrack.

After the deal is completed, the board could be expanded by two members, one from the gaming company and the other from Colony Capital.

The Fertitta brothers will continue to operate the company day-to-day. Colony's approval would be needed before any major actions, such as large construction projects and acquisitions, could be OK'd.

Colony Capital was first licensed in Nevada in 1997 after it bought Harveys Lake Tahoe.

It sold Harveys to Harrah's Entertainment in 2000, and bought the Las Vegas Hilton for $280 million in 2004.

Colony also has ownership interests in casinos in Mississippi, New Jersey and Indiana.

Station Casinos Chief Development Officer Scott Nielson told the commission the buyout still needs approval from the National Indian Gaming Commission.

Station Casinos will be owned through private stock held primarily by the Fertitta family and a Colony Capital investment fund.

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or (702) 477-3893.