In the modern REIT era, there have been a wide variety of property types that have come into vogue over the years from amusement parks to vineyards, from marinas to movie theaters. Now, investment bankers are encouraging casino companies to split their real estate assets from operations and become REITs as well.

Vivek Seth, managing director with Raymond James & Associates, says the advantages of REITs owning casino properties are obvious. "Casino-related properties include large portfolios of valuable hotel assets in key resort markets, particularly given that the U.S. gaming business is largely based in Las Vegas, where land has appreciated enormously in the last five years and driven up replacement costs."

"Converting real estate assets into a REIT would free up value for the casino companies," says Les Loffman, co-chair of the national REIT practice with DLA Piper. "All of corporate America is interested in figuring out ways to monetize real estate and put the cash to better use in their core businesses."

Casinos that divide their business would be following a precedent established by the hotel industry more than a decade ago. To circumvent potential stickiness with gambling license regulations, Seth recommends a triple net lease structure.

"Currently, casino hotels are funded partly through gaming revenues and this would have to be taken into account as REITs cannot receive gaming revenue directly," he says. "A triple net lease structure would allow delineation between lodging and casino operations, though the logistics of dividing the physical plant of existing casinos could be challenging."

Loffman agrees. "A third party lessee that doesn't own more than 10 percent of the REIT could operate the property, bring in money from the casino, and pay the rent without having a conflict of interest."

Both Loffman and Seth say that it is too early to determine the odds of casino REITs taking the floor, but Loffman maintains that it's manageable. "It's mostly a question of applying casino assets in the most valuable way for investors. And it would be possible to do that."