The Wall Street Journal reported the sale earlier on Wednesday and pegged the deal value at about $650 million.

Icahn, one of the industry's most closely watched activist investors, took ownership of the property in February 2010 after paying its bankrupt owner about $104.6 million in cash.

Fontainebleau, which was planned as a $3 billion project, filed for bankruptcy protection in June 2009 after lenders cut off access to nearly $800 million of construction funds.

Located on the north end of the Las Vegas Strip, Fontainebleau was meant to include a 63-story glass skyscraper and feature a casino, a convention center, restaurants and bars, and more than 3,800 guest rooms.