Monday, March 29, 2010

Casinos: What Next for Station?

So last week, we found out about how Station Casinos will look once it emerges from bankruptcy reorganization. Basically, it will be a "leaner, meaner" company as it only holds onto Palace Station, Boulder Station, Sunset Station, Red Rock Resort, Wild Wild West (where its "Viva" casino/entertainment complex redevelopment plan has been on hold lately), and a plot of land at Las Vegas Blvd. and Catcus Ave. slated for a future casino. And the rest?

The plan, if approved, would lead to the sale of the remaining company assets.

The assets include Indian casino management contracts as well as Texas Station, Santa Fe Station, Fiesta Rancho, Fiesta Henderson, Wildfire Rancho, Wildfire Boulder, the Gold Rush, Lake Mead Casino and the company's 50 percent interest in Green Valley Ranch Resort, Aliante Station and the smaller Barley's, the Greens and Wildfire Lanes.

The assets to be sold include extensive land holdings in California (1,321 acres), the Reno area (200 acres) and at key gaming-entitled sites in the Las Vegas Valley at Durango Road and the southern Las Vegas Beltway, Town Center Dive and the Beltway and in Henderson's Inspirada development. The land holdings also include 52 acres south of Palace Station planned as a retail, entertainment and residential development.

So what does this mean for the future of Las Vegas gaming? Quite a lot, really. Station Casinos and Boyd Gaming were quite close to holding a "duopoly" over the locals' casino market. Almost all the casinos up here in Henderson are Station, and the same can be said of many other areas outside The Strip and Downtown. But with this shedding of assets, we will likely see a major game change... And this can go one of two ways.

If Boyd manages to buy most or all of these soon-to-be former Station assets, it will emerge as the new leader in locals' casinos. And what would that look like? Downtown is probably the best indicator (where Boyd dominates), along with the Coast Casinos scattered around the valley. I'd also be interested in seeing if their experience with Borgata in Atlantic City has prepared them for a more upscale Las Vegas locals' casino like Green Valley Ranch.

However, this doesn't have to be the case. If Nevada gaming regulators manage to show some concern over one company controlling so many casinos in town (and it's admittedly a crap shoot over whether they will care enough to do something), they may not allow Boyd to suck up all these casinos. If that happens, this will leave quite the opening for a "renaissance" of independent and small chain operators (like the Maloofs of Palms fame and Cannery Casinos) to emerge as more powerful players in town. Perhaps we'll see more M Resort like casinos in our future? Or maybe Tony Marnell himself will want to expand his empire? Or maybe Michael Gaughan (formerly of Coast Casinos, now running South Point) will reemerge as a big locals' market player? The possibilities are endless, and it would be quite the sight to see.

And what will become of the Fertittas? Well, they will still hold 46% of the new, smaller Station while Colony Capital retains 4%. And while they will let go of most of Station's current assets, the remaining assets will still be quite the company with "crown jewel" Red Rock, "the original" Palace, and Boulder & Sunset in key parts of town. And by holding onto the Cactus plot of land, they'll at least keep their foot in the door for a possible future Station Casino in the still unfinished southern stretch of the valley near Silverado Ranch and Southern Highlands.

So whatever happens next, this will change Station Casinos and change the state of locals' casinos here in Vegas. It's like watching the fall of a great empire. We'll just have to wait and see whether it means the start of a new great empire (Boyd) or a return to a more decentralized and level playing field, as well as how the new Station fits into everything.

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