By John Stearns - Reno Gazette-Journal
When Station Casinos Inc. opens the doors on its first Indian casino next year, the Sacramento-area facility will likely do well with nearby gamblers who’d rather not make the drive to Reno. But if history is any indicator, the casino will do less business with potential visitors who live farther away.
“Station is the champion of Las Vegas for locals . . . (but) they’re not worth a damn on tourism marketing,” said William Thompson, a business professor at the University of Nevada, Las Vegas. “I find that they’re adverse to the Las Vegas economy because they don’t get the tourist.”
Thompson’s believes Station doesn’t bring enough new money into Las Vegas visitor-based economy; it merely recycles locals’ money.
No matter what Station means for Las Vegas, it clearly excels at getting people through its doors. And that gets the attention of Reno casino operators who will need to convince Californians that it’s worth their time to drive the extra 100-plus miles over the Sierra Nevada to the Biggest Little City in the World.
“They’re not going to put in small properties, they’re going to build them right,” Dean Richard, marketing and sales director for Circus Circus Hotel Casino, said of projects by Station off Interstate 80 and Lakes Gaming Inc. off U.S. Highway 50 at Shingle Springs.
So who is Station?
It’s a big company that is expected to generate $1 billion in revenues this year and bring about $77 million to the bottom line. It had a Nov. 30 market capitalization -- the total value of all shares of stock outstanding -- of more than $1.1 billion.
“I think they’re best at running casinos geared toward the local market,” said Jason Ader, a gaming analyst with Bear, Stearns & Co. Inc. in New York.
“They build facilities very well,” Ader said. “They’re sensitive to their local environs. I think they’ll be very strong (at their California site).”
Although its deal with the United Auburn Indian Community to manage the tribe’s casino is Station’s first such deal, the company has been active in the world of gaming transactions lately.
The company signed an agreement on Oct. 20 to buy The Reserve Hotel & Casino in Henderson from Ameristar for $70 million. It also is a partner in the $300-million Green Valley Ranch hotel-casino under construction in Henderson. In that deal, Station will be the managing partner and receive a fee for its services and expects to contribute $50 million in cash equity for a 50 percent ownership.
And on Oct. 18, Station announced an agreement to sell its two Missouri properties to Ameristar Casinos Inc. for $475 million in cash, subject to Ameristar getting regulatory approval.
Station has also had some high-profile blemishes recently.
It was fined $475,000 by Nevada gaming regulators in October when a company executive and political consultant distributed an anonymous flyer criticizing a Clark County commissioner. In Nevada, such flyers must contain the name of their creator.
In another case, Station on Nov. 28 agreed to pay a $1 million fine to the state of Missouri to settle a case involving an outside attorney and lobbyist for the company, Michael Lazaroff. He pleaded guilty to three federal felonies for misappropriating $800,000 of his firm’s money, including $500,000 in bonuses from Station, according to a report in the Las Vegas Review-Journal.
He was alleged to have used his influence to help Station acquire its Missouri licenses in the mid-1990s. Station has said the bonuses were legal and not given to public officials, according to reports. It settled the issue by paying the fine before facing a public gaming hearing to try to protect its Missouri licenses. The fine also allows it to leave the state and focus on Nevada and later its California project.
The Auburn tribe’s Sacramento lawyer, Howard Dickstein, said in October that the Missouri issue did not appear to threaten the tribe’s deal or interests, “but we are keeping a very close eye on developments.”
The fine apparently has put the matter behind everyone.
In another case, Station paid $500,000 in December 1999 to settle a complaint alleging it had illegally dumped organic material into the Missouri River while building its St. Charles riverboat casino, according to a Las Vegas Review-Journal report.
Station’s management contract with the Auburn tribe, meanwhile, is expected to run five-to-seven years and earn it management fee of “less than 25 percent” of net revenues, Dickstein said.
Asked about the numbers that the casino could generate, Dickstein said: “Suffice it to say that they’re large enough so that less than 25 percent of the revenue for a relatively short period of time seems to be very attractive to a Nevada casino company.”
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What: Station Casinos Inc. Where: Based in Las Vegas Employees: 10,700. Trading symbol: STN, New York Stock Exchange. 1999 net income: $47.8 million.
In Las Vegas: Station owns and operates Palace Station Hotel & Casino, Boulder Station Hotel & Casino, Santa Fe Station Hotel & Casino, Texas Station Gambling Hall & Hotel, The Wild Wild West Gambling Hall & Hotel and the Sunset Station Hotel & Casino in Henderson, as well as slot route management services in Clark County.
It also owns and operates: Station Casino in Kansas City, Mo., and Station Casino in St. Charles, Mo., near St. Louis. It also has agreed to buy the Fiesta Casino Hotel in North Las Vegas for $185 million in a deal that is expected to close next month in January.
©2000 Reno Gazette-Journal
