The Calumny of Apelles (Botticelli 1494)

The Myth of the Las Vegas Locals Market Recovery

Red Rock Resorts is heavily dependent on the health of the Las Vegas locals gaming market. In this report, we examine key gaming metrics in the Las Vegas locals market – going beyond simple measures of gaming revenue – in order to gauge the company’s potential to grow back up to the peak levels of 2007.

Red Rock Resorts buys out two related-party land leases for $120 million

The company bought out two long-term land leases it had with a related party for $120 million at a price of approximately $1.62 per acre. The company paid about 17 times annual rent to terminate the two leases. It is unclear whether an independent appraisal was performed or if the audit committee of the board reviewed and approved the transaction.

Should You Pay Someone Else’s Income Taxes?

Under a tax distribution agreement, Station Casinos spent $43.6 million in 2016 to cover some of the federal income tax obligations of the Fertitta family and other owners of the company. Should Red Rock shareholders continue to let Station Casinos, of which they own 57%, spend cash on covering the income tax liabilities of pre-IPO owners like the Fertittas?
Big brown bear (Ursus arctos) in the mountain

Fallow Land, Hollow Claims

Red Rock Resorts has been talking up its Las Vegas development sites and master-planned expansions in its presentations to investors and SEC filings. However, after a review of local real estate listings and planning agency documents, we found development sites for sale and no approvals on file for some of the company’s master-planned expansions.