Questions about “Durango Station”

Back in 2007, Station Casinos received approvals from Clark County to build a 120,000-square-foot casino with 1,000 hotel rooms on its 71-acre property in southwest Las Vegas. The project had a $700 million budget and was to open in 2010 with a projected EBITDA of $110.1 million by 2012.[1] Then in 2008, the company reduced the size of the project, with new approvals for an 86,883-square-foot casino with 726 hotel rooms, plus 8 retail buildings totaling 139,071 square feet. The company received a fourth extension of time for this project in October, 2018, with a deadline to commence by September 3 this year.[2] On May 4, the company said it was looking to redesign the project to be “significantly tighter than anything that we’ve done in the past”, with “a focus on slot machines and table games, our primary business.”[3]

We believe investors should pose the following questions about the “Durango Station” project to management:

  1. Is there market demand for another Las Vegas Locals casino? While total slot handle in the Las Vegas Locals market reached a record of $41.1 billion in 2006, it had dropped to $35.1 billion in 2019. This happened in spite of the fact that Clark County’s population grew from 1.78 million in 2006 to 2.29 million in 2019.[4] Corresponding to this decline in local residents’ spending on slot machines, the number of slot machines in the market had been reduced from 52,947 at the end of 2006 to 44,696 at the end of 2019 and stood at 34,799 at the end of May, 2021. Station Casinos itself has yet to reopen four of its ten major properties after Nevada casinos were allowed to reopen more than a year ago (and is in fact selling one of them, the Palms). Will Durango Station be able to grow the Las Vegas Locals market given the long-term market-wide decline in slot handle?
  2. How many “Durango Station” customers will come from Red Rock Casino? Looking specifically at the area around the Durango site, we see that Station Casinos’ Red Rock Casino is 9 miles north. The 10-minute drive from the neighborhood around the Durango site to Red Rock is not a long distance to travel in Las Vegas. Given its player rewards program, the company likely has detailed data on where its regular Red Rock customers live. How many “Durango Station” customers then does management expect to be new customers instead of customer who will merely shift their business from Red Rock to the new property?
  3. How will “Durango Station” compete against nearby mixed-use developments? Again, looking at the Durango site, we see that, across the street from the Durango site, construction has already started on the $400-million UnCommons mixed-use project,[5] which is slated to open in early 2022,[6] at about the same time Station Casinos plans to start its own project.[7] UnCommons will have 20 vendors in a food hall, [8] including a celebrity chef’s new restaurant.[9] Less than a mile north of the Durango Station site, another mixed-use development called The Bend also broke ground in January, 2020, which will have 170,000 square feet of retail space, including a movie theater.[10] How will these large mixed-use projects nearby change the economics of the Durango Station project?
  4. What will happen to the Flamingo/I-215 site after “Durango Station”? One of Station Casinos’ future casino development sites in Las Vegas is the 58-acre Flamingo/I-215 parcel, which is located about halfway between Red Rock and the Durango site. After “Durango Station” opens, will the Flamingo site continue to be considered a future casino development site, or will the company seek to monetize some other way?

Check out our map of key properties and sites in the Las Vegas Locals market here.


[1] See “Report of Investigation by the Special Litigation Committee of the Board of Directors of Station Casinos, Inc.”, filed as docket 353-3 in the Chapter 11 case of Station Casinos, Inc., case 09-52477-gwz in the U.S. Bankruptcy Court, District of Nevada. The merger proxy contains the project cost, and the attached Odyssey Capital Group’s Report to the Special Committee to the Board of Directors of Station Casinos, Inc., September 9, 2009 shows the projected EBITDA in “Valuation of short-term Development Assets” (by Bear Stearns Presentation to Station Casinos Special Committee on February 22, 2007).

[2] 10/17/2018 Clark County Zoning Commission meeting, agenda item #25, ET-18-400190 (UC-0726-08) by NP Durango, LLC.

[3] Red Rock Resorts 1Q21 quarterly call on 5/4/2021, transcript by Seeking Alpha.

[4] Based on Nevada Gaming Control Board data.



[7] Red Rock Resorts 1Q21 quarterly call on 5/4/2021, transcript by Seeking Alpha.




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. We present our findings in a new report that you can download here.

Our report on Red Rock’s Las Vegas growth pipeline raises some important questions for investors:

  • Why does the company continue to describe the Cactus and Castaways parcels as “development sites” when they are listed for sale?
  • After over a decade of delays, what is the timeline to build out the Durango development site?
  • Does the company still see value in developing a resort hotel on the Flamingo site, which lies between Red Rock Casino and the Durango site?
  • When will the conditions of Inspirada’s master-planned community improve enough to warrant building a resort hotel?
  • When will the company submit plans for the new hotel tower and meeting space at Red Rock Resort or the meeting space expansion at Sunset Station?

See our report for more information from our review into RRR’s development sites and master-planned expansions.

Check out our map of existing properties and future casino development sites in Las Vegas, including those not controlled by RRR.

Why is Station Casinos Selling Valuable Casino Sites?

See also: More growth questions about the Las Vegas locals gaming market.

In Red Rock Resorts’ most recent S-1/A, the company says it “control[s] approximately 398 acres of developable land comprised of seven strategically-located parcels in Las Vegas and Reno, Nevada, each of which is zoned for casino gaming and other commercial uses” (3/15/16 S-1/A, p. 116). The filing then lists seven such parcels: Durango/I-115 (70 acres), Wild Wild West/Viva (96 acres), Flamingo/I-215 (58 acres), Via Inspirada/Bicentennial Parkway (45 acres), Boulder Highway (30 acres), Mt. Rose Property (Reno) (88 acres), and South Virginia St/I-580 (Reno) (8 acres).

Two of these sites caught our eye, because they are actually on the market. There is no guarantee that IPO investors will be able to participate in any potential growth tied to these parcels, if they are soon sold off.

The large Mt. Rose site in Reno has been on the market since at least November 3 last year, less than a month after the company made its initial IPO filing on Oct 13.

A 25.5-acre portion of the company’s 30-acre Boulder Highway site in Las Vegas has also been on the market for a while. The parcel for sale is not itself entitled for gaming development, leaving a 5-acre rump for a future casino. The earliest listing we saw was from October 28.

It is unclear why Red Rock does not disclose in its prospectus that these two parcels are currently listed for sale. This lack of disclosure is all the more puzzling given that the company does say that another gaming-entitled parcel in its land bank is for sale – immediately after it lists off the seven parcels mentioned above: “We also own an additional development site in Las Vegas that is zoned for casino gaming and other commercial uses and which is currently for sale.”

This likely refers to what one might call the “Cactus/I-15 site”, which is located off the new Cactus Avenue ramp of I-15 south of the Las Vegas Strip. This parcel has also been on the market since at least October 28, and it is being sold “with a deed restriction precluding any gaming on entire site.” (Station Casinos had announced a “Cactus Station” project at this location back in November, 2008, before the highway exchange was built.)

Gaming-entitled land has been a scarce commodity since Nevada State Senate Bill 208 (“SB 208”) was enacted in 1997 to significantly limit the construction in large urban communities such as Las Vegas/Clark County and Reno/Washoe County. As Red Rock tells prospectus investors, one example of the ability of its “highly-experienced management team, led by the Fertitta family,” to create value has been their “capitalizing on the opportunity created by Nevada’s passage of SB 208 through a series of strategic acquisitions and new developments” (S-1/A, 3/15/16, p. 4). Furthermore, the company believes that “the development of new casino facilities will continue to be limited due to SB 208, which limited casino gaming in the Las Vegas valley to specified gaming districts and established more restrictive criteria for the creation of new gaming districts” (S-1/A, 3/15/16, p. 8). One would thus expect any large, gaming-entitled parcels – such as the ones the company has put on the market – to continue to be quite valuable.

Investors should ask Red Rock Resorts/Station Casinos and its IPO underwriters:

  • Why is the company selling valuable casino sites?
  • Where will growth come from if the company is selling off future casino sites?
  • Does the Fertitta-led management team not see value in these parcels?
  • Do they not see growth opportunities that can be realized by developing these sites?
  • Do the Fertittas and other executives of Red Rock have confidence in the company’s core Las Vegas locals business?

See more of our analysis of the Red Rock Resorts/Station Casinos IPO: