Nevada Casinos Closures Influence Three Gaming Companies

August 9, 2022
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More than 30 months after a state ordered 78-day closure of the gaming industry due to the coronavirus pandemic, five southern Nevada casinos remain closed with three of those properties scheduled for demolition.

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More than 30 months after a state ordered 78-day closure of the gaming industry due to the coronavirus pandemic, five southern Nevada casinos remain closed with three of those properties scheduled for demolition.

Gambling in Nevada is much larger than the Las Vegas Strip. It is a state where companies can spend hundreds of millions to build brick-and-mortar casinos that cater strictly to local residents, while slot machines can be found in bars, gas stations and in many supermarkets.

Red Rock Resorts confirmed last month that Texas Station, Fiesta Rancho in North Las Vegas and Fiesta Henderson would be demolished with plans to repurpose the land for sale.

Scott Kreeger, president of Red Rock Resorts, said it was a difficult decision to permanently close the three casinos, but it would “enable the company to continue reinvesting in our open properties.”

The casinos, operated by Red Rock’s subsidiary Station Casinos, never reopened once Governor Steve Sisolak, a Democrat, lifted the pandemic-related closure of the state’s gaming industry on June 4, 2020.

According to the Nevada Gaming Control Board (NGCB), Red Rock Resorts will not have to appear before the three-member board and are only required to surrender the three gaming licenses to the NGCB’s Tax and Licensees Division.

Red Rock Resorts owns six casinos and its Wildfire Casino brand of slot machine-only properties located throughout southern Nevada. The company expects to complete its seventh locals resort, the $750m Durango Casino Resort, by late 2023.

The company also did not reopen the Palms Casinos Resort before selling it last year to the San Manuel Indian Tribe for $650m. The Palms was reopened at the end of April.

The Las Vegas-based company is set to report second-quarter earnings Tuesday (August 9). Analyst estimates are for quarterly earnings of 54 cents per share on revenue of $404.45m.

Two other casinos — Eastside Cannery, which is operated by Boyd Gaming, and Golden Entertainment’s Colorado Belle in Laughlin along the Colorado River and border with Arizona — have also remained closed since March 2020.

Josh Hirsberg, CFO and treasurer at Boyd Gaming, said they are consistently thinking about the Eastside Cannery in terms of demand, but their view is that we have been able “to kind of leverage the benefit of Sam’s Town, which is near Eastside Cannery.”

“And until we see perhaps more demand or something else to suggest we should consider reopening Eastside Cannery for now, it will remain closed,” Hirsberg told analysts on July 26.

Golden Entertainment CEO Blake Sartini told analysts on Thursday (August 4) that they are maintaining their gambling license and their ability to operate the casino as the company considers different alternatives.

“That is a one-of-a-kind property on the riverfront and has a multitude of potential uses,” Sartini said, “I won’t get into that, we’ve explored a lot of them.”

Eastside Cannery and the Colorado Belle can remain closed, but Nevada gaming regulations require payment of quarterly state license fees, as well as certain slot machine and table games taxes for both resorts to maintain their gaming licenses.

Gaming must also be conducted and open to the public for eight hours on one day each quarter, according to state gaming regulations.

The locals market in southern Nevada, which consists of some casinos in downtown and suburban Las Vegas, North Las Vegas, Laughlin, the Boulder Strip and other parts of Clark County, generated more than $360.93m in revenue in June, compared with $734.7m earned on the Las Vegas Strip.

In northern Nevada, monthly gaming revenues are driven in large part by casinos in Reno and Sparks, which totaled more than $74.13m out of a total of $85.64m reported in June, according to the control board.

The region has struggled over the last 20 years as tribal casinos in northern California have cut into its gaming business, forcing cities to become less dependent on gaming revenues.

In recent years, northern Nevada’s economy has been fueled by growth in technology and manufacturing.

Mark Nichols, a professor of economics at the University of Nevada, Reno, said the emergence of tribal gaming in California transformed Reno from a regional destination into a locals and special events market.

“We’ve had our closures, but things have stabilized,” Nichols told VIXIO GamblingCompliance. “The economy is not as dependent on casinos anymore.”

Harrah’s Reno closed for good in March 2020, a casualty of the pandemic. The property was sold by Caesars Entertainment and VICI Properties to CAI Investments, a real-estate development and management company, for $50m, and is being transformed into commercial office space, with retail and residential units.

Other properties in the downtown casino corridor to close over the last 20 years were Fitzgeralds Casino in 2008 and Golden Phoenix Reno in 2005, which used to be the Reno Hilton and prior to that was the Flamingo Hilton Reno.

The Silver Legacy in downtown Reno was the last casino built from the ground up in the region. It opened in 1995. Nichols said he believes that an integrated resort will never be built from the ground up again in downtown.

After a 26-year wait, a new, smaller casino geared toward local residents is scheduled to open on August 30 near Reno. The Legends Bay Casino in Sparks cost $120m and took 15 years to build.

Olympia Gaming, which owns the project, acquired the land to build its project in 2006 and envisioned building a $500m resort but the project was halted by the Great Recession, forcing the company to adjust its plans.

Nichols said Olympia’s project fills a niche that is needed in the market.

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