It is massive, it is impressive, and it is no longer a Red Rock Resorts Inc. property; we are of course talking about the Palms Casino Resort in Las Vegas. The San Manuel Band of Mission Indians has agreed in principle to buy the casino for $650 million.
Second Native-Indian Tribal Venture in Las Vegas
This acquisition is a favorable one for the Native-Indian tribe; the $650 million payout that they are handing over is $40 million lesser than what Red Rock Resorts spent on renovations on the property. If you take the purchase price into consideration the value of the deal is that much stronger, given that Red Rock spent close to $1 billion on the casino overall.
Red Rock had earlier bought the property from the Fertitta family in 2016 for $313 million and then spent an astronomical $690 million on renovations. The renovations had been done in an attempt to position the casino differently from its standard gaming ventures, which had exclusive focus on the local landscape and player. This one was positioned as a hybrid that catered to tourists as well as locals.
And yet over 5 years, the returns were never too high, and the casino had to shut shop as well from March 2020 with the onset of the Corona pandemic last year.
With this purchase, the San Manuel Band of Mission Indians is now the second tribal enterprise to make a foray into Las Vegas, the first being the casino launched at Virgin Hotels Las Vegas by Mohegan Gaming and Entertainment. This deal is also the biggest by a Native-Indian tribe in Las Vegas.
Speaking about the deal, Tanya Watkins from No Deposit World provided this opinion on the acquisition: “This is a good opportunity for the San Manuel tribe to expand their horizons away from California and into Vegas. It is also a chance for Red Rock to utilize the funds from the transaction for its other projects.”
Indian Gaming Interests in the US
Up until the abrupt shutdown caused by the Corona pandemic in 2020, the Indian gaming business was booming. Revenues had crossed $35 billion in 2019. And the reason is not hard to see – there are 245 tribes that operate casinos across the US, spanning a significantly large number of states – 29 in all.
And yet, Vegas had remained elusive. While it is true that the Indian gaming enterprises have spread wings beyond the reservations in recent years, no one had gone into Vegas. Until Mohegan Gaming and Entertainment decided to change that with its Virgin Casino launch under the Mohegan Sun Brand. With the Palm Casino purchase, the next steps in this journey have been taken.
Speaking about the deal, San Manuel Chairman Ken Ramirez said, “Today represents an important step for the tribe and its long-term economic diversification strategy… On behalf of the tribe, we are thankful for the opportunity to join a community that we have come to know and appreciate.”
In an e-mailed statement, Latisha Cashas, Chairwoman of the San Manuel Gaming and Hospitality Authority said, “The Palms is a well-designed property which has been beautifully redeveloped and maintained by Red Rock Resorts… Our board believes that the Palms is a casino resort that many of San Manuel Casino’s loyal guests would enjoy. We are excited to move forward with this transaction.”
A Little Background on the Palms Casino and Resort
The Palms Casino and Resort has been around for more than 2 decades now, 21 years to be precise. It was inaugurated in 2001 by the Maloof family of Las Vegas and had its day in the sun. It was considered one of the best nightlife spots in all of Vegas. Reality TV shows, music videos – it was all happening at the Palms.
It was spread across 94,840 square feet and had it all – 700 rooms, a number of restaurants and eateries, casual as well as top dollar, pool, spa, a 2,500-seater theater and much more. After Red Rock Resorts bought it from the Fertitta family in 2016, and after the much talked-about renovations, it was reopened to the public in April 2019.
However, things didn’t go exactly according to plan. Its showstopper, the Kaos nightclub, shut down within 7 months, to start with. And then along came the pandemic, leading to a 78-day shutdown that it never really recovered from.
In an interaction, Stephen Cootey, Executive Vice President and Chief Financial Officer of Red Rock Resorts Inc. said, “We are incredibly proud of how we transformed this iconic property … We determined that the sale of the property is the best way to create shareholder value and enables us to emerge from a pandemic on a more accelerated timeline.”
The Palms Casino and Resorts deal is expected to be completed by the end of the year. Included in the deal are the Palms Place. Also, according to filings before the Securities and Exchange Commission, Red Rock Resorts will not be able to reopen the casino. Also, if the deal isn’t closed within 18 months there could be an upward bump in the pricing, by up to as much as $28.5 million.
Who is the San Manuel Band of Mission Indians?
The tribe of the San Manuel Band of Mission Indians is considered one of the most efficient and sharp-minded tribal casino operators around. Their showpiece casino is the San Manuel Casino in Highland, California, which is considered one of the most successful casinos in the entire southern California. It was opened in 1986 and operates currently with a team of 4,900 people.
In recent times, it has made a number of important donations to organizations across Nevada. These include, among others, donations of $250,000 to 8 charities in Las Vegas that include the Smith Center for the Performing Arts, The Shade Tree, Nevada Public Radio, the Mayor’s Fund for Las Vegas LIFE, Catholic Charities of Southern Nevada, Make-A-Wish of Southern, Nevada Noah’s Animal Center and the Public Education Foundation.
It has also made a substantially large contribution of $9 million to organizations like the University of Nevada’s William S. Boyd School of Law and the William F Harrah College of Hospitality. This is a tribe that is connected to the gambling community quite well. It has, among other things, sponsorship agreements with the Las Vegas Raiders, the Vegas Golden Knights and the Allegiant Stadium.
