Station Casinos has become a prominent gaming brand in the greater Las Vegas area, especially among locals, and now they are delving into the more touristy niche that frequents the Strip itself with their acquisition of Palms Casino Resort. While Palms is not located directly on the Strip, it is synonymous with the major resorts that tourists best identify with, and its proximity to Las Vegas Boulevard means that it has prime placement.
Perhaps the most well known brand among Station Casino’s stable is Red Rock, which is located approximately 25 minutes from the Strip, and features everything from a sprawling food court to casino and even a bowling alley. The resort is a favorite among locals because of their promotions and well paying games. Locals frequent Red Rock for their better odds on craps, positive payback video poker machines and more.
It is unclear whether Palms will take on the look and feel of other Station Casinos properties. The interesting dynamic at play here is that all of Station Casinos locations, until now, have been located a decent driving distance from the big name casinos on the Strip. Now, however, they will have a brand that can much more easily cater to those looking for the full Las Vegas experience without the need for renting a car.
If Station Casinos decides to brand Palms as a locals resort, it seems they would be sacrificing a lot of value, since the average visitor to Las Vegas (especially now, as gaming revenue decreases and rules change), does not seek out well paying games. Instead, visitors want dining, clubs, and convenient gaming here and there. As recently as the early to late 2000s, Las Vegas relied on gaming revenue, but that has been the case less and less each year. With Palms receiving the bulk of their traffic in the form of tourists, it’s hard to imagine that Station Casinos will give up all of the value they may be able to derive in the form of 6-5 blackjack, low odds on craps, and poor paying video poker tables. Only time will tell.
In terms of actual numbers, the reported sale was for $312.5 million in cash. When compared to several mega resorts on the Strip, even in building costs alone, this figure would seem like a great deal. If the Palms was just a bit closer to the Strip, its value would undoubtedly be significantly higher. With that said, Palms has and always has had a strong brand name in the industry. Many visitors to Las Vegas have not heard of Red Rock, for example, but they most likely know about the Palms, and this is likely where Station Casinos decided there was a lot of value to be had.
Station Casinos most definitely knows how to find their niche and dominate (as they have with Vegas locals), so it will be interesting to see how they are able to accommodate to the more traditional, standard Las Vegas crowd. This could also imply that they are looking to expand their presence towards Las Vegas Boulevard in conjunction with their locals casinos, and if any gaming company could complete this transition, Station Casinos would be one of the most well positioned.