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Howard Stutz

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Station Casinos suffers $69.6 million net loss

17 Aug 2010

By Howard Stutz
LAS VEGAS, Nevada -- Station Casinos suffered a $69.6 million net loss in the second quarter as revenues in the locals gaming market continued to tumble.

The company, which took a major step earlier this month toward emerging from bankruptcy with all its properties intact, said Monday the loss for the quarter that ended June 30 was a 6 percent decline compared with a $65.3 million net loss a year ago.

Station Casinos' total revenues in the quarter were $233.6 million, a 12.6 percent decrease compared with $267.2 million in the same period a year ago.

Gaming analysts have said the Las Vegas locals market, where Station Casinos predominately operates, will have a slower economic recovery than the Strip. In the fiscal year that ended June 30, gaming revenues fell 5.6 percent along the Boulder Strip, which includes portions of Henderson, 3.7 percent in North Las Vegas and 9.5 percent in the balance of Clark County.

The privately held company, which filed for Chapter 11 bankruptcy protection a year ago with some $6 billion in debt, did not hold a conference call to further elaborate publicly on its quarterly earnings.

In Las Vegas, Station Casinos said its net revenues were $214.7 million in the second quarter, a 12.7 percent decline compared with $245.9 million in the same quarter a year ago.

The Las Vegas results did not include Green Valley Ranch Resort and Aliante Station, which Station Casinos owns in a 50-50 joint venture with the Greenspun Corp. The company said its earnings from Green Valley Ranch was $3.2 million.

Station Casinos said its net loss from its major Las Vegas operations was $19.2 million, compared to a net loss of $15.6 million in the same quarter last year.

During the three-month period, Station Casinos said it recorded bankruptcy-related reorganization items of $37.9 million, including $31.2 million that represented professional fees and other costs.

Station Casinos' two-pronged bankruptcy plan of reorganization could be approved by a federal bankruptcy judge in Reno next week.

The first leg of the reorganization established a new holding company owned by real estate investor Colony Capital, secured lenders Deutsche Bank and JP Morgan, and Fertitta Gaming, which was formed by Station Casinos founders Frank Fertitta III and his brother Lorenzo.

The new company would take over Red Rock Resort, Palace Station, Sunset Station, Boulder Station, and the Wild Wild West and its adjoining 110 acres. Those casinos provide more than half of Station Casinos' overall revenues.

The Fertittas will put up $85 million for their share of this company.

On Aug. 6, Fertitta Gaming won a bankruptcy-supervised auction to acquire 11 casinos, land holdings and American Indian gaming contracts for $772 million. Fertitta Gaming was the only qualified bidder.

Once the reorganization is confirmed, Nevada gaming regulators and the National Indian Gaming Commission will have to confirm the new corporate ownership structure.

Fertitta Gaming will operate both sides of the reorganized company and the Station Casinos name will remain in place.

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