Sunday, July 27, 2003
Copyright © Las Vegas Review-Journal

LOCALS CASINOS: Competition heating up

New projects by Station Casinos, Coast may boost off-Strip rivalry

Click image for map enlargement. Graphic by Mike Johnson. Click image for map legend. Graphic by Mike Johnson. From left, Millennium Management partners Bob Mendenhall, Bill Paulos and Bill Wortman took over the Rampart last April. Photo by Jeff Scheid..

Two dominant companies rule the Las Vegas locals' roost, but Station Casinos and Coast Casinos don't really compete head-to-head.

Yet.

Prospects for incredibly tough competition loom, as Station Casinos is finalizing plans to build Red Rock Station next to the intersection of Interstate 215 and Charleston Boulevard, about 3 1/2 miles from the Suncoast, Coast's Summerlin-area powerhouse.

Not to be left out, Coast owner Michael Gaughan plans to soon begin building a $325 million locals property at the southern end of Las Vegas Boulevard, a few miles west of Green Valley Ranch, the $300 million property co-owned by Station and the Greenspun family.

Neither company likes their competition's choice for their next developments, as the valley's two biggest locals operators have built their existing casino lineups without directly engaging each other.

Station's Palace Station, just west of Interstate 15 at Sahara Avenue, is only a couple of miles from the Gold Coast, but so are dozens of Strip hotels and the Palms and Rio, diminishing the direct competition.

Coast's Suncoast opening in 2000 poached thousands of customers from Station's Rancho Road lineup, nailing Texas Station particularly hard, but the west-side properties -- including the Fiesta Rancho and Santa Fe Station -- are about four miles away from Suncoast.

Station's remaining major properties -- Sunset Station, Green Valley Ranch, Boulder Station and Fiesta Henderson -- are clustered in the Boulder Strip market. The company controlled 57.3 percent of the Boulder Strip casino market and 77.2 percent of the North Las Vegas market before its 2000 and 2001 deals to buy the Santa Fe, Reserve and Fiesta hotel-casinos and its late 2001 opening of Green Valley Ranch.

Station's toughest existing direct competition comes from Boyd Gaming Corp., operator of the original locals powerhouse on Boulder Highway, Sam's Town, as well as two smaller Henderson casinos, Jokers Wild and the Eldorado.

A recent major Sam's Town expansion reduced Boulder Station's cash flow advantage, and the competition between the two properties is heated.

Just as Station dominates in North Las Vegas, Henderson and on the Boulder Strip, Coast dominates on the west.

Michael Gaughan spent hundreds of million dollars to add parking garages, restaurants and lots of extra space for slot machines to The Orleans and Gold Coast, throwing in a new hotel tower and a $52 million arena to the former.

Gaughan's Suncoast is king-of-the-hill in Summerlin, with only the small Rampart Casino at the JW Marriott left to pester the near monopoly on Summerlin business, at least until Station opens Red Rock Station, a property industry insiders expect Station will invest at least $400 million on.

Gaughan's South Coast site, at the southwest corner of the intersection of Silverado Ranch Road and Las Vegas Boulevard, would target a younger clientele than Coast's other properties.

"Every place is different," Gaughan said recently. "The Orleans is very different from the Gold Coast, even though they are only a mile apart."

The South Coast site sits in the middle of the fastest-growing part of the valley, Gaughan said.

Station also owns two other sites along the western Las Vegas Beltway, at Durango Drive and at Flamingo Road.

Deutsche Banc's Andrew Zarnett said recently that Station and Coast's plans to compete more directly doesn't mean that the companies are going to cut into each others' profits.

"The Las Vegas locals market keeps growing so rapidly," Zarnett said. "Additional supply makes sense, and both companies are very good at what they do. The market should be able to absorb new (casino) capacity as it has in the past, without hurting (either Station or Coast)."