Despite Nevada gaming revenues being down in March, Boyd Gaming and Red Rock Resorts ignored current trends while making major moves aimed at the locals and hybrid markets.
Boyd in April agreed to pay $380 million to buy the Aliante Casino & Hotel, formerly owned by Station Casinos, in North Las Vegas. The North Las Vegas gaming market in March suffered a 9 percent decline in revenues.
Boyd also agreed to pay $230 million to buy the Cannery Casino Hotel in North Las Vegas and the Eastside Cannery Casino and Hotel on the Boulder Strip in east Las Vegas. The Eastside Cannery is situated next to Boyd Gaming’s Sam’s Town Hotel and Gambling Hall.
Boyd made the moves during a down market primarily due to significant economic developments in North Las Vegas, where Faraday Future is spending $1 billion to build an electric car manufacturing plant.
The first car is slated to roll off the assembly line in the northwest part of North Las Vegas in 2018, and the factory is expected to create some 9,500 direct full-time jobs and about another 4,500 related jobs in the local economy.
Despite its recent setback, the North Las Vegas gaming market has posted a 3 percent rise during the past six months, and the deals improved Boyd Gaming’s EBITDA growth guidance, which went from 5.5 percent to 6.5 percent, thanks to the acquisitions.
While Boyd Gaming is betting on North Las Vegas, rival Red Rock Resorts, doing business as Station Casinos, soon after reached a deal to buy the Palms Casino Resort for $312.5 million.
The Palms gives Red Rock Resorts its first casino located near the Las Vegas Strip, although it is about a mile west of it on West Flamingo Boulevard. The move gives it a popular hybrid resort that caters equally to tourists and locals alike.
Red Rock says the Palms should generate some $35 million in additional revenues before deducting interest, taxes, depreciation, and amortization. The deal should boost shareholder value, while generating positive cash flow within a year of the deal’s completion, Red Rock says.
If the local economy realizes its expected improvement, Red Rock and Boyd Gaming soon might reap significant profits from their recent moves.
