On a recent first-quarter earnings call, representatives from Red Rock Resorts indicated that the costs for its Durango Station casino, which is currently under construction, are expected to grow by some $30 million, bringing the overall total to $780 million.
Officials said that the extra costs were attributed to the decision to expand the casino’s gaming floor to accommodate an additional “360 gaming positions,” or a mix of tables and slots. Rising labor and material costs were also cited.
The casino, which is being built in the southwestern corner of Las Vegas, will be Red Rock’s first new-construction property in the market in over 15 years.
On the call, Red Rock CFO Stephen Cootey said that the company believes “a larger casino footprint will better align the product offering with the anticipated growth and favorable demographics in the area surrounding Durango.”
Expected to open sometime before the end of the year, Durango sits on a 50-acre plot situated near the 215 Beltway and Durango Drive. Red Rock is counting on the fact that that area is somewhat underdeveloped in terms of gaming—the nearest competition is approximately five miles away, which is a huge advantage in perhaps the most mature market in the U.S.
Analysts seemed to react positively to the news, as CBRE Equity Research’s John DeCree said in an investor’s note after the call that the expansion “should be a home run.”
Others commented on the strength of the Las Vegas locals market, which is Red Rock’s primary niche. The number of regional casinos in the market has shrunk in recent years, partly thanks to Red Rock themselves, as the company closed three properties—Texas Station, Fiesta Rancho and Fiesta Henderson—that never reopened following Covid-incuded closures in 2020.
J.P. Morgan analyst Joe Greff said in his own note that the Vegas locals market “is special and unique within gaming. The supply picture is bright and demand continues to be boosted by a population influx from high tax states like California, which is generating more jobs locally and increasing the local mix towards a higher annual income.”
Once Durango is up and running, the company is expected to transition to its next project, but has not confirmed what that project will be. The general consensus is that the company will move forward with a project in Henderson’s Inspirada community, which is also somewhat underdeveloped in terms of gaming.
Regardless, DeCree asserted that whatever project they do choose will “likely not be undertaken until Durango is ramped, which could be 18-36 months from opening,”
As of right now, the company owns more than 500 acres across the Las Vegas Valley, mostly in smaller communities such as Durango and Inspirada. Red Rock has a track record of buying large plots, holding them for future use and then selling them if they don’t like how the area develops.
