Southern California’s San Manuel Tribe buying the off-Strip Palms from Red Rock Resorts Howard Stutz, CDC Gaming Reports · May 4, 2021 at 4:25 pm Southern California’s San Manuel Indian Band of Mission Indians is acquiring the off-Strip Palms Casino from Red Rock Resorts and will become the second tribe to operate a gaming resort near the Las Vegas Strip. In a statement Tuesday morning, the San Manuel Gaming and Hospitality Authority said it expects to close the transaction by the end year following regulatory approval. In a separate statement Tuesday, Red Rock said the sale price was $650 million. “Today represents an important step for the Tribe and its long-term economic diversification strategy,” San Manuel Chairman Ken Ramirez said in a statement. “On behalf of the Tribe, we are thankful for the opportunity to join a community that we have come to know and appreciate.” Offices of the San Manuel Band of Mission Indians The Palms, which is located roughly a mile west of the Las Vegas Strip, has been closed since March 2020 following the state’s 78-day shutdown of gaming due to the pandemic. “The Palms is a well-designed property which has been beautifully redeveloped and maintained by Red Rock Resorts,” San Manuel Gaming Chairwoman Latisha Casas said in a statement. “Our board believes that the Palms is a casino resort that many of San Manuel Casino’s loyal guests would enjoy. We are excited to move forward with this transaction.” Red Rock Resorts spent more than $1 billion on the 703-room Palms, acquiring the property in 2016 for $321.5 million and then embarking on a $690 million redevelopment effort that became a financial drain on the company. A year ago, during a quarterly conference call, Red Rock Resorts CEO Frank Fertitta III sternly shot down reports the Palms was being sold. It is one of four casinos operated by the company’s Station Casinos subsidiary that has not reopened since after the closure was lifted. The website Vital Vegas first reported the sale to San Manuel last week. There was no comment in the release from Red Rock Resorts, but the company is scheduled to announce first-quarter earnings Tuesday afternoon, so additional commentary could be provided. San Manuel Tribe Chairman Ken Ramierez announces a $20,000 donation to restaurant owner Jovanna Rodriguez/Courtesy photo A second tribal operator San Manuel Gaming will join Mohegan Gaming, the business arm of Connecticut’s Mohegan Indian Tribe, in operating a casino resort in the Strip corridor. Mohegan manages the casino space inside the off-Strip Virgin Hotels Las Vegas under the name Mohegan Sun Casino at Virgin Hotels Las Vegas. The San Manuel Tribe operates the San Manuel Casino in the community of Highland, located roughly 60 miles from downtown Los Angeles. The flagship casino is undergoing a $550 million expansion to create a full-scale resort that includes a 432-room hotel tower, a 3,000-seat events center, new restaurants, and other non-gaming attractions. The Tribe, already a top-10 private employer in San Bernardino County with more than 4,900 workers, expects to add another 2,000 jobs through the expansion by the end of 2021. The casino added a high-limit gaming area last year, and the property primarily draws customers from the populous Los Angeles, Orange, San Bernardino, and Riverside counties. The San Manuel Tribe has become familiar in Las Vegas, where it has marketing sponsorships with both the NFL’s Las Vegas Raiders and NHL’s Vegas Golden Knights. In February 2020, the tribe donated $9 million to the University of Nevada, Las Vegas to fund tribal development programs through the university’s hospitality college and school of law. The tribe has also donated to the Clark County Public Education Foundation and Las Vegas’ Shade Tree Shelter. Former Las Vegas gaming executive Laurens Vosloo was named the tribe’s CEO last August. He had been with San Manuel since 2014 when he was named chief financial officer. He was previously executive director of finance for Las Vegas Sands and he started his career as an auditor in Las Vegas with Deloitte. Vosloo is also a graduate of UNLV. San Manuel is one of the more influential tribes in Southern California. In December, the tribe donated $14 million to Claremont Graduate University to create a health research center on the campus of the Inland Empire school. Earlier this year, the tribe donated $1 million to 50 pandemic-stricken small businesses located within San Manuel’s ancestral territory in Southern California. Each business received $20,000 to help in their recovery. Palms financial issues The redesign undertaken by Red Rock Resorts included hotel and suite renovations, several new restaurants featuring celebrity chefs, entertainment lounges, high-priced artwork, new outdoor signage – including a 272-foot-tall LED mesh wall that fills the whole Strip-facing side of one of the towers – and a complete redesign of the casino. However, the budget-breaker was the development and opening of the Kaos Nightclub and Dayclub, a flashy 73,000-square-foot indoor-outdoor venue that took up the pool area. The facility opened to mixed reviews. Red Rock paid some $34 million in one-time charges and payments over several months in 2019 to close the club and buy out the contracts of several high-priced celebrity performers and DJs. Red Rock Resorts has reopened six properties but left the Palms closed along with the three other locations. Company leaders have said the reopenings won’t take place until customer demand needs to be met. The Palms was developed by George Maloof and his New Mexico-based family. It opened in September 2001 and drew attention a year later when a specially constructed suite became the setting for the MTV reality show, “The Real World.” Other fantasy suites include a full-size basketball court and a pair of bowling lanes. Shares of Red Rock Resorts closed Monday at $36.78 on the Nasdaq, up 15 cents or 0.41%. Milbank LLP represented Red Rock and Deutsche Bank Securities Inc. is acting as financial advisor to Red Rock on the transaction. Jefferies LLC is acting as San Manuel’s financial advisor. Latham & Watkins LLP and Greenberg Traurig, LLP are acting as the Tribe’s legal counsel. Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at firstname.lastname@example.org. Follow @howardstutz on Twitter.