The San Manuel Indian Band of Mission Indians are the new owners of Palms Casino Resort in Las Vegas.
In a statement, San Manuel Chairman Ken Ramirez said, “Today represents an important step for the Tribe and its long-term economic diversification strategy. On behalf of the Tribe, we are thankful for the opportunity to join a community that we have come to know and appreciate.”
The Southern California tribe purchased the off-strip property from Red Rock Resorts, parent company Station Casinos LLC, for $650 million. This is only the second instance where a Native American Tribe has operated a casino near the Las Vegas Strip. (Connecticut’s Mohegan Indian Tribe became the first with the Mohegan Sun Casino at Virgin Hotels Las Vegas.)
Wall Street still values Red Rock
Although the sale comes in lower than the $1 billion spent to redevelop the property, according to the Las Vegas Sun, included in the sales agreement is a provision that would add $28.5 million to the purchase price if the deal is not completed in 18 months.
Palms is one of four Station properties that have yet to reopen. However, Barry Jonas, a gaming industry analyst with Trust Securities, still puts Red Rock Resorts in his “buy” category.
“We are positive on the sale. The purchase price comes in below [Red Rock’s] nearly $1 billion total investment, but we believe [Wall Street] had largely written the property off given recent underperformance and its COVID-related closure,” Jones said in a memo.
Even though Las Vegas casinos are open and can operate at 80% to 100% capacity, the Fiesta Henderson, the Fiesta Rancho, and Texas Station remain closed.
At the time of writing, Red Rock Resorts ($RRR) opened at $37.52 a share on May 5.
No strangers to Vegas
The San Manuel Indian Tribe is no stranger to Las Vegas. They have marketing sponsorships with both the Las Vegas Raiders (NFL) and Vegas Golden Knights (NHL). They have donated roughly $9 million to UNLV and donated to the Clark County Public Education Foundation and Las Vegas’ Shade Tree Shelter.
The tribe’s flagship casino, the San Manuel Casino in Highland, is located 60 miles from downtown Los Angeles. The property is undergoing a $550 million renovation that will create a full-scale resort with a 432-room hotel, 3,000-seat events center, new restaurants, and other non-gaming attractions. The tribe also owns several hotels throughout California and an office building in Washington, DC.
A winding road for the Palms
Red Rock Resorts acquired the Palms Casino for $321.5 million in 2016. The company then pursued a perhaps overly ambitious $690 million redevelopment plan for the 1,200-room resort to restore it to its early 2000s glory days when it was a celebrity hot spot.
For about a decade, beginning in 2001, the Palms enjoyed its status as the place to “see and be seen,” with multiple nightclubs and lounges, including Playboy Club, hip and high-end restaurants, and events and parties crawling with the who’s who of Hollywood. Everything from The Real World to the MTV Video Music Awards was filmed at the property, further enhancing its status. That took a hit when The Cosmopolitan opened and some of the Palms’ novelty wore off. Its off-Strip location on Flamingo Road didn’t help matters either.
When Stations Casinos purchased the property from George Maloof in 2016, it went all-in on the nearly billion-dollar renovation – an eye-popping amount given the hotel’s small size. It began unrolling its makeover in 2018, complete with a Bobby Flay restaurant, and a suite going for $100,000 a night, and a whole host of other splashy amenities and venues.
Part of that billion-dollar price tag was what’s been called the most expensive music residency in history with Marshmello signed to DJ select dates at the Palms’ new nightclub, Kaos. Unfortunately, it became embroiled in scandal, and the much-hyped club closed within months. Multiple lawsuits and payouts followed, among other happenings, and it struggled along.
Then, of course, came the coronavirus pandemic. As a majority of other hotel-casinos in Vegas have long reopened, the Palms has been closed since March 2020.
According to San Manuel Gaming Chairwoman Latisha Casas, despite its lengthy closure, the property has been well maintained by Red Rock.
“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,” Casas said.
Here’s hope this fresh start will transform the property into something appropriate for its audience – likely locals looking for mid-range, approachable amenities and a few good casino play offers. Palms’ glory days were something to behold, but much like the Las Vegas Strip and the city itself, it must evolve.