New Wildfire Casino starts Red Rock’s latest building boom
The newly opened Wildfire Fremont Casino near downtown Las Vegas isn’t going to tip the scales on Red Rock Resorts’ balance sheet.
The company’s big new revenue producer lands later this year when the $750 million Durango Station opens for business.
Still, CEO Frank Fertitta III said the 21,000-square-foot Wildfire, the seventh of the company’s properties without a hotel component, has its place in Red Rock’s portfolio as the starting point in an effort to double the size of the company’s Southern Nevada footprint by 2030.
“They're a little bit more local in their radius of customer catchment,” Fertitta said on the company’s Feb. 7 conference call with analysts when describing the small standalone casino that is five times smaller than either of the company’s flagship properties – Red Rock Resort in Summerlin and Green Valley Ranch Resort in Henderson.
“They're a little more convenient getting in and out, and they offer a little bit more of a personalized service than our big box operations,” Fertitta said.
Red Rock saw a 3 percent year-over-year increase in revenue from its Southern Nevada casinos, bringing in $1.65 billion last year. Fertitta said the large casino resorts and Wildfire attract different customer markets.
CBRE gaming analyst John DeCree told investors the small casino “should provide some incremental growth [to the company] in 2023 and 2024.”
By then, the Durango project, Red Rock’s first all-new casino development since 2008, could be up and running from its location in the southwestern part of the valley at the 215 Beltway and Durango Drive.
Once the hotel-casino opens, Red Rock executives said they will be able to determine the next resort.
Construction crews topped off the 200-room hotel-casino in October and the structure should be fully enclosed by April. Red Rock Chief Financial Officer Steve Cootey said the opening is still planned for sometime in the last three months of this year.
Fertitta told analysts the company wants to see continued stability in the Las Vegas gaming market and assess how Durango performs before jumping into another development. However, he seemed to point toward the 45 acres the company owns in the Inspirada development in Henderson as the next target, which has also been discussed on previous conference calls.
“What we're doing is working on being in a position to have a ready-to-go project,” Fertitta said. “But to green-light the project, we're going to have to prove out Durango.”
Stifel Financial gaming analyst Steven Wieczynski said the Las Vegas locals gaming market, which collected a record $2.9 billion in gaming revenue in 2022, “continues to be one of the most resilient/healthy gaming markets across the U.S.” However, he wrote in a research note that investors are concerned about “how much more can be extracted from that market.”
Going where there’s development
Fertitta said the company will continue to focus on locations in Southern Nevada “where rooftops are being built, but gaming entertainment remains somewhat minimal.”
“Once Red Rock’s Durango project is fully operational, and if that asset produces better than expected returns, then we believe [the stock price] could break out, given how much more undeveloped land banks the company controls,” Wieczynski wrote.
Red Rock owns more than 522 acres in Southern Nevada for future developments in Henderson, North Las Vegas and on the southern end of Las Vegas Boulevard at Cactus Avenue.
Cootey told analysts at least 120 acres are for sale, including the site of the former Texas Station in North Las Vegas, which has been demolished, and the land associated with the Wild Wild West Casino on Tropicana Avenue west of Interstate 15, which was closed last year.
In 2022, Red Rock sold 21 acres of the Durango site for $23.8 million to a multi-family housing developer that is planning to put an apartment complex behind the resort. Additionally, the 35-acre site in Henderson that housed the since-demolished Fiesta Henderson site, was sold for $33 million to the City of Henderson, which plans to use it for a youth athletic complex.
Red Rock also paid $55 million for a 67-acre parcel at Losee Road and the 215 Beltway for a hotel-casino.
JMP Securities gaming analyst Jordan Bender said Red Rock smartly turns the money it extracts from land sales to “provide a liquidity runway for the company to work toward growing the size of the portfolio.”
The flagship for the brand
The newest Wildfire has 200 slot machines, a Station Casinos sportsbook and two restaurants — a 200-seat IHOP with an outdoor patio and a Tacos El Pastor.
Wildfire is built on a section of a 26-acre site that once housed the Showboat hotel and casino, which the company bought in 2005 and demolished a year later. A portion of the land now includes an apartment complex.
“[The Wildfire] does sit relatively close to downtown, but we do think that it's going to be predominantly for folks in that neighborhood,” Fertitta said, adding that that particular area of the Boulder Strip hasn’t seen a property that “fresh and new in years.”
Truist Securities gaming analyst Barry Jonas said the new casino will “become the flagship of the Wildfire brand,” which has locations in Southern Nevada away from the company’s six full-scale casino resorts.
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