California Tribe Buys Palms Casino in Vegas for $650 Million

The San Manuel Band of Mission Indians agreed to buy the Palms Casino Resort in Las Vegas from Red Rock Resorts Inc. for $650 million, the biggest purchase by a Native-Indian tribe in the U.S. gambling capital.

The tribe operates the San Manuel Casino in Highland, California, about 70 miles east of Los Angeles. That property has been open for 35 years and is undergoing an expansion of its casino and hotel. The Palms sale, announced Tuesday, is expected to close later this year, the tribe said.

Indian gaming has become a huge business in the U.S., reaching nearly $35 billion in 2019 before the pandemic crimped travel and spending. There are some 245 tribes operating casinos in 29 states. And while tribes have long been expanding beyond their traditional reservations, they’ve only recently set their sites on Las Vegas.

More than 45,000 cars a day traveled to Nevada from Southern California in March, about one third of all auto traffic to the city, creating a marketing opportunity for the new owner.

San Manuel Chief Executive Officer Laurens Vosloo said in an interview that the tribe has been seeking to diversify, adding an event center that will open this year in California and looking beyond the state for investments. The tribe will keep the Palms name for now and target a customer similar to the bread-and-butter gambler it attracts in California, not the younger, nightlife-driven clientele the property had embraced, he said.

“We have maybe a little different strategy, that caters to a different crowd, more of a gaming crowd,” Vosloo said.

Tribal Interests

Hard Rock International, owned by Florida’s Seminole tribe, acquired the rights to the Hard Rock name in Las Vegas last year. It has a restaurant in the city but has yet to announce casino plans.

The old Hard Rock, just off the city’s famous Strip, reopened in March under the Virgin Hotels brand. Its casino is operated by the Mohegan tribe of Connecticut under their Mohegan Sun brand, marking the first entry of a Native-American gaming operator in the city.

The Palms casino, which is also located off of the Strip, was opened in 2001 by the city’s Maloof family. It was one of the hottest nightlife spots in Las Vegas for a time, hosting music videos and reality TV shows. Red Rock, controlled by the Fertitta family, purchased it in 2016 for $313 million and began a $690 million renovation that included a focus on contemporary art.

The resort never quite regained its prior buzz, however, and has been closed since the pandemic began last year. On a conference call with investors Tuesday, the Fertittas said the sale to San Manuel gives Red Rock an opportunity to refocus on its core business of casinos that target Las Vegas residents.

©2021 Bloomberg L.P.

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