After meeting with executives from Red Rock Resorts this week at G2E, a Wall Street analyst noted the company is well positioned and outlined the operator’s three next potential projects.
Daniel Politzer of J.P. Morgan said his team met with President Scott Kreeger and CFO Steve Cootey as part of investor meetings.
Business and database trends appear stable from a very strong second quarter and management is getting closer to determining its next capital project with a potential update in early 2026, Politzer said.
“Red Rock Resorts has seen solid database trends continue across both its local and national customer base, noting its strong value proposition has been resonating well with players and out-of-town customer trends have been positive with some 20% of total,” Politzer said. “The market-wide promotional environment has stayed rational and consistent.”
Red Rock’s group business is trending well into 2026, with upgrades to Green Valley Ranch’s convention space providing some benefit. At the Durango Casino & Resort, Red Rock expects the majority of the $5 million to $6 million construction disruption impact to occur in the third and fourth quarters, with the parking garage expected to be completed by Dec15. At Green Valley Ranch, Red Rock expects construction disruption of about $15 million to continue into early 2026.
Red Rock is working simultaneously on planning three projects, including the Durango expansion and Inspirada in west Henderson near the M Resort with a potential cost of 50% to 60% of Durango’s $780 million. A site south of the South Point on Las Vegas Boulevard will cost an estimated $1.5 billion and take four to five years to build, Politzer said.
“While it’s not clear what Red Rock’s top priority is, management did point out that Durango is likely the lowest-risk project and greatest comfort in underwriting, given it’s an existing property,” Politzer said. “Cactus is an exciting opportunity as that area is reminiscent of what Durango looked like several years ago, while Inspirada is one of the wealthiest areas of Las Vegas, though still being fully developed. We could get more clarity on Red Rock’s next project with its fourth-quarter earnings report.”
Red Rock’s $750 million project in Madera, California, is fully financed, on track and on budget for its anticipated opening one year from now, Politzer said.
The project is part of a tribal management agreement under which Red Rock initially provided a $180 million in financing note (including interest) and more recently received $110 million back as part of the project’s refinancing. Red Rock receives a 4% development fee for hard costs/soft costs which equates to $3 million of quarterly EBITDA accruing through fourth quarter of 2026.
Upon the property opening, the seven-year management deal dictates that Red Rock will receive 2% of gaming revenue and 30% of cash income with the total capped at 40%.
Red Rock has five taverns on their way towards completion, with the first opening in December and expecting one opening each month until completion. Over time, Red Rock management said they think it can have a 25 to 40 tavern footprint with each tavern doing about $500,000 in EBITDA. Red Rock is continuing to work on tech enhancements that could meaningfully improve its digital wallet capabilities, Politzer said.