Stations Casinos banks on Kansas City

Gary Thompson

Friday, Jan. 17, 1997 | 11:59 a.m.

They're calling it "Boulder Station on steroids."

Las Vegas-based Station Casinos Inc. debuted its new Kansas City gaming operation, which features the nation's fourth-largest casino, to overflow crowds last night.

And while Station executives smile dismissively at the description by guests who've seen both operations, they're secretly hoping Station Casino Kansas City pumps up the company's Wall Street weakling image the way the drugs do a body builder's muscles.

Glenn Christenson, Station's executive vice president and chief financial officer, acknowledges that the company's decision to spend $255 million on the new Missouri gaming property raised the same reaction from some securities analysts as steroids do from doctors.

"This has been a very controversial investment," he says, noting analysts' estimates on annual cash flow for the new resort and overall market size vary widely.

"We haven't always followed the conventional view," Christenson says. "People said we couldn't make any money building casinos off the Strip. But look at what we've done with Palace Station and Boulder Station."

Frank Fertitta III, Station chairman, believes the muscular new Kansas City entry will emulate their success.

"There's no doubt Harrah's was the market leader -- until last night," he says.

Station's new Missouri casino complex boasts 140,000 square feet of gaming area, with 3,000 slots and 190 gaming tables split between two "riverboat" operations on a 171-acre site within 90 miles of more than 2.5 million people.

That gives Station about 38 percent of the region's gaming capacity, with Harrah's Entertainment Inc. double-boat complex in North Kansas City the next largest of its four competitors.

Analysts predict Station will capture about 40 percent of the market, which they estimate at $360 million to $500 million annually, and generate annual cash flow of $30 million to $55 million.

Station officials won't address those widely divergent numbers, but something convinced them that boosting the construction budget nearly 25 percent, to $255 million from $205 million, would be worthwhile. While it's clear internal projections played a key role, so did demand.

"The more people learned about the investment we were making and the project we were building, the more people wanted to be involved," Christenson says. "We had to accelerate completion of Phase 2 to accommodate the demand."

Among those wanting to participate were Kid's Quest, the child-care operator that's enjoyed success at Boulder Station in Las Vegas; Arthur Bryant's, a noted restaurant operation; and Act III, which has movie theaters at Station properties in Las Vegas.

"As we saw all this coming together, we had to expand the initial plans because it would clearly enhance our image as a complete entertainment destination resort," Christenson says.

"And we are positioning this property as a world-class destination. In terms of quality and attention to detail, this is as nice as anything in Las Vegas.

"There are times when gaming companies get carried away with their own marketing, but we truly believe this is a special place."

The complex, which totals 730,000 square feet, includes 12 restaurants, a 200-room hotel and a jazz club in addition to the two casino areas, all carrying a turn-of-the-century theme.

Analysts have also been leery about Missouri's $500-per-visit loss limit, which has resulted in an $11 larger win-per-customer for nearby Illinois riverboats.

"The loss limit does have an adverse impact in terms of convenience to the customers," Christenson says. "A lot of them are really put off by the paperwork associated with the law. And it really doesn't accomplish what it intended, which was to reduce problem gaming."

But the company's strategic emphasis on encouraging repeat visits from area slot and video poker customers should limit the law's impact. It's a formula that's proven successful in the biggest market of all -- Las Vegas.