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Station Casinos Will Pay $1 Million Penalty to Missouri Regulators

29 November 2000

Station Casinos said today that it has settled its problems with the Missouri Gaming Commission. The company will pay a $1 million penalty after the closing of the sale of its Missouri casinos - one in Kansas City and one in the St. Louis suburb of St. Charles - to Ameristar Casinos.

Station is by far the dominant operator of "locals" casinos in the Las Vegas market, where it has its headquarters. The only casinos it ever developed outside of Nevada are in Missouri, where it was one of the first two operators when riverboat gambling began in May 1994.

For years, the company had a cozy relationship with the Missouri Gaming Commission. But that began to unravel late last year, along with the career of Station's former top outside lawyer in Missouri, Michael Lazaroff.

Lazaroff, formerly a prominent gaming and deal-making lawyer in St. Louis, pleaded guilty this summer to three felony counts of fraud. He admitted not disclosing to the law firm where he was partner that he had received $500,000 in bonus payments from Station.

The Commission held hearings on the bonus payments, and also looked into the relationship between Lazaroff and former Commission chairman Robert Wolfson. Station executives initially defied a subpoena to testify before the Commission in August. In retaliation, the Commission began proceedings to revoke Station's Missouri gaming licenses.

Later, the executives did testify and said they had obtained licenses on their own merits, without improper ties between Lazaroff and Wolfson.

In today's announcement, Station denied any wrongdoing but said its settlement addresses all outstanding issues with the Commission including "allegations relating to the activities of Michael Lazaroff" and other unrelated disciplinary actions for which the Commission had sought penalties totaling $400,000.

Station had clearly worn out its welcome with the Commission, and this summer announced its intent to sell the Missouri casinos. In October, Ameristar - another Las Vegas company - said it would pay $475 million for Station's Missouri casinos. That deal is pending approval by the Commission.

Today Station said that, based on talks with the Commission, it believes the sale could close by the end of this year. If it doesn't close by Dec. 27, Station said, the Commission has agreed to renew the licenses until the sale closes or until May 31, 2001. Station also retains the right to try to prove to the Commission that it is suitable to continue to be licensed.

Ameristar said last month that its financing for the Missouri acquisitions includes $100 million to complete an expansion of the St. Charles casino. Station long ago stopped work on the expansion, which angered local officials.

Jason Ader, senior gaming analyst at Bear, Stearns & Co., said in a statement this afternoon that he was "encouraged" by the settlement:

"Following the completed sale of the Missouri assets to Ameristar, we believe investors will begin to fully focus on Station Casinos' Las Vegas franchise and should begin to experience some long-awaited multiple expansion, as we believe the current share price does not reflect the underlying value of Station's Las Vegas assets and land holdings as well as their cash flow generating abilities."

Station's stock rose 8 percent today, trading this afternoon at $18.62.

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