KALAMAZOO, Mich. (April 25, 2005) -- Station Casinos has moved a step closer to opening an American Indian casino in Michigan with U.S. Department of the Interior approval that the Gun Lake Tribe may develop 145 acres into a gambling destination about 25 miles north of Kalamazoo.

The Las Vegas-based casino company, which also operates an American Indian casino outside Sacramento, Calif., needs several other steps to be completed before the deal can be closed: additional federal approvals that move the land officially into a trust, approval of the company's management agreement with the tribe, and the tribe signing a compact with Michigan's governor.

Station Casinos has proposed converting an existing 192,000-square-foot building on the site into a casino and entertainment facility that would house 2,500 slot machines and 75 table games, as well as a buffet and other specialty restaurants.

The company said it would enter into a seven-year management agreement with the Gun Lake Tribe and collect fees based on the casino's performance. Gaming analysts estimate the contract could be worth between $10 million and $20 million annually to the company's revenue stream, affecting the company's stock price anywhere from 15 cents to $2 a share annually. The Gun Lake project could open in 2007.

Station Casinos filed a statement on the matter with the Securities and Exchange Commission late Tuesday. Approval from the U.S. Department of the Interior came late Monday.

Stock in Station Casinos closed Wednesday at $64.25, down $2.32, or 3.49 percent.

One potential hang-up could be the compact. The tribe negotiated an agreement with the previous governor's administration and the Michigan Senate revoked the compact last year, although the Michigan House took no action on the matter. It's unclear whether current Gov. Jennifer Granholm can sign the compact.

"Despite this, Station Casinos and the tribe have options available to them, including seeking federal approval of the compact or operating Class II machines in lieu of a compact," said Deutsche Bank gaming analyst Marc Falcone in an investors note.

Susquehanna Financial Group gaming analyst Eric Hausler said it could be difficult for the governor not to sign an agreement with the tribe once the land is formally put into trust by federal authorities.

"If she refuses to sign a compact, Gun Lake could pursue a Class II casino, although with many tribes already operating Class III casinos in Michigan and Gun Lake federally recognized with land in trust, we think it could be legally difficult for the governor to not sign a Class III compact with the tribe," Hausler wrote in an investors note.

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