Red Rock Resorts (RRR) risk factors, FY2025 10-K

Business, Economic, Market and Operating Risks

1. 01We depend on the residents of the Las Vegas regional market and repeat visitors, which subjects us to greater risks than a gaming company with more diverse operations
2. 02Our business is sensitive to changes in consumer sentiment and discretionary spending
3. 03We face substantial competition in the gaming industry and we expect that such competition will intensify
4. 04Our success depends on key executive officers and personnel and our ability to attract and retain employees
5. 05We may incur delays and budget overruns with respect to current or future construction projects. Any such delays or cost overruns may have a material adverse effect on our operating results
6. 06We may pursue new gaming acquisition and development opportunities and may not be able to recover our investment or successfully expand to additional locations
7. 07We require significant capital to fund capital expenditures, pursue proposed development, expansion or acquisition opportunities or refinance our indebtedness63% rewritten
8. 08If we are unable to access sufficient capital from operations, borrowings or otherwise, we may be precluded from maintaining or enhancing our properties, taking advantage of future opportunities, growing our business or responding to competitive pressuresNew
9. 09We may not be successful in entering into additional management or development agreements for Native American gaming opportunities
10. 10Union organization activities could disrupt our business by discouraging patrons from visiting our properties, causing labor disputes or work stoppages, and, if successful, could significantly increase our labor costs
11. 11Work stoppages, labor problems and unexpected shutdowns may limit our operational flexibility and negatively impact our future profits20% rewritten
12. 12The concentration and evolution of the slot machine manufacturing industry or other technological conditions could impose additional costs on us
13. 13We are subject to extensive federal, state and local regulation and governmental authorities have significant control over our operations and any failure to comply with the regulations that govern our operations could have an adverse effect on our business43% rewritten
14. 14money laundering laws or regulations by any of our properties could have an adverse effect on our financial condition, results of operations or cash flowsNew
15. 15We are subject to a variety of federal, state and local laws and regulations relating to the protection of the environment and human health and safety. Our compliance with these regulations could have a materially adverse effect on our business, financial condition, results of operations and cash flows
16. 16Increased regulation by international, national, state, regional, and local regulatory bodies of greenhouse gas emissions could materially affect our business, financial condition, results of operation and cash flows69% rewritten
17. 17resources and expose us to additional risks, which could adversely impact our reputation, customer attraction and retention, access to capital and employee recruitment and retentionNew
18. 18We may incur losses that are not adequately covered by insurance, which may harm our results of operations. In addition, our insurance costs may increase as a result of any such losses and we may be unable to obtain similar insurance coverage in the future26% rewritten
19. 19We renew our insurance policies on an annual basis. To the extent that the cost of insurance coverage increases, we may be required to reduce our policy limits or agree to exclusions from our coverageNew
20. 20We may incur impairments to goodwill, indefinite-lived intangible assets, or long-lived assets which could negatively affect our results of operations
21. 21Any failure to protect our trademarks could have a negative impact on the value of our brand names and adversely affect our business
22. 22Shortages or increases in prices of energy or water may adversely affect our business and our results of operations
23. 23Win rates for our gaming operations depend on a variety of factors, some beyond our control, and the winnings of our gaming customers could exceed our casino winnings
24. 24We face the risk of fraud and cheating

Risks Related to our Indebtedness

1. 25We have a substantial amount of indebtedness, which could have a material adverse effect on our financial condition and our ability to obtain financing in the future and to react to changes in our business22% rewritten
2. 26Our indebtedness imposes restrictive financial and operating covenants that limit our flexibility in operating our business and may adversely affect our ability to compete or engage in favorable business or financing activities
3. 27In addition, our credit agreements contain certain financial covenants, including maintenance of a maximum total secured net leverage ratio
4. 28Despite our current indebtedness levels, we and our subsidiaries may still incur significant additional indebtedness, which could increase the risks associated with our substantial indebtedness23% rewritten
5. 29We may not be able to generate sufficient cash to service all of our indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful

Risks Related to Our Structure and Organization

1. 30Red Rock’s only material asset is its interest in Station Holdco and Station LLC. Accordingly, it is dependent upon distributions from Station Holdco to make payments under the tax receivable agreement, pay dividends, if any, and pay taxes and other expenses
2. 31Our Principal Equityholders have control over our management and affairs, and their interests may differ from our interests or those of our other stockholders
3. 32We are a “controlled company” within the meaning of the rules of NASDAQ and, as a result, qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements
4. 33We will be required to pay certain of our pre-IPO owners for certain tax benefits we may claim arising in connection with the reorganization transactions, and the amounts we may pay could be substantial56% rewritten
5. 34The payments that we may make under the TRA could be substantial. At December 31, 2025 and 2024, our liability under the TRA with respect to previously consummated transactions was $20.6 million and $20.4 million, respectivelyNew
6. 35In certain cases, payments under the TRA may be accelerated and/or significantly exceed the actual benefits, if any, we realize in respect of the tax attributes subject to the TRA
7. 36We may not be able to realize all or a portion of the tax benefits that are expected to result from the exchanges of LLC Units and payments made under the TRA itself

General Risks

1. 37The market price of our Class A common stock could decline upon the exchange of LLC Units by our Continuing Owners58% rewritten
2. 38shares of our Class A common stock, as described under “Class B Common Stock” within Note 10 to the Consolidated Financial Statements
3. 39We may not have sufficient funds to pay dividends on our Class A common stock31% rewritten
4. 40These change of control provisions, and similar provisions in future agreements, are likely to increase the costs of any takeover and may discourage, delay or prevent an acquisition of our Company by a third partyNew
5. 41The share price for our Class A common stock may fluctuate significantly
6. 42We are subject to litigation in the ordinary course of our business. An adverse determination with respect to any such disputed matter could result in substantial losses