STATION CASINOS INC, S-4/A, 1997-08-08

STATION CASINOS INC
S-4/A, 1997-08-08
MISCELLANEOUS AMUSEMENT & RECREATION

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 8, 1997

REGISTRATION NO. 333-30685

AMENDMENT NO. 1
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
-----------

STATION CASINOS, INC.
(Exact name of registrant as specified in its charter)
-----------

Nevada 7990 88-0136443
(State or other (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Identification No.)
Incorporation or Classification Code
Organization) Number)

(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

MR. GLENN C. CHRISTENSON
STATION CASINOS, INC.
2411 WEST SAHARA AVENUE
LAS VEGAS, NEVADA 89102
(702) 367-2411
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-----------

COPY TO:
KENNETH J. BARONSKY, ESQ.
MILBANK, TWEED, HADLEY & MCCLOY
601 S. FIGUEROA STREET, 30TH FLOOR
LOS ANGELES, CA 90017
(213) 892-4000

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this registration statement becomes
effective.

If the securities being registered on this form are being offered in
connection with the formation of a holding Company and there is compliance with
General Instruction G, check the following box.[__]

CALCULATION OF REGISTRATION FEE

Proposed Proposed
Maximum Maximum
Amount Offering Aggregate Amount of
Title of Each Class of To be Price Offering Registration
Securities to be Registered Registered Per Unit Price(1) Fee(1)
- --------------------------------------------------------------------------------
9 3/4% Senior Subordinated
Notes due 2007 . . . . . . $150,000,000 100% $150,000,000 $43,747.86
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

(1) In accordance with Rule 457(f)(2), the registration fee is calculated based
on the book value of the securities as of June 30, 1997.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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PROSPECTUS
[Logo]

$150,000,000 OFFER TO EXCHANGE
9 3/4% SENIOR SUBORDINATED NOTES DUE 2007
FOR ANY AND ALL OUTSTANDING
9 3/4% SENIOR SUBORDINATED NOTES DUE 2007
OF STATION CASINOS, INC.

Station Casinos, Inc. (the "Company") hereby offers (the "Exchange Offer"),
pursuant to a registration statement (the "Registration Statement"), of which
this Prospectus constitutes a part, and the accompanying Letter of Transmittal
(the "Letter of Transmittal"), to exchange its issued 9 3/4% Senior Subordinated
Notes Due 2007 (the "Old Notes") of which an aggregate of $150,000,000 principal
amount is outstanding as of the date hereof, for an equal amount of newly issued
9 3/4% Senior Subordinated Notes Due 2007 (the "New Notes").

The New Notes will mature on April 15, 2007. Interest on the New Notes is
payable semiannually on each October 15 and April 15, commencing October 15,
1997. The New Notes are redeemable at the option of the Company, in whole or in
part, on or after April 15, 2002, at the redemption prices set forth herein,
plus accrued interest. Upon a Change of Control Triggering Event (as defined
herein), each holder of the New Notes will have the right to require the Company
to repurchase such holder's New Notes at 101% of the principal amount thereof,
plus accrued interest to the repurchase date. There can be no assurance that
the Company will have sufficient funds to repurchase the New Notes upon a Change
of Control Triggering Event. See "Description of the New Notes - Change of
Control and Rating Decline" for a discussion of other factors that could limit
the Company's ability to effect such a repurchase.

The New Notes will be general unsecured obligations of the Company,
subordinated in right of payment to all existing and future Senior Indebtedness
(as defined herein) of the Company, including the Company's guaranty of the
$368 million Bank Facility (as defined herein), and effectively subordinated to
all existing and future indebtedness and other liabilities (including trade and
construction payables) of the Company's subsidiaries. As of March 31, 1997,
after giving effect to the offering of the Old Notes (the "Old Notes Offering")
and application of the net proceeds therefrom, the Company's Restricted
Subsidiaries (as defined herein) would have had approximately $296.3 million of
indebtedness and other liabilities (including trade and construction payables)
outstanding, of which $287.6 million would have been guaranteed by the Company.
In addition, $46.0 million of Qualified Non-Recourse Debt would have been
incurred by an Unrestricted Subsidiary under the $110 million Sunset Loan
Agreement (each as defined herein). See "Description of Certain Indebtedness
and Capital Stock." The Company also would have had $391 million of senior
subordinated indebtedness that ranked PARI PASSU with the Old Notes. The
Company has no indebtedness outstanding to which the New Notes are senior, and
the Company has no plans to issue any such indebtedness.

The New Notes are being offered hereby in order to satisfy certain
obligations of the Company under a registration rights agreement, dated April 3,
1997 and amended as of May 27, 1997, between the Company and BancAmerica
Securities, Inc. (the "Registration Rights Agreement"). The form and the terms
of the New Notes will be substantially identical to those of the Old Notes
except that the New Notes will have been registered under the Securities Act of
1933, as amended (the "Securities Act"), and hence are not subject to certain
transfer restrictions, registration rights and related liquidated damages
provisions applicable to the Old Notes. The New Notes will evidence the same
debt as the Old Notes and will be entitled to the benefits of an indenture (the
"Indenture"), dated as of April 3, 1997, by and between the Company and First
Union National Bank, N.A., as trustee (the "Trustee"). The Indenture provides
for the issuance of both the Old Notes and the New Notes.

The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all expenses incident to the Exchange Offer (which shall not
include the expenses of any holder in connection with resales

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of the New Notes). The Company will accept for exchange any and all
validly tendered Old Notes on or prior to 5:00 p.m. New York City time, on
September 12, 1997 (such date and time, if and as extended, the "Expiration
Date"). Tenders of the Old Notes may be withdrawn at any time prior to the
Expiration Date. The Exchange Offer is not conditioned upon any minimum
principal amount of Old Notes being tendered for exchange. Old Notes may be
tendered only in integral multiples of $1,000.

This Prospectus, together with the Letter of Transmittal, is first being sent
on or about August 8, 1997 to all holders of the Old Notes known to the
Company.

SEE "RISK FACTORS" BEGINNING ON PAGE 17 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY HOLDERS OF THE OLD NOTES (THE "NOTEHOLDERS") PRIOR TO
TENDERING THEIR OLD NOTES IN THE EXCHANGE OFFER OR BY A PROSPECTIVE INVESTOR
BEFORE PURCHASING THE NEW NOTES.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

NONE OF THE NEVADA GAMING COMMISSION, THE NEVADA GAMING CONTROL BOARD, THE
MISSOURI GAMING COMMISSION, GAMING AUTHORITIES IN LOUISIANA OR ANY OTHER GAMING
AUTHORITY HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR THE
INVESTMENT MERITS OF THE SECURITIES OFFERED HEREBY. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.

THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
MR. WES ALLISON, STATION CASINOS, INC., 2411 WEST SAHARA AVENUE, LAS VEGAS, NV
89102, TELEPHONE (702) 367-2411. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY AUGUST 22, 1997.

Based on interpretations contained in no-action letters of the Securities
and Exchange Commission (the "Commission"), the Company believes that the New
Notes issued pursuant to the Exchange Offer in exchange for the Old Notes may be
offered for resale, resold, and otherwise transferred by a holder thereof (other
than (i) a broker-dealer who purchases such New Notes directly from the Company
to resell pursuant to Rule 144A or any other available exemption under the
Securities Act or (ii) a person who is an affiliate of the Company (within the
meaning of Rule 405 under the Securities Act)), without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that the holder is acquiring the New Notes in its ordinary course of business
and is not participating, and has no arrangement or understanding with any
person to participate, in the distribution of the New Notes. The Noteholders
wishing to accept the Exchange Offer must represent to the Company that such
conditions have been met.

Each broker-dealer that receives the New Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a Prospectus in
connection with any resale of such New Notes. This Prospectus has been prepared
for use in connection with the Exchange Offer and may be used by BancAmerica
Securities, Inc. in connection with offers and sales related to market-making
transactions in the Old Notes. BancAmerica Securities, Inc. may act as a
principal or agent in such transactions. Such sales will be made at prices
related to prevailing market prices at the time of sale. The Letter of
Transmittal states that by so acknowledging and by delivering a Prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of the New Notes received in exchange for the Old Notes where such
Old Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed that, for a
period of one year after the date when the Registration Statement becomes
effective, it will make this Prospectus available to any broker-dealer for use
in connection with any such resale. See "Plan of Distribution."

Prior to this Exchange Offer, there has been no public market for the Old
Notes. The Company does not intend to list the New Notes on any securities
exchange or to seek approval for quotation through any automated quotation
system. There can be no assurance that an active market for the New Notes will
develop. To the extent that a market for the New Notes does develop, the market
value of the New Notes will depend

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on many factors, including, among other things, prevailing interest rates,
market conditions, general economic conditions, the Company's results of
operations and financial condition, the market for similar securities, and other
conditions. Such conditions might cause the New Notes, to the extent that they
are actively traded, to trade at a significant discount from face value. See
"Risk Factors - Absence of Public Trading Market."

The date of this Prospectus is August 8, 1997.

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AVAILABLE INFORMATION

This Prospectus represents only a summary of the information presented
herein, and incorporates by reference the following reports of the Company filed
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"):
Annual Report on Form 10-K for the fiscal year ended March 31, 1997, and the
Current Report on Form 8-K dated April 3, 1997, and the Current Report on
Form 8-K dated August 7, 1997 (collectively, the "Incorporated
Documents"). References herein to this "Prospectus" shall be deemed to include
such Incorporated Documents, which are an integral part of this Prospectus.
Prospective investors should obtain and review carefully copies of the
Incorporated Documents. Any statement contained in the Incorporated Documents
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained in this Prospectus modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
Any person obtaining a copy of this Prospectus may obtain without charge, upon
written request, a copy of the Incorporated Documents.

All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, prior to the first anniversary of the
date the Exchange Offer is consummated, shall be deemed to be incorporated by
reference into this Prospectus.

The Company is subject to the informational reporting requirements of the
Exchange Act and in accordance therewith files reports, proxy and information
statements and other information (including the Incorporated Documents) with the
Commission. Such reports, proxy and information statements and other
information (including the Incorporated Documents) may be inspected and copied
at the public reference facilities of the Commission, Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the
following Regional Offices: 7 World Trade Center, 14th Floor, New York, New York
10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such material can be obtained from the Commission by mail at prescribed
rates. Requests should be directed to the Commission's Public Reference
Section, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. In addition, the Commission maintains a website (http:/www.sec.gov) that
contains such reports, proxy statements and other information (including the
Incorporated Documents) filed by the Company. The Company's Common Stock, $0.01
par value per share (the "Common Stock"), is listed on the New York Stock
Exchange. Information (including the Incorporated Documents) filed by the
Company can be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005. In addition, for so long as any of the Old
Notes remain outstanding, the Company has agreed to make available to any
prospective purchaser of the Old Notes or beneficial owner of the Old Notes in
connection with any sale thereof the information required by Rule 144A(d)(4)
under the Securities Act. Information (including the Incorporated Documents)
may be obtained from the Company at 2411 West Sahara Avenue, Las Vegas, Nevada
89102, Attention: Investor Relations, telephone (702) 367-2411.

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PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO,
INCLUDED ELSEWHERE IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE HEREIN.
UNLESS THE CONTEXT INDICATES OTHERWISE, ALL REFERENCES HEREIN TO "SCI" REFER TO
STATION CASINOS, INC. AND ALL REFERENCES TO THE "COMPANY" REFER TO SCI AND ITS
CONSOLIDATED SUBSIDIARIES. THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS
THAT INVOLVE RISKS AND UNCERTAINTIES. SEE "RISK FACTORS" FOR CERTAIN FACTORS
INCLUDING FACTORS AFFECTING FORWARD-LOOKING STATEMENTS, THAT THE NOTEHOLDERS
SHOULD CONSIDER IN EVALUATING THE COMPANY BEFORE TENDERING THE OLD NOTES IN AN
EXCHANGE OFFER OR A PROSPECTIVE INVESTOR SHOULD CONSIDER BEFORE PURCHASING THE
NEW NOTES.

THE COMPANY

Station Casinos, Inc. is a multi-jurisdictional gaming company that owns
and operates six distinctly themed casino properties, four of which are located
in Las Vegas, Nevada, one of which is located in Kansas City, Missouri and one
of which is located in St. Charles, Missouri. In Las Vegas, the Company owns
and operates Palace Station Hotel & Casino ("Palace Station"), Boulder Station
Hotel & Casino ("Boulder Station"), Texas Station Gambling Hall & Hotel ("Texas
Station") and Sunset Station Hotel & Casino ("Sunset Station") which opened in
June 1997. In Kansas City, the Company owns and operates Station Casino Kansas
City, a historic Missouri riverboat-themed dockside gaming and entertainment
complex which opened in January 1997. In St. Charles, the Company owns and
operates Station Casino St. Charles, a themed riverboat and dockside gaming and
entertainment complex (Station Casino St. Charles, together with Station Casino
Kansas City, Palace Station, Boulder Station, Texas Station and Sunset Station,
the "Casino Properties"). The Company is currently expanding its existing
Station Casino St. Charles property by constructing two new gaming vessels
(similar to those at Station Casino Kansas City) as well as adding a new retail
and entertainment complex. These new facilities ultimately are intended to
replace the Company's existing facilities at St. Charles upon completion of the
St. Charles Expansion Project (as defined herein).

The Company's operating strategy emphasizes attracting and retaining
customers primarily from the local and repeat visitor markets. The Casino
Properties attract customers from their local markets through innovative,
frequent and high-profile promotional programs, focused marketing efforts and
convenient locations, and from the repeat visitor market through aggressive
marketing and the development of strong relationships with specifically targeted
travel wholesalers. Because the Company targets the repeat customer, management
is committed to providing a high-value entertainment experience for its
customers in its restaurants, hotels and casinos. Management believes that the
value offered by restaurants at each of the Casino Properties is a major factor
in attracting its local gaming customers and that its focus on slot and video
poker machine play with higher than average payout rates and attentive customer
service attract the frequent gaming patron. See "Business - Operating
Strategy."

Management's growth strategy includes the master-planned expansion of the
Company's existing gaming facilities in Nevada and Missouri, as well as the
evaluation and pursuit of additional development opportunities in Nevada,
Missouri and other emerging gaming markets. The Company seeks expansion
opportunities where it can realize distinct competitive advantages through its
focus on the local and repeat visitor markets. To accomplish this, the Company
seeks strategic development locations that (i) provide easy access to high
volume traffic, (ii) are in major metropolitan or rapidly growing areas, (iii)
provide flexibility for future expansion, (iv) allow for ample parking and (v)
are surrounded by a strong demographic profile. Management believes that these
factors enable the Company to capitalize on its expertise in the locals and
repeat visitors niche as well as on its reputation as a provider of a
high-quality, affordable gaming and entertainment experience. See "Business -
Expansion Strategy."

The Company currently conducts its operations through eight wholly-owned
subsidiaries, Palace Station Hotel & Casino, Inc. ("PSHC"), Boulder Station,
Inc. ("BSI"), Texas Station, Inc. ("TSI"), Sunset Station, Inc. ("SSI"), Kansas
City Station Corporation ("KCSC"), St. Charles Riverfront Station, Inc.
("SCRSI"), Green Valley Station, Inc. ("GVS") and Southwest Gaming Services,
Inc. ("SGSI"). The Company was incorporated in 1976, its principal executive
offices are located at 2411 West Sahara Avenue, Las Vegas, Nevada 89102, and its
telephone number is (702) 367-2411.

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EXPANSION OF EXISTING CASINO PROPERTY

STATION CASINO ST. CHARLES

The Company has commenced construction on certain elements of the Station
Casino St. Charles master plan. In May 1996, the Company completed construction
of an elevated roadway and a 4,000-space parking garage. In Fall 1996, the
Company commenced construction of the next phase of development at Station
Casino St. Charles consisting of two new gaming vessels which will be located in
a newly-formed backwater protective basin as well as a uniquely designed retail
and entertainment complex (the "St. Charles Expansion Project"). Customers will
be provided direct, convenient access to the gaming and the retail and
entertainment facilities from the 4,000-space parking garage. Both of the new
gaming vessels will be 132 feet wide by 350 feet long and will offer gaming on
each of two levels, similar to the Station Casino Kansas City vessels.
Combined, the new vessels will have approximately 3,000 slot and video poker
machines and 190 gaming tables and will comprise over 140,000 square feet of
casino space (compared to 47,000 square feet at the existing vessels). The new
gaming facilities are designed to offer guests an experience similar to that now
offered at Station Casino Kansas City. The Company has entered into a
nonbinding letter of intent with Gordon Group Holdings, Ltd. (the "Gordon
Group") pursuant to which the Gordon Group will lease from the Company a
substantial portion of the new retail and entertainment complex. The Company
selected the Gordon Group for this project based upon its experience in
developing unique shopping and entertainment destinations, including experience
as the developer of the successful Forum Shops at Caesars Palace. The Company
anticipates that between $50 million and $70 million of financing will be
required by the Gordon Group for the development of a uniquely styled shopping
and entertainment area, including a variety of specialty retail stores,
restaurants and entertainment attractions. The Company will retain certain
space in the entertainment facility for selected restaurant concepts, a
high-quality movie theater, a gift shop and other customer services as well as
passenger ticketing and back of the house facilities. The Company believes that
the St. Charles Expansion Project will enable the Company to leverage the
success of its current operations at Station Casino St. Charles and position
itself as the premier facility in the St. Louis marketplace. However, no
assurances can be given that the Company and the Gordon Group will enter into a
definitive development agreement with respect to the project, that the Gordon
Group will be able to obtain the necessary financing, that the Gordon Group will
complete the build-out of the complex within the Company's estimated completion
time of the project or that the Gordon Group will be able to develop and operate
the project successfully.

LAS VEGAS CASINO PROPERTIES

In Las Vegas, Palace Station, Boulder Station, Texas Station and Sunset
Station, are positioned as distinctive products in the Las Vegas gaming market.
Each site has great visibility and access from major thoroughfares and is
situated in the middle of dense, growing population bases. Management believes
that the Company's reputation as "The Local Favorite" is a key to attracting the
repeat visitor. Management believes that its patrons are discerning customers
who enjoy the Company's locals-oriented hotels and casinos as an alternative to
hotels and casinos located on the Las Vegas Strip and downtown Las Vegas.

PALACE STATION

Palace Station caters primarily to Las Vegas residents and repeat visitors.
Located on Sahara Avenue adjacent to Interstate 15, Palace Station is near major
attractions on the Las Vegas Strip and downtown Las

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Vegas. Palace Station is situated on 39 acres, strategically located at one of
the most heavily traveled intersections in Las Vegas. The Palace Station complex
has approximately 287,000 square feet of main facility area and features a
turn-of-the-century railroad station theme. The complex includes a 1,028-room
hotel, an approximately 84,000-square foot casino, two swimming pools, 3,700
parking spaces (including 1,900 spaces in two multi-level parking structures),
an approximately 20,000-square foot banquet and convention center, five
full-service restaurants, two fast-food outlets, a 24-hour gift shop and a
non-gaming video arcade. The casino offers approximately 2,220 slot and video
poker machines, 53 gaming tables, two keno lounges, a poker room, a bingo
parlor and a race and sports book. In addition, Palace Station has been
master-planned to provide for additional hotel rooms and improved recreational
facilities. The Company intends to develop plans and budgets for expansion of
the complex and is continually evaluating the timing and scope of the next
expansion phase of the Palace Station master plan. See "Business - Las Vegas
Casino Properties - Palace Station."

BOULDER STATION

Boulder Station, which opened in August 1994, caters primarily to Las Vegas
residents living on the eastern side of Las Vegas. Situated on 40 acres along
the Boulder Highway and immediately adjacent to Interstate 515, Boulder Station
is strategically located on the opposite side of Las Vegas from Palace Station,
approximately four miles east of the Las Vegas Strip and approximately four
miles southeast of downtown Las Vegas. The Boulder Station complex has
approximately 337,000 square feet of main facility area and, like Palace
Station, features a turn-of-the-century railroad station theme. The complex
includes a 300-room hotel, an approximately 90,000-square foot casino, 4,350
parking spaces (including a 1,900-space multi-level parking structure), five
full-service restaurants, several fast-food outlets, a 280-seat entertainment
lounge, eight additional bars, a high-quality 11-screen movie theater complex, a
child-care facility, a swimming pool, a non-gaming video arcade and a gift shop.
The casino offers approximately 2,950 slot and video poker machines, 38 gaming
tables, a keno lounge, a poker room, a bingo parlor and a race and sports book.
In addition, Boulder Station has been master-planned to provide additional hotel
rooms, casino space and entertainment facilities. See "Business - Las Vegas
Casino Properties - Boulder Station."

TEXAS STATION

Texas Station, which opened in July 1995, caters primarily to residents
from the rapidly growing North Las Vegas and Summerlin areas. Texas Station is
situated on 47 acres, strategically located at the corner of Lake Mead Boulevard
and Tonopah Highway in North Las Vegas. The facility features a friendly,
"down-home" Texas atmosphere, highlighted by the distinctive early Texas
architecture. Texas Station has approximately 258,000 square feet of main
facility area in a low-rise complex, plus a six-story, 200-room hotel tower and
approximately 4,000 parking spaces (including the recently opened 1,500-space
covered parking structure). The complex includes an approximately 75,000-square
foot casino, five full-service restaurants, several fast-food outlets, a
132-seat entertainment lounge, seven additional bars, a high-quality 12-screen
movie theater complex, a swimming pool, a non-gaming video arcade and a gift
shop. The casino offers approximately 1,985 slot and video poker machines, 36
gaming tables, a keno lounge, a poker room, a bingo parlor and a race and sports
book. In December 1996, the Company completed construction of an approximately
$7 million multi-level parking structure which added approximately 1,500 parking
spaces. This addition was designed to alleviate parking constraints during peak
periods and has resulted in improved customer traffic at the facility. In
addition, Texas Station has been master-planned for additional hotel rooms,
casino space and entertainment facilities. See "Business - Las Vegas Casino
Properties - Texas Station."

SUNSET STATION

Sunset Station, which opened in June 1997, caters primarily to residents
living in the Henderson/Green Valley area of Las Vegas. Sunset Station is
strategically located on approximately 100 acres at the intersection of
Interstate 515 and Sunset Road on the southeast side of Las Vegas, in the
rapidly growing Henderson/Green Valley area. Sunset Station is located
approximately nine miles east of McCarran International Airport and eight miles
southeast of Boulder Station. The project's multiple access points will provide
customers convenient access to the gaming complex and parking areas. The Sunset
Station complex has approximately 350,000 square feet of main facility area in a
low-rise complex, plus a 20-story, 467-room hotel tower and approximately 4,200
parking spaces. The complex includes an approximately 80,000-square foot casino,
with approximately 2,700 slot and video poker machines, 40 gaming tables, a keno
lounge, a 10-table poker room and a 300-seat race and sports book. The complex
also includes five full-service restaurants themed to capitalize on the well-

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known restaurants at the Company's other properties, an entertainment lounge,
additional bars, a microbrewery, a gift shop, a non-gaming video arcade, tenant
lease space with additional restaurants, a high-quality 13-screen movie theater
complex, a child-care facility, an outdoor swimming pool and an amphitheater, as
well as several fast-food outlets and franchises. In addition, Sunset Station
has been master-planned to provide additional hotel rooms, casino space and
entertainment facilities. See "Business - Las Vegas Casino Properties - Sunset
Station."

The Company anticipates that the total cost of the Sunset Station project
will be approximately $198 million (excluding net construction period
interest and preopening expenses). The cost of the project has increased $38
million from the previous estimate of $160 million. The increased cost is
primarily attributable to the Company's decision to expand the project to
include an increase in the number of slot and video poker machines from 2,300
to 2,700 machines, a tenant buildout for a microbrewery, enhancements to the
streetscape facades, sky ceilings, stained glass, landscaping and other
general interior upgrades, an increased number of hotel suites, an enhanced
outdoor pool and an amphitheater. In addition, the Company has experienced
increased construction costs due in part to the high level of overall
construction activity in Las Vegas. Management believes that the enhanced
project will position the Company as the premier entrant in the
Henderson/Green Valley area and allow the Company to market the property more
effectively and offer its guests a more complete entertainment experience.

MISSOURI CASINO PROPERTIES

STATION CASINO KANSAS CITY

Station Casino Kansas City, which opened in January 1997, caters primarily
to residents in the greater Kansas City area, as well as tourists from outside
the region. The facility is strategically located on a 171-acre site
immediately east of the heavily traveled Interstate 435 bridge, seven miles east
of downtown Kansas City, one mile south of Worlds of Fun and Oceans of Fun
Amusement Parks, six miles north of the Truman Sports Complex, which includes
Arrowhead Stadium and Kauffman Stadium, and 12 miles from the Kansas City
International Airport. The Station Casino Kansas City complex has approximately
526,000 square feet of main facility area featuring a historic Missouri
riverboat theme. The complex includes approximately 140,000 square feet of
gaming space in two continuously docked gaming vessels. The gaming facility
offers approximately 3,000 slot and video poker machines and 190 gaming tables.
Station Casino Kansas City is the fourth largest casino in the United States in
terms of casino square footage, and the Company believes the facility offers the
first Las Vegas-style gaming experience in the Midwest. The complex also
features a 200-room hotel, seven full-service restaurants, several fast-food
outlets, 11 bars and lounges, a 1,400-seat Grand Pavilion featuring headline
entertainment, a child-care facility, a gift shop and parking for 5,000
vehicles. Act III Theaters is currently constructing a high-quality 18-screen
movie theater complex adjacent to the facility pursuant to a long-term ground
lease and the Company is completing a 5,700-square foot non-gaming video arcade
and midway both of which are estimated to open in July 1997. In addition,
Station Casino Kansas City has been master-planned to provide additional hotel
rooms, restaurants and entertainment facilities. Management believes that
Station Casino Kansas City has specific advantages relative to both existing and
future riverboat facilities in the region and that it is the premier facility in
the Kansas City market. See "Business - Missouri Casino Properties - Station
Casino Kansas City."

STATION CASINO ST. CHARLES

Station Casino St. Charles, which opened in May 1994, caters primarily to
customers from the St. Charles and greater St. Louis areas, as well as tourists
from outside the region. Station Casino St. Charles is situated on a 52-acre
site strategically located for easy access from Interstate 70 in St. Charles,
Missouri. Station Casino St. Charles's two current gaming vessels -- a 292-foot
long by 74-foot wide gaming riverboat known as "The Station Casino Belle" and a
floating two-story, 105,000-square foot gaming and entertainment facility --
feature a historic Missouri riverboat theme. The two current gaming vessels have
47,000 square feet of gaming space with capacity for 4,000 gaming customers, as
well as food and beverage and other related facilities. Station Casino St.
Charles offers approximately 1,810 slot and video poker machines, 85 gaming
tables and a poker room. The complex also includes a 330-seat restaurant
facility with an all-you-can-eat buffet and a specialty steakhouse. In addition
to the casinos and restaurants, the facility offers seven bars, a fast-food
court, an entertainment lounge, a lobby, a ticketing area and a gift shop. The
Company has commenced the St. Charles Expansion Project, as described herein,
which is ultimately intended to replace the existing facilities at Station
Casino St. Charles upon completion of such project.

In furtherance of the Station Casino St. Charles master plan, the Company
completed construction of a new elevated roadway and a 4,000-space five-story
parking structure in May 1996. This project includes a turn-around deck and
porte-cochere. The parking facility is constructed above the existing flood
plain and provides the infrastructure for the current facilities as well as the
St. Charles Expansion Project. The elevated roadway and parking structure
provide improved access to the current and new gaming facilities and
significantly diminish Station Casino St. Charles' susceptibility to closure
during the spring flooding season. This was evidenced in May 1996 when
flooding on the Missouri River occurred and the parking garage and elevated
roadway served one of its intended purposes in minimizing business disruption
caused by the flood. See "Risk Factors - St. Charles Expansion Project" and
"Business - Missouri Casino Properties - Station Casino St. Charles."

8
<PAGE>

EXPANSION AND DEVELOPMENT OPPORTUNITIES

The Company continually evaluates the timing and scope of its
master-planned developments at each of its properties and may determine from
time to time to expand the scope of, improve on or suspend the implementation of
its master plans. These decisions are dependent upon the availability of
financing, competition and future economic and gaming regulatory environments,
many of which are beyond the Company's control.

The Company also evaluates other development opportunities in current and
emerging gaming markets, including land-based, dockside, riverboat and Indian
gaming opportunities. The Company's decision whether to proceed with any new
gaming development opportunity is dependent upon future economic and regulatory
factors, the availability of financing and competitive and strategic
considerations, many of which are beyond the Company's control.

RECENT DEVELOPMENTS

On July 30, 1997, the Company announced the following results of its
operations for the first quarter ended June 30, 1997.

The Company reported net revenues for the quarter of $173.5 million, a
28 percent increase over net revenues of $135.4 million in the prior year's
quarter. Earnings before interest, taxes, depreciation and amortization
("EBITDA") increased 7 percent to $35.0 million, compared to $32.6 million in
the prior year.

Excluding the impact of preopening expenses from Sunset Station Hotel &
Casino, which opened June 10, 1997 and the expiration of certain option
payments to lease or acquire land for future development, which had
previously been capitalized but were expensed during the quarter, of $5.0
million, the Company reported net income of $0.1 million, or $0.00 per share
for the quarter. The Company believes that the decision to terminate certain
development opportunities is consistent with the Company's strategies of
focusing on existing operations and moving to deleverage the balance sheet.
Including the above charges, the Company reported a net loss applicable to
common stock of $10.1 million, or $0.29 per share for the quarter, compared
to net income applicable to common stock of $7.6 million or $0.22 per share
in the prior year's quarter.

NEVADA OPERATIONS. The Company's Nevada Operations reported record net
revenues and EBITDA for the quarter. Combined net revenues for the quarter
increased 12 percent to $99.5 million, compared to $88.5 million in the prior
year's quarter. Combined EBITDA increased 23 percent to $30.0 million,
compared to $24.4 million in the prior year.

PALACE STATION. First quarter net revenues at Palace Station were $32.9
million, a slight decline from the prior year's quarter, while EBITDA
remained steady at $9.9 million. EBITDA margins improved to 30 percent,
compared to 29 percent in the prior year.

BOULDER STATION. First quarter net revenues at Boulder Station increased
4 percent to $35.9 million from $34.4 million in the prior year's quarter.
EBITDA inceased 16 percent to a record $13.3 million from $11.4 million,
representing an EBITDA margin of 37 percent, compared to 33 percent in the
prior year.

TEXAS STATION. Texas Station built upon the momentum generated in the
fourth quarter of fiscal 1997 with its second consecutive quarter of record
EBITDA. Net revenues increased 7 percent to $21.1 million from $19.8 million
in the prior year's quarter. EBITDA grew 50 percent to $4.5 million from $3.0
million in the prior year, representing an EBITDA margin of 21 percent, the
highest ever acheived at the property.

SUNSET STATION. Sunset Station opened to capacity crowds on June 10. Net
revenues and EBITDAR (earnings before interest, taxes, depreciation,
amortization and rent) for the first 21 days of operations at Sunset Station
were $9.5 million and $2.8 million, respectively, representing an EBITDAR
margin of 29 percent. Management believes EBITDAR gives a better
representation of operating cash flow at Sunset Station as a result of a $40
million operating lease included in Sunset Station's capital structure
resulting in rent expense of approximately $8 million annually.

ST. CHARLES STATION. Net revenues at St. Charles Station declined 21
percent to $31.4 million from $39.5 million in the prior year's quarter.
EBITDA decreased 41 percent to $6.7 million from $11.3 million in the prior
year. Results for the quarter were negatively impacted by the opening of new
competition in Maryland Heights in March 1997. The impact of new competition
heightened as the quarter progressed, making for a difficult operating
environment.

KANSAS CITY STATION. Net revenues and EBITDA at Kansas City Station,
which opened January 16, 1997, were $35.3 million and $1.2 million,
respectively. Gaming revenues and admissions totaled $27.0 million and 1.8
million, respectively, translating into a win-per-admission of approximately
$15. During the quarter, Kansas City Station focused on building top line
momentum and market share which had a considerable impact on operating
margins. An 18-screen movie theater complex operated by ACT III Theatres, and
a 5,700-square foot video arcade and midway operated by Sega GameWorks opened
to the public on July 4.

For more detailed information concerning the Company's first quarter
results, see the Company's Report on Form 8-K filed on August 7, 1997 with
the Securities and Exchange Commission.

9
<PAGE>

THE EXCHANGE OFFER

The form and terms of the New Notes will be substantially identical to
those of the Old Notes except that the New Notes will have been registered under
the Securities Act, and hence will not be subject to certain transfer
restrictions, registration rights and related liquidated damages provisions
applicable to the Old Notes.

THE EXCHANGE OFFER . . . . . . . . . The Company is offering to exchange an
aggregate of $150 million principal
amount of the New Notes for a like
principal amount of the Old Notes. The
Old Notes may be exchanged only in
multiples of $1,000 principal amount.
The Company will issue the New Notes on
or promptly after the Expiration Date.
See "The Exchange Offer."
ISSUANCE OF THE OLD NOTES;
REGISTRATION RIGHTS. . . . . . . . . The Old Notes were issued and sold on
April 3, 1997 to BancAmerica Securities,
Inc. In connection therewith, the
Company executed and delivered for the
benefit of the Noteholders the
Registration Rights Agreement, pursuant
to which the Company agreed (i) to
commence an exchange offer under which
the New Notes, registered under the
Securities Act with terms substantially
identical to those of the Old Notes,
will be exchanged for the Old Notes
pursuant to an effective registration
statement (the "Exchange Offer
Registration Statement") or (ii) cause
the Old Notes to be registered under the
Securities Act pursuant to a resale
shelf registration statement (the "Shelf
Registration Statement"). If the
Company does not comply with its
obligations under the Registration
Rights Agreement, it will be required to
pay certain liquidated damages that will
accrue and be payable semiannually. See
"The Exchange Offer - Purpose of the
Exchange Offer; Registration Rights."

EXPIRATION DATE. . . . . . . . . . . The Exchange Offer will expire at 5:00
pm., New York City time, on September 12,
1997, unless extended in which case the
term "Expiration Date" shall mean the
latest date and time to which the
Exchange Offer is extended.

CONDITIONS TO THE EXCHANGE OFFER . . The Exchange Offer is subject to certain
conditions, which may be waived by the
Company in whole or in part and from
time to time in its sole discretion.
See "The Exchange Offer - Certain
Conditions to the Exchange Offer." The
Exchange Offer is not conditioned upon
any minimum aggregate principal amount
of Old Notes being tendered for
exchange.

PROCEDURES FOR TENDERING OLD NOTES . Each Noteholder desiring to accept the
Exchange Offer must complete and sign
the Letter of Transmittal, have the
signature thereon guaranteed if required
by the Letter of Transmittal, and mail
or otherwise deliver the Letter of
Transmittal, together with the Old Notes
or a Notice of Guaranteed Delivery and
any other required documents (such as
evidence of authority to act satisfactory
to the Company in its sole discretion, if
the Letter of Transmittal is signed by
someone acting in a fiduciary or
representative capacity), to the
Exchange Agent (as defined) at the
address set forth herein prior to 5:00
p.m., New York City time, on the
Expiration Date. Any beneficial owner
of the Old Notes whose Old Notes are
registered in the name of a nominee,
such as a broker, dealer, commercial
bank or trust company and who wishes to
tender the Old Notes in the

10
<PAGE>

Exchange Offer, should instruct such
entity or person to promptly tender on
such beneficial owner's behalf. See
"The Exchange Offer - Procedures for
Tendering the Old Notes."

GUARANTEED DELIVERY PROCEDURES . . . Noteholders who wish to tender their Old
Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot
deliver their Old Notes or any other
documents required by the Letter of
Transmittal to the Exchange Agent prior
to the Expiration Date (or complete the
procedure for book-entry transfer on a
timely basis), may tender their Old
Notes according to the guaranteed
delivery procedures set forth in the
Letter of Transmittal. See "The
Exchange Offer - Guaranteed Delivery
Procedures."

The Letter of Transmittal provides that
each Noteholder (other than
participating broker-dealers) will
represent to the Company that, among
other things, the New Notes acquired
pursuant to the Exchange Offer are being
obtained in the ordinary course of
business of the person receiving such
New Notes, that neither such Noteholder
nor any such other person has an
arrangement or understanding with any
person to participate in the
distribution of such New Notes and that
neither the holder nor any such person
is an "affiliate" of the Company, as
defined in Rule 405 under the Securities
Act. Any tendered Old Notes not
accepted for exchange for any reason
will be returned promptly after the
expiration or termination of the
Exchange Offer. See "The Exchange
Offer."

WITHDRAWAL RIGHTS. . . . . . . . . . Tenders of the Old Notes may be
withdrawn at any time prior to the
Expiration Date. See "The Exchange
Offer - Withdrawal Rights."

ACCEPTANCE OF THE OLD NOTES AND
DELIVERY OF THE NEW NOTES. . . . . The Company will accept for exchange any
and all Old Notes which are properly
tendered in the Exchange Offer prior to
the Expiration Date. The New Notes
issued pursuant to the Exchange Offer
will be delivered promptly following the
Expiration Date. See "The Exchange
Offer -Terms of the Exchange Offer."

RESALES OF THE NEW NOTES . . . . . . Based on an interpretation by the staff
of the Commission set forth in no-action
letters issued to third parties, the
Company believes that the New Notes
issued pursuant to the Exchange Offer in
exchange for the Old Notes may be
offered for resale, resold and otherwise
transferred by any Noteholder thereof
(other than any such Noteholder which is
an "affiliate" of the Company within the
meaning of Rule 405 under the Securities
Act) without compliance with the
registration and prospectus delivery
provisions of the Securities Act,
provided that such New Notes are
acquired in the ordinary course of such
Noteholder's business and that such
Noteholder has no arrangement or
understanding with any person to
participate in the distribution of such
New Notes, and provided, further, that
each broker-dealer that receives the New
Notes for its own account in exchange
for

11
<PAGE>

the Old Notes must acknowledge that it
will deliver a Prospectus in connection
with any resale of such New Notes. See
"Plan of Distribution." If a Noteholder
does not exchange such Old Notes for New
Notes pursuant to the Exchange Offer,
such Old Notes will continue to be
subject to the restrictions on transfer
contained in the legend thereon. In
general, the Old Notes may not be
offered or sold, unless registered under
the Securities Act, except pursuant to
an exception from, or in a transaction
not subject to, the Securities Act and
applicable state securities laws. See
"The Exchange Offer - Consequences of
Failure to Exchange."

CONSEQUENCES OF FAILURE TO EXCHANGE. Noteholders who do not exchange their
Old Notes for the New Notes pursuant to
the Exchange Offer will continue to be
subject to the restrictions on transfer
of such Old Notes as set forth in the
legend thereon. In general, the Old
Notes may not be offered or sold, except
pursuant to a registration statement
under the Securities Act or any
exemption from registration thereunder
and in compliance with applicable state
securities laws. In the event the
Company completes the Exchange Offer,
the Noteholders will have no further
rights to registration or liquidated
damages pursuant to the Registration
Rights Agreement.

CERTAIN TAX CONSIDERATIONS . . . . . There will be no Federal income tax
consequences to Noteholders exchanging
the Old Notes for the New Notes pursuant
to the Exchange Offer and a Noteholder
will have the same adjusted basis and
holding period in the New Notes as in
the Old Notes immediately before the
exchange.

REGISTRATION RIGHTS AGREEMENT. . . . The Exchange Offer is intended to
satisfy the registration rights of
Noteholders under the Registration
Rights Agreement, which rights terminate
upon consummation of the Exchange Offer.

EXCHANGE AGENT . . . . . . . . . . . First Union National Bank is the Exchange
Agent. The address and telephone number
of the Exchange Agent are set forth in
"The Exchange Offer - Exchange Agent."

12
<PAGE>

DESCRIPTION OF THE NEW NOTES

New Notes. . . . . . . . . . . . . . $150,000,000 principal amount of 9 3/4%
Senior Subordinated Notes Due 2007 (the
"New Notes")

Maturity Date. . . . . . . . . . . . April 15, 2007.

Interest Payment Dates . . . . . . . October 15 and April 15, commencing
October 15, 1997.

Optional Redemption. . . . . . . . . The New Notes are redeemable at the
option of the Company, in whole or in
part, at any time after April 15, 2002
at the redemption prices set forth
herein, plus accrued interest. See
"Description of the New Notes - Optional
Redemption."

Special Redemption . . . . . . . . . The New Notes are subject to redemption
requirements imposed by gaming laws and
regulations of the state of Nevada and
other Gaming Authorities (as defined
herein). See "Description of New
Notes - Mandatory Disposition Pursuant
to Gaming Laws."

Mandatory Sinking Fund . . . . . . . None.

Subordination . . . . . . . . . . . The New Notes are subordinated in right
of payment to all existing and future
Senior Indebtedness (as defined herein)
of the Company and are effectively
subordinated to all existing and future
indebtedness and other liabilities
(including trade and construction
payables) of the Company's subsidiaries.
As of March 31, 1997, after giving
effect to the Old Notes Offering and
application of the net proceeds
therefrom, and assuming the incurrence
by certain subsidiaries of the Company
of $368 million under the Company's
secured, reducing revolving loan
agreement, as amended through the date
hereof (the "Bank Facility"), the
Company's Restricted Subsidiaries would
have had approximately $531.3 million of
indebtedness and other liabilities
(including trade and construction
payables) outstanding, of which $522.6
million would have been guaranteed by
the Company. In addition, $46.0 million
of Qualified Non-Recourse Debt would
have been incurred by an Unrestricted
Subsidiary under the $110 million Sunset
Loan Agreement. The Company also would
have had $391 million of senior
subordinated indebtedness that ranked
PARI PASSU with the Old Notes. The
Company has no indebtedness outstanding
to which the New Notes will be senior,
and the Company has no plans to issue
any such indebtedness. See "Description
of Certain Indebtedness and Capital
Stock" and "Description of the New
Notes."

13
<PAGE>

Change of Control Triggering
Event. . . . . . . . . . . . . . . Upon a Change of Control Triggering
Event (as defined herein), each holder
of the New Notes will have the right to
require the Company to repurchase such
holder's New Notes at 101% of the
principal amount thereof, plus accrued
interest to the repurchase date. See
"Description of the New Notes - Change
of Control and Rating Decline" for a
discussion of certain factors that could
limit the Company's ability to effect
such a repurchase.

Certain Covenants. . . . . . . . . . The indenture governing the New Notes
(the "Indenture") contains certain
covenants that impose limitations on,
among other things, the incurrence of
additional indebtedness by the Company
or its Restricted Subsidiaries, the
payment of dividends, the repurchase of
capital stock and the making of certain
other Restricted Payments and Restricted
Investments (each as defined herein) by
the Company or its Restricted
Subsidiaries, agreements restricting the
ability of the Company's Restricted
Subsidiaries to pay dividends or to make
any other distributions to the Company,
the issuance of preferred stock by the
Company's Restricted Subsidiaries and
transactions by the Company or its
Restricted Subsidiaries with Affiliates
and other Related Persons (each as
defined herein). These limitations are
subject to a number of important
qualifications and exceptions. See
"Description of the New Notes."

Use of Proceeds. . . . . . . . . . . The Company will not receive any
proceeds in connection with the Exchange
Offer. In consideration for issuing the
New Notes in exchange for the Old Notes
as described in this Prospectus, the
Company will receive the Old Notes that
will be retired and canceled. See "Use
of Proceeds."

Risk Factors . . . . . . . . . . . . See "Risk Factors" for a discussion of
certain factors that should be
considered by Noteholders prior to
tendering their Old Notes in the
Exchange Offer.

14
<PAGE>

SUMMARY CONSOLIDATED FINANCIAL DATA

The summary consolidated financial data set forth below are qualified in
their entirety by, and should be read in conjunction with, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements, the notes thereto and other financial and
statistical information included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
FOR THE YEARS ENDED MARCH 31,
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues $583,515 $466,857 $290,278 $169,543 $149,895
Depreciation and amortization 44,589 35,039 22,220 12,976 10,935
Preopening expenses 31,820 2,436 19,378 - -
Operating income 58,123 69,464 6,388 25,696 26,857
Interest expense, net (36,698) (30,563) (19,967) (9,179) (8,949)
Income (loss) before income taxes 21,378 40,051 (11,419) 18,709 17,940
Net income (loss) 13,763 25,472 (7,942) 9,417 -
Preferred stock dividends (7,245) (53) - - -
Net income (loss) applicable to common stock 6,518 25,419 (7,942) 9,417 -
Proforma net income (unaudited)(1) - - - 12,309 11,840
EARNINGS PER SHARE:
Earnings (loss) per common share $0.18 $0.75 $(0.26) - -
Pro forma earnings per share (unaudited) (1) - - - $0.42 $0.44

OTHER DATA (2):
Number of hotel rooms 1,728 1,528 1,328 1,028 1,028
Average daily occupancy rate 96% 94% 95% 97% 94%
Casino square footage 432,000 278,000 206,000 84,000 84,000
Number of slot machines 13,008 9,555 7,020 3,323 3,202
Capital expenditures (3) $506,096 $307,745 $163,884 $102,687 $15,504
EBITDA (4) 136,548 106,939 47,986 41,743 37,792
Cash flows provided by (used in):
Operating activities 111,803 77,953 48,494 23,685 29,658
Investing activities (479,008) (266,935) (157,585) (111,072) (14,867)
Financing activities 294,859 286,889 109,893 92,073 (10,309)
Ratio of earnings to fixed charges (5) 1.00x 1.87x 0.38x 2.01x 2.62x

<CAPTION>
AT MARCH 31, 1997
-----------------------------

Actual As adjusted(6)
------------ --------------
(dollars in thousands)
<S> <C> <C>

BALANCE SHEET DATA:
Cash and cash equivalents $ 42,522 $ 42,522
Total assets 1,234,118 1,234,368
Long-term debt (6) 760,963 761,213
Stockholders' equity 298,848 298,848
</TABLE>

(1) Reflects provisions for federal income taxes (assuming a 34% effective tax
rate for all periods) as if the Company had not been treated as an S
corporation during these periods.

(2) Other Data relating to the number of hotel rooms, the casino square footage
and the number of slot and video poker machines represent end of period
data.

(3) Capital expenditures for the fiscal year ended March 31, 1994 include $52.8
million related to the development of Station Casino St. Charles and $31.9
million related to the development of Boulder Station. Capital Expenditures
for the fiscal year ended March 31, 1995 include $52.9 million related to
the development of Station Casino St. Charles and $90.7 million related to
the development of Boulder Station. Capital expenditures for the fiscal
year ended March 31, 1996 include $84.9 million related to the acquisition
and completion of Texas Station, $62.8 million related to the development
and construction of Station Casino Kansas City, $29.7 million related to
the development and construction of Sunset Station and $39.4 million
related to the expansion at Station Casino St. Charles including an
elevated roadway, a parking structure and restaurant facilities. Capital
expenditures for the fiscal year ended March 31, 1997, include $211.1
million related to the development and construction of Station Casino
Kansas City, $112.8

15
<PAGE>

million related to the development and construction of Sunset Station and
$99.6 million related to the St. Charles Expansion Project. See Note 3 of
Notes to Consolidated Financial Statements.

(4) "EBITDA" consists of operating income plus depreciation and amortization,
including preopening expenses and a restructuring charge in 1997. EBITDA
should not be construed as an alternative to operating income as an
indicator of the Company's operating performance, or as an alternative to
cash provided by operating activities as a measure of liquidity. The
Company has presented EBITDA solely as supplemental disclosure because the
Company believes that it enhances the understanding of the financial
performance of companies with substantial depreciation and amortization.

(5) For the fiscal year ended March 31, 1995, earnings were inadequate to cover
fixed charges by a coverage deficiency of $17.4 million.

(6) As Adjusted amounts give effect to the Old Notes Offering and the
application of the net proceeds therefrom to reduce borrowings under the
Bank Facility. As Adjusted amounts do not reflect the incurrence of any
additional borrowings under the Bank Facility because such borrowings are
expected to be periodically incurred subsequent to the consummation of the
Old Notes Offering in connection with the completion of the St. Charles
Expansion Project, additional equity contributions for the construction of
Sunset Station, payment of construction payables, as well as general
corporate purposes.

16
<PAGE>

RISK FACTORS

EXCEPT FOR HISTORICAL INFORMATION CONTAINED IN THIS PROSPECTUS, THE MATTERS
DISCUSSED HEREIN CONTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, SUCH AS PLANS FOR FUTURE EXPANSIONS, CAPITAL SPENDING AND
FINANCING SOURCES. SUCH FORWARD-LOOKING STATEMENTS ARE INHERENTLY UNCERTAIN,
AND INVESTORS MUST RECOGNIZE THAT ACTUAL RESULTS MAY DIFFER FROM MANAGEMENT'S
EXPECTATIONS. KEY FACTORS AFFECTING CURRENT AND FUTURE OPERATIONS OF THE
COMPANY INCLUDE THE FACTORS DISCUSSED BELOW. THE NOTEHOLDERS OR PROSPECTIVE
INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS IN ADDITION TO THE
OTHER INFORMATION SET FORTH IN THIS PROSPECTUS BEFORE TENDERING THEIR OLD NOTES
IN THE EXCHANGE OFFER OR PURCHASING THE NEW NOTES.

RESTRICTIONS UPON TRANSFER OF AND LIMITED TRADING MARKET FOR OLD NOTES

The New Notes will be issued in exchange for the Old Notes only after
timely receipt by the Exchange Agent of tenders of such Old Notes. Therefore,
Noteholders desiring to tender such Old Notes in exchange for the New Notes
should allow sufficient time to ensure timely delivery. Neither the Exchange
Agent nor the Company is under any duty to give notification of defects or
irregularities with respect to tenders of the Old Notes for exchange. The Old
Notes that are not tendered or are tendered but not accepted will, following
consummation of the Exchange Offer, continue to be subject to the existing
restrictions upon transfer thereof. In addition, any holder of the Old Notes
who tenders in the Exchange Offer for the purpose of participating in a
distribution of the New Notes will be required to comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any resale transaction. Each broker-dealer who receives New Notes for its own
account in exchange for the Old Notes, where such Old Notes were acquired by
such broker-dealer as a result of market-making activities or any other trading
activities, must acknowledge that it will deliver a Prospectus in connection
with any resale of such New Notes. See "Plan of Distribution." To the extent
that the Old Notes are tendered and accepted in the Exchange Offer, the trading
market for untendered and tendered but unaccepted Old Notes could be adversely
affected. See "The Exchange Offer."

COMPETITION

Intense competition exists among companies in the gaming industry, many of
which have significantly greater resources than the Company. Palace Station,
Boulder Station, Texas Station and Sunset Station face competition from all
other casinos and hotels in the Las Vegas area, including, to some degree, from
each other. Such competition includes at least eight hotel-casinos targeted
primarily towards local residents and repeat visitors, as well as numerous
non-hotel gaming facilities targeted towards local residents. In recent months,
several of the Company's direct competitors have completed major expansion
projects, and other expansions are in progress or are planned. Major expansions
or enhancements of existing properties or the construction of new properties by
competitors could have a material adverse effect on the business of Palace
Station, Boulder Station, Texas Station and Sunset Station. Other gaming
operators own undeveloped properties on which gaming facilities could be
developed in the immediate vicinity of Texas Station and Sunset Station, and at
least two operators are exploring development opportunities in the immediate
vicinity of Sunset Station.

Station Casino Kansas City, which opened January 16, 1997, competes
primarily with other gaming operations in and around Kansas City, Missouri.
Currently, there are four gaming facilities operating in the Kansas City market,
in addition to Station Casino Kansas City. Earlier entrants to the Kansas City
market may have an advantage over the Company due to previously established
market share. Gaming has been approved by local voters in jurisdictions near
Kansas City, including St. Josephs (which currently has one gaming riverboat in
operation), Jefferson City and other cities and counties along the Missouri
River. Any new gaming operations developed near Kansas City would likely provide
significant competition to Station Casino Kansas City.

Station Casino St. Charles competes primarily with other gaming operations
in and around St. Louis, Missouri. Currently, in addition to Station Casino St.
Charles, there are four facilities operating in the St. Louis market, including
a facility in Maryland Heights which opened in March 1997. In particular, the
Company expects that Station Casino St. Charles will be directly impacted by
competition from the facility located in Maryland Heights due to its size,
quality and close proximity. While the Company has experienced a decline

17
<PAGE>

in revenues at Station Casino St. Charles since the opening of the Maryland
Heights facility, the Company is taking steps to mitigate the effects of such
competition, including undertaking the St. Charles Expansion Project.
Additionally, two of the four competitors operating in the St. Louis market are
located in Illinois, which does not impose a $500 loss limit. Gaming also has
been approved by local voters in jurisdictions near St. Louis, including St.
Charles, Jefferson City, and other cities and counties along the Mississippi and
Missouri Rivers. Any new gaming operations developed near St. Louis would likely
provide significant competition to Station Casino St. Charles. Gaming laws in
surrounding states and in other areas may be amended in ways that would increase
the competition to Station Casino St. Charles. This increasing competition could
have a material adverse effect on the Company's business.

For a more comprehensive discussion of competitive factors affecting the
Company's operations, see "Business - Competition."

LEVERAGE AND DEBT SERVICE

The Company has significant interest expense and principal repayment
obligations under the Bank Facility, the Existing Senior Subordinated Notes (as
defined herein) and its other indebtedness as well as dividend payment
obligations under the Convertible Preferred Stock. As of March 31, 1997,
after giving effect to the Old Notes Offering and application of the net
proceeds therefrom, the Company's Restricted Subsidiaries would have had
approximately $296.3 million of indebtedness and other liabilities (including
trade and construction payables) outstanding, of which $287.6 million would have
been guaranteed by the Company. In addition, $46.0 of Qualified Non-Recourse
Debt would have been incurred by an Unrestricted Subsidiary under the $110
million Sunset Loan Agreement (each as defined herein). The Company also would
have had $391 million of senior subordinated indebtedness that ranked PARI PASSU
with the New Notes. The Company will be entirely dependent upon distributions
from its operating subsidiaries to meet its interest expense and principal
repayment obligations under the Existing Senior Subordinated Notes and the New
Notes and dividend payment obligations under the Convertible Preferred Stock.
The Bank Facility restricts the payment of dividends of PSHC to the Company. In
addition, the Bank Facility prohibits the Company from holding cash and cash
equivalents in excess of the sum of the amounts necessary to make the next
scheduled interest payment on the New Notes, the Existing Senior Subordinated
Notes and the next scheduled dividend payment on the Convertible Preferred
Stock, the amounts necessary to fund casino bankroll in the ordinary course of
business plus $2 million. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital Resources"
and "Description of Certain Indebtedness and Capital Stock."

In connection with the Old Notes Offering, the Company recently obtained
certain amendments to the Bank Facility in order to enhance its borrowing
capacity under its Bank Facility to fund the expansion strategy described
herein. As last amended on June 27, 1997, the Bank Facility requires that
PSHC, BSI, TSI, SCRSI, KCSC (collectively, the "Borrowers"), SCI, on a
consolidated basis, and SCI and certain of its other subsidiaries satisfy
certain financial and other covenants. These include a maximum funded debt to
EBITDA (adjusted for preopening expenses) ratio for the Borrowers combined of
3.00 to 1.00 for each fiscal quarter through June 30, 1997, 2.75 to 1.00 for
each fiscal quarter through June 30, 1998 and 2.50 to 1.00 for each fiscal
quarter thereafter, a minimum fixed charge coverage ratio for the preceding
four quarters for the Borrowers combined of 1.35 to 1.00 for periods prior to
June 30, 1998 and 1.50 to 1.00 for periods thereafter, and a limitation on
indebtedness. The Bank Facility also contains a maximum funded debt to
EBITDA (adjusted for preopening expenses) ratio for the Company on a
consolidated basis of 5.00 to 1.00 for the fiscal quarter ending March 31,
1997, 5.75 to 1.00 for the fiscal quarter ending June 30, 1997, 5.85 to 1.00
for the fiscal quarter ending September 30, 1997, 5.75 to 1.00 for each
fiscal quarter through March 31, 1998, 5.00 to 1.00 for the fiscal quarter
ending June 30, 1998, 4.75 to 1.00 for the fiscal quarter ending September
30, 1998, 4.50 to 1.00 for the fiscal quarter ending December 31, 1998, 4.25
to 1.00 for each fiscal quarter through June 30, 1999, 4.00 to 1.00 for the
fiscal quarter ending September 30, 1999 and 3.75 to 1.00 thereafter. Such
consolidated calculations under the Bank Facility do not include Sunset
Station. The Company's ability to incur borrowings under the Bank Facility
will depend upon generating sufficient EBITDA (adjusted for preopening
expenses) to meet the maximum funded debt to EBITDA (adjusted for preopening
expenses) ratios. Borrowings under the Bank Facility bear interest at a
margin above the bank's prime rate or the Eurodollar Rate, as selected by the
Company. The margin above such rates, and the fee on the unfunded portions
of the Bank Facility, will vary quarterly based on the combined Borrowers'
and the Company's consolidated (exclusive of Sunset Station) ratio of funded
debt to EBITDA (adjusted for preopening expenses). As of May 31, 1997, the
Company's margin above the Eurodollar Rate on borrowings under its Bank
Facility is 2.13%. Such margin will increase to 2.75% if the

18
<PAGE>

maximum funded debt to EBITDA (adjusted for preopening expenses) ratio is
reached. See "Description of Certain Indebtedness and Capital Stock."

The Indenture governing the New Notes and the indentures governing the
Existing Senior Subordinated Notes (the "Existing Indentures") contain numerous
financial and operating covenants. For instance, the Indenture and the Existing
Indentures limit the ability of the Company and certain of its subsidiaries to
incur additional indebtedness, unless, after giving effect thereto, a minimum
2.00 to 1.00 pro forma Consolidated Coverage Ratio (as defined herein),
calculated for the four most recent consecutive fiscal quarters, has been met.
Under the Indenture and the indenture governing the 10 1/8% Senior Subordinated
Notes due 2006 (the "96 Indenture"), the Company and certain of its subsidiaries
also will be permitted to incur additional indebtedness under the Bank Facility
without regard to such limitations in an amount equal to the greater of $200
million or 1.50 times Operating Cash Flow (as defined herein) calculated
cumulatively for the four most recent consecutive fiscal quarters, any permitted
refinancing thereof and certain other indebtedness, compared to $72 million
permitted under the Existing Indentures (excluding the 96 Indenture) (in each
case, the "Additional Bank Indebtedness"), so long as such indentures are in
effect. Also, under the Indenture and the Existing Indentures, the Company and
its Restricted Subsidiaries (as defined herein) will be permitted to incur an
unlimited amount of indebtedness on a non-recourse basis to finance the
acquisition or lease of furniture, fixtures and equipment used in connection
with their gaming facilities. As of March 31, 1997, the Company's Consolidated
Coverage Ratio was 2.66 to 1.00. After giving effect to the issuance of the Old
Notes, the Consolidated Coverage Ratio as of March 31, 1997 would have been 2.32
to 1.00. Although the Company currently exceeds the minimum Consolidated
Coverage Ratio, its ability to incur any additional indebtedness (excluding
Additional Bank Indebtedness and certain other indebtedness) in subsequent
quarters will continue to depend upon generating sufficient cash flow to meet
the 2.00 to 1.00 Consolidated Coverage Ratio test. In addition, under the
Indenture and the Existing Indentures, the Company may become liable under
certain Completion Guarantee and Keep-Well Agreements (as defined herein) with
respect to its Unrestricted Subsidiaries (as defined herein), although the
Company may not make any payments under such Completion Guarantee and Keep-Well
Agreements without complying with the terms of the covenants relating to the
limitation on indebtedness and restricted payments and restricted investments
contained in the Indenture and the Existing Indentures. See "Description of the
New Notes." The Company has entered into a Completion Guarantee and Keep-Well
Agreement (as defined herein) with respect to Sunset Station.

The ability of the Company to meet its debt service and capital expenditure
requirements, pay dividends and comply with such covenants will be dependent
upon future performance of the Company's operations (including the performance
of Station Casino Kansas City) which is subject to financial, economic,
competitive, regulatory and other factors affecting the Company and its
subsidiaries, many of which are beyond their control. While the Company expects
that its operating cash flow will be sufficient to comply with such covenants
and cover its expenses, including interest costs, dividends and capital
expenditures, there can be no assurance with respect thereto. If the Company is
unable to generate sufficient cash flow, it could be required to adopt one or
more alternatives, such as obtaining additional equity capital, reducing or
delaying planned expansions or capital expenditures, selling or leasing assets
or restructuring debt. There can be no assurance that any of these alternatives
could be effected on satisfactory terms, and any resort to alternative sources
of funds could impair the Company's competitive position and reduce its future
cash flow. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations." If the Company is required to obtain additional equity
capital, existing stockholders could experience substantial dilution.

SUBORDINATION

The operations of the Company are conducted through PSHC, BSI, SCRSI, TSI,
KCSC and SSI, which is an unrestricted subsidiary under the Bank Facility, the
Indenture and the Existing Indentures. The Company is dependent on the earnings
and cash flow of its subsidiaries to meet its debt and dividend obligations,
including its obligations with respect to the Existing Senior Subordinated
Notes, the New Notes and the Convertible Preferred Stock. Because the assets of
the Company's subsidiaries constitute all of the operating assets of the
Company, and because the subsidiaries do not guaranty the payment of principal
and interest on the New Notes, the holders of the New Notes will have no direct
claim to the assets of the Company's subsidiaries, and, as a result, all
existing and future obligations (including debt, taxes, trade and construction
payables) of the Company's subsidiaries must be paid in full before amounts, if
any, would become available

19
<PAGE>
for distribution to the Note holders. As of March 31, 1997, after giving effect
to the Old Notes Offering and application of the net proceeds therefrom, and
assuming the incurrence by certain subsidiaries of the Company of $368 million
under the Company's Bank Facility, the Company's Restricted Subsidiaries would
have approximately $531.3 million of indebtedness and other liabilities
(including trade and construction payables) outstanding, of which approximately
$522.6 million would have been guaranteed by the Company. In addition, $46.0
million of Qualified Non-Recourse Debt would have been incurred by an
Unrestricted Subsidiary under the $110 million Sunset Loan Agreement. The
Company also would have had $391 million of Existing Senior Subordinated Notes
that ranked PARI PASSU with the New Notes and no Senior Indebtedness outstanding
(excluding guarantees of subsidiary indebtedness).

The indebtedness incurred by SSI limits the ability of SSI to incur
additional indebtedness. The Company has made equity contributions to SSI
totaling approximately $87 million each without recourse against any of the
property of SSI and thus these contributions will be effectively subordinated to
SSI's existing indebtedness. In addition, the documents governing such
indebtedness restrict SSI from making distributions to the Company. There can
be no assurances that the Company will receive a return on these contributions
and funding commitments and any such returns will be dependent upon the results
of operations at SSI. See " - Sunset Station Operations."

The New Notes are subordinated to all existing and future Senior
Indebtedness of the Company, including the Company's guaranty of the Bank
Facility. Except for limitations on the aggregate amount of consolidated
indebtedness that the Company may incur, the Indenture does not limit the
ability of the Company to incur additional Senior Indebtedness, create liens,
transfer assets to or among its subsidiaries or incur or permit its subsidiaries
to incur secured indebtedness. In the event of bankruptcy, liquidation or
reorganization of the Company, the assets of the Company will be available to
make payments on the New Notes only after all Senior Indebtedness of the Company
has been paid in full, and there may not be sufficient assets remaining to pay
amounts due on the New Notes. The Company's guaranty of the Bank Facility
provides that the Company waives all rights of subrogation and reimbursement
from the Borrowers (as defined herein). In addition, SCI's assets consist
primarily of the stock of its operating subsidiaries and, as noted above, the
holders of the New Notes have no direct claim against the assets of such
subsidiaries. Borrowings under the Bank Facility are secured by substantially
all of the assets of the Borrowers and by the stock of three of the Borrowers,
PSHC, BSI and TSI; assets not securing the Bank Facility secure other
indebtedness of the Borrowers. Borrowings by SSI under the Sunset Loan
Agreement are secured by all of its assets and by the stock of SSI. Under
certain circumstances, holders of the Senior Indebtedness of the Company may
block payments on the New Notes. In addition, in the event of any distribution
or payment of the assets of the Company in any foreclosure, dissolution,
winding-up, liquidation or reorganization, holders of Senior Indebtedness will
have a prior claim to the assets of SCI and to the assets of its subsidiaries
which constitute their collateral. The Existing Indentures for the Existing
Senior Subordinated Notes have subordination provisions substantially similar to
the Indenture's provisions. See "Description of New Notes - Subordination."

In the event of a Change of Control Triggering Event, each holder of the
New Notes will have the right to require the Company to repurchase such holder's
New Notes at 101%, plus accrued interest. Such right is subordinated to the
rights of the holders of Senior Indebtedness and, effectively, all indebtedness
of the Company's subsidiaries. In addition, the occurrence of a Change of
Control Triggering Event constitutes an Event of Default under the Bank
Facility. Therefore, in order for the Company to repurchase the New Notes as a
result of a Change of Control Triggering Event, it will be necessary for the
Company either to obtain the consent of the banks under the Bank Facility or to
repay the Bank Facility in full. These requirements and subordination of the New
Notes will limit the ability of the Company to repurchase the New Notes. The
Existing Indentures for the Existing Senior Subordinated Notes have change of
control provisions substantially similar to the Indenture's provisions. See
"Description of the New Notes -- Change of Control and Rating Decline."

ST. CHARLES EXPANSION PROJECT

The St. Charles Expansion Project currently includes the building of a
backwater basin that will contain two new gaming vessels and a new retail and
entertainment complex. Completion and opening of these new facilities is
dependent upon the availability of funds under the Bank Facility, which are
restricted based on the Company's operating cash flow, the cash flow
generated by the Company's operations including Station Casino Kansas City,
regulatory requirements unique to the state of Missouri and gaming in general
and construction risks. As of March 31, 1997, $99.6 million of the Company's

20
<PAGE>

total approximate cost of $190 million for the St. Charles Expansion Project had
been invested by the Company. The Company estimates that this expansion will be
completed in mid-summer 1998. As a result, the time until this expansion
provides a return on investment could be substantial and if the project is
delayed, such time could be indefinite.

The Company has entered into a nonbinding letter of intent with the Gordon
Group to develop a substantial portion of the new retail and entertainment
complex portion of the St. Charles Expansion Project. No assurances can be
given that the Company and the Gordon Group will enter into a definitive
development agreement with respect to the project, that the Gordon Group will be
able to obtain the necessary financing, that the Gordon Group will complete the
build-out of the complex within the Company's estimated completion time of
mid-summer 1998 or that the Gordon Group will be able to develop and operate the
project successfully. See "Business - Expansion of Station Casino St. Charles."

LOSS OF RIVERBOAT AND DOCKSIDE FACILITIES FROM SERVICE

The Company's riverboat and dockside facilities in Missouri, including the
new vessels at Station Casino St. Charles, could be lost from service due to
casualty, mechanical failure, extended or extraordinary maintenance, or other
severe weather conditions. For example, Station Casino St. Charles was closed
for approximately three weeks during the Spring of 1995 due to flooding.
Although there was no significant damage to the gaming facilities, the closure
had a material adverse effect on the Company's operating results for the fiscal
year ended March 31, 1996. The Company believes that the new elevated roadway
and 4,000-space parking structure at Station Casino St. Charles and the
sheltered location of Station Casino Kansas City will substantially lessen the
likelihood of closures of facilities due to flooding. Cruises are subject to
risks generally incident to the movement of vessels on inland waterways,
including risks of casualty due to river turbulence and severe weather
conditions. In addition, U.S. Coast Guard regulations set limits on the
operation of vessels, require that vessels be operated by a minimum complement
of licensed personnel and require a hull inspection at a U.S. Coast Guard
approved dry docking facility for all cruising riverboats at five-year
intervals. Additionally, the Missouri Gaming Commission has required that gaming
entertainment barges obtain annual certification from the American Bureau of
Shipping. The Company's Station Casino St. Charles dockside entertainment
facility was recertified by the American Bureau of Shipping in December 1996,
and the Company's two riverboats are not scheduled for inspection by the U.S.
Coast Guard until October 1998 and October 1999, respectively. The loss of the
riverboat or dockside facility from service for any period of time could
adversely affect the Company's operating results.

CONSTRUCTION RISKS

Construction projects, such as the St. Charles Expansion Project, entail
significant risks, including shortages of materials or skilled labor, unforeseen
engineering, environmental or geological problems, work stoppages, weather
interference, floods and unanticipated cost increases. The anticipated costs and
construction periods are based upon budgets, conceptual design documents and
construction schedule estimates prepared by the Company in consultation with its
architects and contractors. Definitive budgets have been completed for the St.
Charles Expansion Project, but the existing construction plans for these
projects are subject to change, and the scope of the projects may vary
significantly from that which is currently anticipated. Although the Company
has entered into certain firm contracts for construction of the St. Charles
Expansion Project, no assurance can be given that the budgeted costs of this
project will not be exceeded or that such project will commence operations
within the contemplated time frame, if at all. Budget overruns and delays with
respect to expansion and development projects could have a material adverse
impact on the Company's results of operations.

SUNSET STATION FUNDING COMMITMENT

The Company has agreed to provide a contingent funding commitment under
the Supplemental Loan Agreement (as defined herein). In the event of the
failure of certain financial covenants under the Sunset Loan Agreement, the
Company would be required to provide loans to SSI under this funding
commitment in the amount of up to $10 million during the first year of
operations, up to $10 million during the second year and up to $5 million
during the third year. The Indenture, the Existing Indentures and the Bank
Facility may limit the Company's ability to provide these loans. See
"Description of Certain Indebtedness and Capital Stock - Sunset Loan
Agreement, Supplemental Loan Agreement and Sunset Operating Lease."

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<PAGE>

DEPENDENCE ON KEY MARKETS

The Company's operating strategy emphasizes attracting and retaining
customers from the local and repeat visitor market. All of the Company's Las
Vegas casino properties are dependent upon attracting Las Vegas residents. In
addition, Station Casino St. Charles and Station Casino Kansas City are
dependent upon attracting local residents within their respective geographic
markets. There can be no assurances that the Company will be able to continue to
attract a sufficient number of guests, gaming customers and other visitors in
Nevada and Missouri to make its operations profitable. See "Business -
Operating Strategy."

OTHER DEVELOPMENT OPPORTUNITIES

The Company has been evaluating and pursuing new gaming development
opportunities in existing and emerging jurisdictions, including land-based,
dockside, riverboat and Indian gaming opportunities. The Company's ability to
benefit from its investment in new gaming development opportunities will
depend upon a number of factors, including (i) the Company's ability to
identify and acquire attractive sites, (ii) the Company's ability to secure
required federal, state and local licenses, permits and approvals, which in
some jurisdictions, are limited in number, (iii) certain political factors
and (iv) the availability of adequate financing on acceptable terms. Most of
these factors are beyond the control of the Company. As a result, there can
be no assurance that the Company will be able to recover its investment in
any new gaming development opportunities, or successfully expand to
additional locations. See "Business - Expansion Strategy."

The Company has invested, and will likely continue to invest, in real
property in connection with the pursuit of expansion opportunities. At March
31, 1997, $22.6 million of land had been acquired for potential gaming
projects in jurisdictions where gaming has been approved. In addition, $3.7
million of land had been acquired in certain jurisdictions where gaming has
not yet been approved. No assurances can be made that these jurisdictions
will approve gaming in the future. The Company has also entered into various
option agreements whereby the Company has the option to acquire or lease land
for the development of existing and potential new gaming projects with
purchase prices totaling $31.3 million. In consideration for these options,
the Company has paid or placed in escrow $6.0 million at March 31, 1997 all
of which would be forfeited and written off should the Company not exercise
its options to acquire or lease the land. Such investments are subject to
the risks generally incident to the ownership of real property, including
changes in economic conditions, environmental risks, governmental rules and
fiscal policies and other circumstances over which the Company may have
little or no control and the development of such properties is subject to
restrictions under the Bank Facility. There can be no assurance that the
Company will be able to recover its investment in any such properties or be
able to prevent incurring investment losses. See "Business - Operating
Strategy" and "- Properties."

GAMING AND LIQUOR REGULATION

The ownership and operation of casino gaming facilities are subject to
extensive state and local regulation. The states of Nevada, Missouri and
Louisiana and the applicable local authorities require various licenses,
findings of suitability, registrations, permits and approvals to be held by the
Company and its subsidiaries. The Nevada Gaming Commission, the Missouri
Gaming Commission and the Louisiana Gaming Commission may, among other things,
limit, condition, suspend or revoke a license or approval to own the stock of
any of the Company's Nevada, Missouri or Louisiana subsidiaries, respectively,
for any cause deemed reasonable by such licensing authority. Substantial fines
or forfeiture of assets for violations of gaming laws or regulations may be
levied against the Company, such subsidiaries and the persons involved. The
suspension or revocation of any of the Company's licenses or the levy on the
Company of substantial fines or forfeiture of assets would have a material
adverse effect on the business of the Company.

To date, the Company has obtained all governmental licenses, findings of
suitability, registrations, permits and approvals necessary for the operation of
its gaming activities. However, gaming licenses and related approvals are deemed
to be privileges under Nevada, Missouri and Louisiana law, and no assurances can
be given that any new licenses, findings of suitability, registrations, permits
and approvals that may be required in the future will be given or that existing
ones will not be revoked. Any expansion of the Company's gaming operations in
Nevada, Missouri, Louisiana or into new jurisdictions will require various
licenses, findings of suitability, registrations, permits and approvals of the
gaming authorities, which approval process can be time consuming and costly and
has no assurance of success.

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<PAGE>

Gaming Authorities (as defined herein) have the authority generally to
require that any beneficial owner of the Company's securities, including the New
Notes, file an application and be investigated for a finding of suitability. If
a record or beneficial owner of a Note is required by any Gaming Authority to be
found suitable, such owner will be required to apply for a finding of
suitability within 30 days after request of such Gaming Authority. The
applicant for a finding of suitability must pay all costs of the investigation
for such finding of suitability. If a record or beneficial owner is required to
be found suitable and is not found suitable by such Gaming Authority, such owner
may be required pursuant to the terms of the New Notes or law to dispose of the
New Notes. See "Regulation and Licensing" and "Description of the New Notes -
Mandatory Disposition Pursuant to Gaming Laws."

UNCERTAIN EFFECT OF NATIONAL GAMBLING COMMISSION

The U.S. Congress has created the National Gambling Impact and Policy
Commission to conduct a comprehensive study of all matters relating to the
economic and social impact of gaming in the United States. The enabling
legislation provides that, not later than two years after the enactment of such
legislation, the commission would be required to issue a report containing its
findings and conclusions, together with recommendations for legislation and
administrative actions. Any such recommendations, if enacted into law, could
adversely impact the gaming industry and have a material adverse effect on the
Company's business, financial condition or results of operations.

From time to time, certain legislators have proposed the imposition of a
federal tax on gross gaming revenues. Any such tax could have a material
adverse effect on the Company's business, financial condition or results of
operations.

ABSENCE OF PUBLIC TRADING MARKET

Prior to this Exchange Offer, there has been no public market for the Old
Notes which were sold pursuant to an exemption from registration under
applicable securities laws. Like the Old Notes, the New Notes constitute a new
issue of securities, have no established trading market and may not be widely
distributed. The Initial Purchaser has informed the Company that it currently
intends to make a market in the New Notes following the effectiveness of this
Registration Statement; however, the Initial Purchaser is not obligated to do so
and may discontinue such market-making activities at any time without notice.
The Company does not intend to list the New Notes on any securities exchange or
to seek the admission thereof to trading in the Nasdaq National Market. If the
New Notes are traded after their initial issuance, they may trade at a discount
from their initial offering price, depending on prevailing interest rates, the
market for similar securities and other factors, including general economic
conditions and the financial condition of, performance of and prospects for the
Company. There can be no assurance as to the development of any market or
liquidity of any market that may develop for the New Notes. If a market does
develop, the price of the New Notes may fluctuate and liquidity may be limited.
If a market for the New Notes does not develop, purchasers may be unable to
resell such securities for an extended period of time, if at all.

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<PAGE>

USE OF PROCEEDS

The Company will not receive any proceeds in connection with the Exchange
Offer. In consideration for issuing the New Notes in exchange for the Old Notes
as described in this Prospectus, the Company will receive the Old Notes that
will be retired and canceled.

The net proceeds from the Old Notes Offering, after deducting discounts
and commissions and estimated offering expenses, were approximately $144
million. The Company used the net proceeds from the sale of the Old Notes to
reduce amounts outstanding under the Bank Facility. Immediately prior to the
closing of the Old Notes Offering, the outstanding balance was approximately
$280 million. See "Description of Certain Indebtedness and Capital Stock -
Bank Facility." At such time as funds are needed by the Company, the Company
will draw funds then available under the Bank Facility, which was last
amended as of June 27, 1997. Borrowings under the Bank Facility bear
interest at a margin above the bank's prime rate or LIBOR, as selected by the
Company, and will mature on September 30, 2000. As of March 31, 1997, the
weighted average interest rate for such borrowings was 7.89%. The
availability under the Bank Facility, purchase money equipment financing and
cash flows from operations, will be used (i) for payment of the remaining
construction costs for the St. Charles Expansion Project of approximately
$90.4 million (excluding net construction period interest and preopening
expenses) as of March 31, 1997, (ii) to provide additional equity
contributions of approximately $35 million for the completion of Sunset
Station, of which all had been made as of May 31, 1997, (iii) for payment of
construction payables of approximately $95 million at March 31, 1997 and (iv)
for general corporate purposes. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources." See also "Description of Certain Indebtedness and Capital Stock."

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CONSOLIDATED CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company at March 31, 1997 and as adjusted to reflect the issuance and sale of
the Old Notes by the Company after deducting discounts and commissions and
estimated expenses of the Old Notes Offering payable by the Company, and the
application of the net proceeds therefrom to repay borrowings under the Bank
Facility. See "Use of Proceeds." This table should be read in conjunction with
the more detailed information and financial statements appearing elsewhere in
this Prospectus.

AT MARCH 31, 1997
---------------------------
AS
ACTUAL ADJUSTED
----------- ------------
(IN THOUSANDS)

Current portion of long-term debt . . . . . . . $ 18,807 $ 18,807
----------- -------------
----------- -------------

Bank Facility (1) . . . . . . . . . . . . . . . $ 277,000 $ 132,963
9 5/8% Senior Subordinated Notes due 2003 (2) . 186,248 186,248
10 1/8% Senior Subordinated Notes due 2006 (2). 196,818 196,818
9 3/4% Senior Subordinated Notes due 2007 (3) . -- 144,287
Sunset Station First Mortgage Note (4) . . . . 46,000 46,000
Other long-term debt, less current portion . . 36,090 36,090
----------- -------------

Total long-term debt, less current portion . . 742,156 742,406
----------- -------------

Total Stockholders' equity . . . . . . . . . . 298,848 298,848
----------- -------------

Total capitalization . . . . . . . . . . . $ 1,041,004 $ 1,041,254
----------- -------------
----------- -------------

- -------------------------

(1) The Bank Facility provides for borrowings up to an aggregate of $368
million available to certain subsidiaries of the Company as of March
31, 1997, reducing to $360 million as of July 1, 1997, which borrowings
are guaranteed by the Company. Availability is subject to the Company's
compliance with the indebtedness covenants contained in the Indenture and
the Existing Indentures and by certain ratios under the Bank Facility. The
Bank Facility was last amended as of June 27, 1997 to improve borrowing
capacity under the facility by increasing the ratio of funded debt to
EBITDA (adjusted for preopening expenses) ratio required under the Bank
Facility. As Adjusted amounts do not reflect the incurrence of
approximately $22.5 million of additional borrowing under the Bank Facility
incurred through the closing of the Old Notes Offering. Borrowings under
the Bank Facility are expected to be periodically incurred subsequent to
the consummation of the Old Notes Offering in connection with the St.
Charles Expansion Project, additional equity contributions for the
completion of Sunset Station, payment of construction payables and general
corporate purposes.

(2) Both the Actual and As Adjusted amounts are net of combined original issue
discount of $8.0 million as of March 31, 1997.

(3) As Adjusted amount is net of discount of $5.7 million.

(4) The Sunset Loan Agreement provides SSI, an Unrestricted Subsidiary, with up
to an aggregate of $110 million of Qualified Non-Recourse Debt to finance
the certain development and construction costs of Sunset Station. See
"Description of Indebtedness and Capital Stock - Sunset Loan Agreement,
Supplemental Loan Agreement and Sunset Operating Lease."

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<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data presented below as of and for the
Company's fiscal years ended March 31, 1993, 1994, 1995, 1996 and 1997 have
been derived from consolidated financial statements which, except for 1993 and
1994, are contained elsewhere in this Prospectus. The selected consolidated
financial data set forth below are qualified in their entirety by, and should be
read in conjunction with, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the consolidated financial statements,
the notes thereto and other financial and statistical information included
elsewhere in this Prospectus.

Operating revenues:
Casino $450,013 $358,495 $210,534 $109,090 $100,426
Food and beverage 92,220 73,057 43,208 26,078 25,157
Room 27,420 23,614 17,690 14,360 12,373
Other 48,957 39,099 36,561 31,226 20,743
-------- -------- -------- -------- --------
Gross revenues 618,610 494,265 307,993 180,754 158,699
Less promotional allowances (35,095) (27,408) (17,715) (11,211) (8,804)
-------- -------- -------- -------- --------
Net revenues 583,515 466,857 290,278 169,543 149,895
-------- -------- -------- -------- --------

Operating costs and expenses:
Casino 203,857 150,805 92,812 47,492 42,185
Food and beverage 68,994 57,659 34,045 19,528 20,184
Room 10,318 9,147 7,014 5,439 5,398
Other 23,927 24,902 27,270 22,432 15,822
Selling, general and administrative 120,285 97,466 60,810 26,269 28,514
Corporate expenses 18,284 15,979 13,141 7,920 -
Restructuring charge 2,016 - - - -
Development expenses 1,302 3,960 7,200 1,791 -
Depreciation and amortization 44,589 35,039 22,220 12,976 10,935
Preopening expenses 31,820 2,436 19,378 - -
-------- -------- -------- -------- --------
Total operating costs and expenses 525,392 397,393 283,890 143,847 123,038
-------- -------- -------- -------- --------

Operating income 58,123 69,464 6,388 25,696 26,857

Interest expense, net (36,698) (30,563) (19,967) (9,179) (8,949)
Other income (expense) (47) 1,150 2,160 2,192 32
-------- -------- -------- -------- --------
Income (loss) before income taxes 21,378 40,051 (11,419) 18,709 17,940
Income tax (provision) benefit (7,615) (14,579) 3,477 (4,806) -
Reinstatement of deferred taxes - - - (4,486) -
Pro forma income taxes (unaudited) (1) - - - - (6,100)
-------- -------- -------- -------- --------
Net income (loss) 13,763 25,472 (7,942) 9,417 -
Preferred stock dividends (7,245) (53) - - -
-------- -------- -------- -------- --------
Net income (loss) applicable to common stock $6,518 $25,419 $(7,942) $9,417 $-
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Proforma net income after income taxes (unaudited)(1) $- $- $- $12,309 $11,840
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Earnings per share:
Earnings (loss) per common share $0.18 $0.75 $(0.26) - -
Pro forma earnings per share (unaudited) (1) - - - $0.42 $0.44
Weighted average common shares outstanding 35,316 33,918 30,113 - -
Pro forma weighted average common
shares outstanding (unaudited) - - - 29,413 26,681

</TABLE>

26
<PAGE>

FOR THE YEARS ENDED MARCH 31,
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
OTHER DATA (2):
Number of hotel rooms 1,728 1,528 1,328 1,028 1,028
Average daily occupancy rate 96% 94% 95% 97% 94%
Casino square footage 432,000 278,000 206,000 84,000 84,000
Number of slot machines 13,008 9,555 7,020 3,323 3,202
Capital expenditures (3) $506,096 $307,745 $163,884 $102,687 $15,504
EBITDA (4) 136,548 106,939 47,986 41,743 37,792
Cash flows provided by (used in):
Operating activities $111,803 $77,953 $48,494 $23,685 $29,658
Investing activities (479,008) (266,935) (157,585) (111,072) (14,867)
Financing activities 294,859 286,889 109,893 92,073 (10,309)
Ratio of earnings to fixed charges (5) 1.00x 1.87x 0.38x 2.01x 2.62x
BALANCE SHEET DATA:
Cash and cash equivalents $42,522 $114,868 $16,961 $16,159 $11,473
Total assets 1,234,118 827,314 436,538 301,486 185,110
Long-term debt (6) 760,963 464,998 299,814 159,460 133,215
Stockholder's equity 298,848 278,470 87,886 95,791 37,153

</TABLE>

- ---------------------------
(1) Reflects provisions for federal income taxes (assuming a 34% effective tax
rate for all periods) as if the Company had not been treated as an S
corporation during these periods.

(2) Other Data relating to the number of hotel rooms, the casino square footage
and the number of slot and video poker machines represent end of period
data.

(3) Capital expenditures for the fiscal year ended March 31, 1994 include $52.8
million related to the development of Station Casino St. Charles and $31.9
million related to the development of Boulder Station. Capital Expenditures
for the fiscal year ended March 31, 1995 include $52.9 million related to
the development of Station Casino St. Charles and $90.7 million related to
the development of Boulder Station. Capital expenditures for the fiscal
year ended March 31, 1996 include $84.9 million related to the acquisition
and completion of Texas Station, $62.8 million related to the development
and construction of Station Casino Kansas City, $29.7 million related to
the development and construction of Sunset Station and $39.4 million
related to the expansion at Station Casino St. Charles including an
elevated roadway, a parking structure and restaurant facilities. Capital
expenditures for the fiscal year ended March 31, 1997 include $211.1
million related to the development and construction of Station Casino
Kansas City, $112.8 million related to the development and construction of
Sunset Station and $99.6 million related to the St. Charles Expansion
Project. See Note 3 of Notes to Consolidated Financial Statements.

(4) "EBITDA" consists of operating income plus depreciation and amortization,
including preopening expenses and a restructuring charge in 1997. EBITDA
should not be construed as an alternative to operating income as an
indicator of the Company's operating performance, or as an alternative to
cash provided by operating activities as a measure of liquidity. The
Company has presented EBITDA solely as supplemental disclosure because the
Company believes that certain investors consider this information useful in
the evaluation of the financial performance of companies with substantial
depreciation and amortization.

(5) For the fiscal year ended March 31, 1995, earnings were inadequate to cover
fixed charges by a coverage deficiency of $17.4 million.

(6) Long-term debt at March 31, 1993 includes $7.8 million of notes payable to
affiliates which was subsequently paid.

27
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with
"Selected Consolidated Financial Data" and the consolidated financial statements
and the notes thereto included elsewhere in this Prospectus.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. The
forward-looking statements in this document are intended to be subject to the
safe harbor protection provided by Section 27A and Section 21E. All
forward-looking statements involve risks and uncertainties. Although the
Company believes that its expectations are based upon reasonable assumptions
within the bounds of its knowledge of its business and operations, there can be
no assurance that actual results will not materially differ from its
expectations. Factors that could cause actual results to differ materially from
expectations include, among other things, the Company's competition, the
limitations on capital resources imposed by the Company's Bank Facility, the
Sunset Loan Agreement (as defined herein) and the terms of the Indenture and the
Existing Indentures, the Company's ability to meet its interest expense and
principal repayment obligations, loss of the Company's riverboat and dockside
facilities from service, construction risks, the Company's dependence on key
gaming markets, the Company's ability to take advantage of new gaming
development opportunities and gaming and liquor regulations. See "Risk
Factors." Readers are cautioned not to place undue reliance on any
forward-looking statements, which speak only as of the date thereof. The Company
undertakes no obligation to publicly release any revisions to such
forward-looking statements to reflect events or circumstances after the date
hereof.

28
<PAGE>
RESULTS OF OPERATIONS.

The following discussion and analysis should be read in conjunction with
"Selected Consolidated Financial Data" and the financial statements and notes
thereto included elsewhere in this Prospectus.

RESULTS OF OPERATIONS

The following table highlights the results of operations for the Company
and its subsidiaries:
<TABLE>
<CAPTION>
Fiscal Year Ended March 31,
----------------------------------------
1997 1996 1995
----------- ---------- ----------
<S> <C> <C> <C>
NEVADA OPERATIONS:
PALACE STATION
Net revenues $ 133,464 $ 131,178 $ 133,313
Operating income 30,802 28,615 31,390
EBITDA (1) 38,890 38,225 41,285

BOULDER STATION
Net revenues $ 143,039 $ 118,040 $ 64,645
Operating income (2) 37,728 28,103 5,450
EBITDA (1) 48,553 35,650 16,842

TEXAS STATION
Net revenues $ 80,690 $ 55,098 $ --
Operating income 4,062 3,903 --
EBITDA (1) 12,462 8,904 --

TOTAL NEVADA OPERATIONS:
Net revenues $ 357,193 $ 304,316 $ 197,958
Operating income 72,592 60,621 36,840
EBITDA (1) 99,905 82,779 58,127

MISSOURI OPERATIONS:
STATION CASINO ST. CHARLES
Net revenues $ 158,760 $ 129,878 $ 58,384
Operating income (loss) (3) 34,996 28,058 (12,039)
EBITDA (1) 47,144 39,627 5,632

STATION CASINO KANSAS CITY
Net revenues $ 39,071 $ -- $ --
Operating (loss) (4) (30,701) -- --
EBITDA (1) 3,536 -- --

TOTAL MISSOURI OPERATIONS:
Net revenues $ 197,831 $ 129,878 $ 58,384
Operating income (loss) (3)(4) 4,295 28,058 (12,039)
EBITDA (1) 50,680 39,627 5,632

STATION CASINOS, INC. AND OTHER:
Net revenues $ 28,491 $ 32,663 $ 33,936
Operating loss (18,764) (19,215) (18,413)
EBITDA (1) (14,037) (15,467) (15,773)
</TABLE>

(1) "EBITDA" consists of operating income plus depreciation and
amortization, including preopening expenses and a restructuring charge in 1997.
EBITDA should not be construed as an alternative to operating income as an
indicator of the Company's operating performance, or as an alternative to cash
provided by operating activities as a measure of liquidity. The Company has
presented EBITDA solely as supplemental disclosure because the Company believes
that certain investors consider this information useful in the evaluation of the
financial performance of companies with substantial depreciation and
amortization.
(2) Operating income for Boulder Station for the fiscal year ended March
31, 1995, includes preopening expenses of $7.5 million.
(3) Operating loss for Station Casino St. Charles for the fiscal year
ended March 31, 1995, includes preopening expenses of $11.9 million.
(4) Operating loss for Station Casino Kansas City for the fiscal year
ended March 31, 1997, includes preopening expenses of $31.1 million.

29
<PAGE>

FISCAL YEAR 1997 COMPARED TO FISCAL YEAR 1996

Consolidated net revenues increased 25.0% to $583.5 million for the fiscal
year ended March 31, 1997, from $466.9 million in the prior year. The Company's
Nevada Operations contributed $357.2 million of net revenues for the fiscal year
ended March 31, 1997, an increase of 17.4% over the prior year. This increase
is primarily due to improved operations at Boulder Station and the operations
of Texas Station which opened in July 1995. The Company's Missouri Operations
contributed $197.8 million of net revenues for the fiscal year ended March 31,
1997, an increase of 52.3% over the prior year. This increase is due to the
opening of Station Casino Kansas City in January 1997, as well as an increase in
revenues at Station Casino St. Charles. For the fiscal year ended March 31,
1996, net revenues and operating income at Station Casino St. Charles were
adversely impacted by flooding on the Missouri River, which closed operations
for 16 days and disrupted operations through the balance of the first quarter of
fiscal year 1996. During the fiscal year ended March 31, 1997, the improved
results at Station Casino St. Charles were achieved despite disruption created
from the construction of a new parking garage and elevated roadway, which opened
in May 1996, and construction related to the further development of the
property's master plan. Flooding on the Missouri River did occur again in May
1996. The newly completed parking garage and elevated roadway served one of
its intended purposes in minimizing business disruption caused by the flood.
Additionally, results at Station Casino St. Charles were adversely impacted with
the opening of a new hotel/casino in March 1997.

Operating income decreased 16.3% to $58.1 million for the fiscal year ended
March 31, 1997, from $69.5 million in the prior year. Operating income at the
Company's Nevada Operations increased 19.8% to $72.6 million from $60.6 million
in the prior year. Operating income at the Company's Missouri Operations were
negatively impacted by the write-off of preopening expenses for Station Casino
Kansas City and a one-time restructuring charge from the implementation of a
plan to reduce costs and improve efficiency which resulted primarily in employee
severance payments. Operating income at Station Casino St. Charles increased
24.7% to $35.0 million. For the fiscal year ended March 31, 1997, these
results, including an increase in net interest expense of $6.1 million, a
decrease in the income tax provision of $7.0 million and dividends of $7.2
million on the convertible preferred stock issued in March 1996, resulted in net
income applicable to common stock of $6.5 million, or earnings per common share
of $0.18, compared to net income applicable to common stock of $25.4 million or
earnings per common share of $0.75 in the prior year.

CASINO. Casino revenues increased 25.5% to $450.0 million for the fiscal
year ended March 31, 1997, from $358.5 million in the prior year. This increase
is due to the opening of Station Casino Kansas City, a full year of operations
at Texas Station, as well as improved results at both Boulder Station and
Station Casino St. Charles. Casino revenues increased $42.8 million and $51.6
million for the Nevada Operations and Missouri Operations, respectively. Station
Casino Kansas City generated casino revenue of $29.9 million since opening in
January 1997.

Casino expenses increased 35.2% to $203.9 million for the fiscal year ended
March 31, 1997, from $150.8 million in the prior year. These increases in
casino expenses are consistent with the increases in casino revenues discussed
above. Casino net profit margin decreased to 54.7% from 57.9% in the prior
year. This decrease is due to a slight decrease at the Nevada Operations and a
lower margin at Station Casino Kansas City due to the start-up nature of the new
operations. In addition, the Missouri Operations have a lower margin than the
Company's combined margin due primarily to higher gaming tax rates in Missouri
as compared to Nevada.

FOOD AND BEVERAGE. Food and beverage revenues increased 26.2% to $92.2
million for the fiscal year ended March 31, 1997, from $73.1 million in the
prior year. This improvement is primarily due to an increase in food and
beverage revenues at Station Casino St. Charles of $5.0 million resulting from
two new full-service restaurant facilities which opened in October 1995, an
increase of $5.0 million at Texas Station and $7.5 million from Station Casino
Kansas City.

Food and beverage net profit margins improved to 25.2% for the fiscal year
ended March 31, 1997, from 21.1% in the prior year. This increase in net
margins is primarily due to improvements at the Nevada Operations, especially
Texas Station, as a result of continued focus on cost control and strong margins
at Station Casino St. Charles with the addition of the two full-service
restaurants.

30
<PAGE>

ROOM. Room revenues increased 16.1% to $27.4 million for the fiscal year
ended March 31, 1997, from $23.6 million in the prior year. This increase is
due primarily to the addition of Texas Station with a total of 200 rooms which
contributed an increase of $1.6 million of room revenues and Station Casino
Kansas City with a total of 180 rooms which contributed $1.2 million of room
revenues for the fiscal year ended March 31, 1997. The Company-wide room
occupancy increased to 96% from 94%, while the average daily room rate
increased to $48 from $46.

OTHER. Other revenues increased 25.2% to $49.0 million for the fiscal
year ended March 31, 1997, from $39.1 million in the prior year. This increase
is due to $2.3 million for the Company's interest in the operating income of
Barley's Casino & Brewing Company which opened in January 1996, $3.1 million of
lease income from the lease of a riverboat gaming facility, combined increases
in other revenues at the Company's other operating properties of $7.5 million,
offset by lost revenues of $3.0 million from the sale of vending assets of
Southwest Services, Inc. which were sold in September 1995. The riverboat
gaming facility lease will terminate in August 1997. Revenues from the
Company's slot route business remained constant at $21.0 million.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses ("SG&A") increased 23.4% to $120.3 million for the fiscal year ended
March 31, 1997, from $97.5 million in the prior year. This increase is
primarily due to the addition of Texas Station in July 1995 and Station Casino
Kansas City in January 1997. SG&A as a percentage of net revenues decreased
slightly to 20.6% from 20.9% in the prior year.

CORPORATE EXPENSES. Corporate expenses increased 14.4% to $18.3 million
for the fiscal year ended March 31, 1997, from $16.0 million in the prior year.
These increases are attributable to increases in personnel infrastructure to
manage the Company's new properties and projects under development. Corporate
expenses decreased to 3.1% of net revenues for the fiscal year ended March 31,
1997, from 3.4% in the prior year.

DEVELOPMENT EXPENSES. Development expenses decreased significantly for the
fiscal year ended March 31, 1997 compared to the prior year. This decrease is
the result of reduced efforts to identify potential gaming opportunities. Such
costs are incurred by the Company in its efforts to identify and pursue
potential gaming opportunities in selected jurisdictions, including those in
which gaming has not been approved. The Company expenses development costs
including lobbying, legal and consulting until such time as the jurisdiction has
approved gaming and the Company has identified a specific site. Costs incurred
subsequent to these criteria being met are capitalized.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
27.3% to $44.6 million for the fiscal year ended March 31, 1997, from $35.0
million in the prior year. Station Casino Kansas City contributed $2.8 million
of this increase, while Texas Station contributed $3.8 million. Depreciation
expense increased at Boulder Station primarily as a result of the parking garage
and entertainment facilities added during mid-fiscal year 1996 as well as at
Station Casino St. Charles primarily as a result of the parking garage which
opened in May 1996. These increases were offset by a decrease in depreciation
expense at Palace Station.

PREOPENING EXPENSES. The Company capitalizes significant preopening
expenses associated with its construction projects, including Station Casino
Kansas City which opened January 16, 1997, and Sunset Station. These amounts are
expensed upon the opening of the related project and could have a material
adverse impact on the Company's earnings. During the fiscal year ended March 31,
1997 the Company expensed preopening expenses of $31.8 million substantially
related to Station Casino Kansas City. Preopening expenses for the fiscal year
ended March 31, 1996 relate to the opening of the new restaurant facilities at
Station Casino St. Charles, the theater and parking garage at Boulder Station,
the opening of Texas Station in July 1995 and the opening at Barley's Casino &
Brewing Company in January 1996.

INTEREST EXPENSE, NET. Interest costs incurred (expensed and capitalized)
increased 59.2% to $58.8 million for the fiscal year ended March 31, 1997.
This increase is primarily attributable to added interest costs associated with
the 10 1/8 % Senior Subordinated Notes issued by the Company in March 1996 and
borrowings under the reducing revolving credit facility. During the first
quarter of fiscal year 1997, the

31
<PAGE>

Company recorded interest income of $0.7 million from investments in tax free
municipal securities purchased with the excess proceeds of the public offerings
completed in March 1996. Capitalized interest is expected to continue, but at a
reduced rate with the opening of Station Casino Kansas City in January 1997, due
to the construction of a new casino facility in Las Vegas and expansion projects
at the Company's Missouri facilities, as well as ongoing improvements at the
Company's existing Las Vegas facilities (see "Liquidity and Capital Resources").

FISCAL YEAR 1996 COMPARED TO FISCAL YEAR 1995

The Company's results of operations include the operations of Texas Station
located in northwest Las Vegas which opened on July 12, 1995, operations for the
full fiscal year ended March 31, 1996 at Boulder Station, which opened on August
23, 1994, and full-scale gaming at Station Casino St. Charles which opened on a
limited basis on May 27, 1994. Operations at Station Casino St. Charles were
limited for a significant portion of fiscal year 1995 due to the unexpected
decision of the Missouri Supreme Court in January 1994 that certain games of
chance were prohibited under the Missouri Constitution. On November 8, 1994, by
referendum, the Missouri voters amended the Missouri Constitution to permit
full-scale gaming. Full-scale operations began at Station Casino St. Charles on
December 9, 1994.

Consolidated net revenues increased 60.8% to $466.9 million for the fiscal
year ended March 31, 1996, as compared to $290.3 million for the prior year.
This increase is due to the factors noted in the preceding paragraph. Station
Casino St. Charles contributed $129.9 million of net revenues, an increase of
$71.5 million as compared to the prior year, while Boulder Station contributed
$118.0 million of net revenues, an increase of $53.4 million as compared to the
prior year. Texas Station contributed $55.1 million of net revenues during the
current fiscal year. For the fiscal year ended March 31, 1996, net revenues and
operating income of Station Casino St. Charles were negatively impacted by the
flooding of the Missouri River which led to the closing of the property from May
17 through June 1, 1995, and disruption of operations throughout the balance of
the first quarter. The operations of Station Casino St. Charles have been
further disrupted by ongoing construction, including a new parking garage and
elevated roadway which opened in May 1996. The new parking garage and
elevated roadway should provide improved access to the gaming facility and
reduce the likelihood of further business disruption from flooding. In addition
this project is the foundation for future phases of the land based elements of
the Station Casino St. Charles master plan.

Operating income increased $63.1 million to $69.5 million for the fiscal
year ended March 31, 1996, as compared to $6.4 million for the prior year. This
improvement is due to the new and expanded operations discussed above. In
addition, contributing to the lower operating income for the fiscal year ended
March 31, 1995 were preopening expenses of $19.4 million related to the opening
of Boulder Station and Station Casino St. Charles. The Company did not incur a
large amount of preopening expenses in connection with the Texas Station
acquisition due to the fact that Texas Station was substantially ready to open
upon acquisition. This improvement in operating income, partially offset by an
increase in net interest expense of $10.6 million and an increase of $18.1
million in the income tax provision, resulted in net income applicable to common
stock of $25.4 million, or earnings per common share of $0.75 for fiscal year
1996.

CASINO. Casino revenues increased 70.3% to $358.5 million for the fiscal
year ended March 31, 1996, as compared to $210.5 million for the prior year.
This increase is directly related to $40.1 million in casino revenues generated
by the new Texas Station property and combined casino revenue increases
generated by Station Casino St. Charles and Boulder Station of $110.2 million.
For the fiscal year ended March 31, 1996, casino revenues at Palace Station
decreased $2.2 million or 2.3% as compared to the prior year, primarily as a
result of a decline in sports book revenue. Management believes that Palace
Station's revenues were negatively impacted by road construction at Interstate
15 and Sahara Avenue. This construction was substantially completed in October
1995. In addition, two of the restaurants at Palace Station were closed for
remodeling during different parts of the fiscal year which management believes
also had a negative impact on casino revenues. Both restaurants have been
reopened. Revenues at the Southwest Company's Louisiana Downs Race Track video
poker operation declined by $2.2 million for the fiscal year ended March 31,
1996 as compared to the prior year. This decrease is a result of increased
competition in northwest Louisiana from riverboats opened in the first two
quarters of fiscal year 1995. The Company is considering various alternatives
for improving cash flows or possibly selling its interest in the Louisiana Downs
joint venture.

32
<PAGE>

In any event, the operations of the joint venture are not material to the
Company's financial position or results of operations taken as a whole.

Casino expenses increased 62.5% to $150.8 million for the fiscal year ended
March 31, 1996, as compared to $92.8 million for the prior year. This increase
in casino expenses is consistent with the increase in casino revenues discussed
above. Casino net profit margin improved to 57.9% from 55.9% during the prior
year. This improvement comes primarily from the operations at Station Casino
St. Charles where the casino profit margin was 53.1% for the fiscal year ended
March 31, 1996, compared to 45.0% for the prior year. The improvement at
Station Casino St. Charles was primarily due to increased revenues generated as
a result of the Missouri vote which allowed full-scale gaming beginning in
December 1994. The increased revenues allowed for substantial operational
efficiencies. The casino net profit margins at Station Casino St. Charles are
lower than the Company's combined margin primarily due to higher gaming tax
rates in Missouri as compared to Nevada.

FOOD AND BEVERAGE. Food and beverage revenues increased $29.8 million or
69.1% for the fiscal year ended March 31, 1996, as compared to the prior year.
This increase is due to food and beverage revenues of $15.1 million at the newly
opened Texas Station property and combined food and beverage revenue increases
at Station Casino St. Charles and Boulder Station of $14.2 million. Food and
beverage revenues at Station Casino St. Charles have increased with the opening
of two full service restaurants in October 1995. The addition of these
restaurants should have a positive impact on food and beverage revenues during
the upcoming fiscal year.

Food and beverage net profit margins have remained relatively flat, with a
margin of 21.1% in fiscal year 1996. Net profit margins for Boulder Station
have improved significantly over the prior year from 5.4% to 17.8% for the
fiscal year ended March 31, 1996. Management believes that the low margin
experienced in the prior year was due to typical initial operating
inefficiencies of a new property. In fiscal year 1996 the increase in margin at
Boulder Station was due to efficiencies resulting from effective cost control
measures implemented. The net profit margin at Texas Station was 9.7% which
management attributes primarily to initial operating inefficiencies typical for
a new property.

ROOM. Room revenues increased 33.5% to $23.6 million for the fiscal year
ended March 31, 1996, as compared to $17.7 million for the prior year. This
increase is due primarily to the addition of Texas Station and a full year of
operations at Boulder Station. Texas Station, with a total of 200 rooms,
contributed $2.1 million of the increase. Boulder Station, with a total of 300
rooms, contributed $2.7 million of the increase. Palace Station contributed an
increase of $1.1 million over the prior year. The Company-wide room occupancy
rate declined from 95% in the prior year to 94% for the fiscal year ended March
31, 1996, while the average daily room rate increased from $41 to $46.

OTHER. Other revenues increased $2.5 million or 6.9% to $39.1 million for
the fiscal year ended March 31, 1996, as compared to the prior year. This
increase is due primarily to increased slot route revenues of $4.0 million and
an increase in other revenues at Boulder Station of $1.8 million. In addition,
Texas Station added $1.8 million of other revenues during the fiscal year ended
March 31, 1996. These increases were offset by decreases in operating revenues
resulting after the sale of certain assets of the pay phone division at the end
of fiscal year 1995 and the vending division in the middle of fiscal year 1996.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses ("SG&A") increased $36.7 million or 60.3% for the fiscal year ended
March 31, 1996, as compared to the prior year. This increase is primarily due
to the operations at Station Casino St. Charles and Boulder Station, which
combined, contributed an increase of $20.5 million over the prior year. In
addition, Texas Station added $14.8 million of SG&A for the fiscal year ended
March 31, 1996. SG&A as a percentage of net revenues remained consistent at
20.9%.

CORPORATE EXPENSES. Corporate expenses increased $2.8 million or 21.6% to
$16.0 million for the fiscal year ended March 31, 1996, as compared to the prior
year. This increase is attributable to increases in personnel and other
infrastructure costs required to manage the Company's new properties and
expansion plans for fiscal years 1997 and beyond. Corporate expenses declined
to 3.4% of net revenues for the fiscal year ended March 31, 1996, as compared to
4.5% in the prior year.

33
<PAGE>

DEVELOPMENT EXPENSES. Development expenses decreased significantly for the
fiscal year ended March 31, 1996, compared to the prior year. This decrease was
the result of reduced efforts to identify potential gaming opportunities. Such
costs are incurred by the Company in its efforts to identify and pursue
potential gaming opportunities in selected jurisdictions, including those in
which gaming has not been approved. The Company expenses development costs
including lobbying, legal and consulting until such time as the jurisdiction has
approved gaming and the Company has identified a specific site. Costs incurred
subsequent to these criteria being met are capitalized.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
$12.8 million or 57.7% to $35.0 million for the fiscal year ended March 31,
1996. This increase is attributed to increases of $3.5 million at Boulder
Station and $5.2 million at Station Casino St. Charles due to expansions at
these facilities. In addition, Texas Station generated $4.1 million of
depreciation and amortization for the fiscal year ended March 31, 1996.

INTEREST EXPENSE, NET. Interest costs incurred (expensed and capitalized)
for the fiscal year ended March 31, 1996 were $36.7 million, a 41.5% increase
over the prior year. This increase is primarily attributable to increases in
term note and revolving line of credit balances as a result of the capital
required for the Company's expansion strategy. Capitalized interest is expected
to continue to grow at an increased pace due to ongoing improvements at the
Company's casinos as well as construction of new facilities (see "Liquidity and
Capital Resources").

Other income includes a $1.2 million gain recorded as a result of the sale
of certain assets of the vending division of Southwest Services, Inc.

LIQUIDITY AND CAPITAL RESOURCES

During the fiscal year ended March 31, 1997, the Company's sources of
capital included cash flows from operating activities of $111.8 million,
borrowings under the Company's Bank Facility of $277.0 million,
borrowings under the Sunset Loan Agreement (as defined herein) of $46.0
million, net proceeds from the exercise of the underwriters'
over-allotment option to purchase an additional 270,000 shares of
convertible preferred stock related to 1,800,000 shares of convertible
preferred stock issued by the Company on March 29, 1996, of $13.1 million
and excess cash invested from the March 29, 1996, issuance of convertible
preferred stock and senior subordinated notes. At March 31, 1997, the
Company had available borrowings of $91.0 million under its Bank Facility,
$64.0 million under the Sunset Loan Agreement, available advances of
$40.0 million under the Sunset Operating Lease (as defined herein) and
$42.5 million in cash and cash equivalents. In addition, in April 1997
the Company completed the Old Notes Offering, the proceeds of which were
used to reduce amounts outstanding under the Bank Facility.

During the fiscal year ended March 31, 1997, total capital expenditures
were approximately $506.1 million, of which approximately (i) $211.1 million was
associated with the development and construction of Station Casino Kansas City,
(ii) $112.8 million was associated with the development and construction of
Sunset Station, (iii) $99.6 million was associated with the construction of the
St. Charles Expansion Project, (iv) $14.7 million was associated with the
construction of a 4,000-space parking structure and elevated roadway at Station
Casino St. Charles, which opened in May 1996 and (v) $67.9 million was
associated with various other projects, maintenance capital expenditures and net
construction period interest.

The Company's primary requirements during fiscal year 1998 are expected to
include the following:

- - Sunset Station - The Company anticipates that the total cost of the Sunset
Station project will be approximately $198 million (excluding net
construction period interest and preopening expenses), of which
approximately $143.9 million had been incurred as of March 31, 1997. The
cost of the project has increased $38 million from the previous estimate of
$160 million. The increased cost is primarily attributable to the
Company's decision to expand the project to include an increase in the
number of slot and video poker machines from 2,300 to 2,700 machines, a
tenant buildout for a microbrewery, enhancements to the streetscape
facades, sky ceilings, stained glass, landscaping and other general
interior upgrades, an increased number of hotel suites, an enhanced outdoor
pool and an

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amphitheater. In addition, the Company experienced increased construction
costs due in part to the high level of overall construction activity in Las
Vegas. Management believes that the enhanced project will position the
Company as the premier entrant in the Henderson/Green Valley area, and
allow the Company to market the property more effectively and offer guests
a more complete entertainment experience. Sunset Station is being
constructed on approximately 100 acres in the Henderson/Green Valley area
of Las Vegas and will feature a casino, hotel, and dining and entertainment
facilities. The construction of Sunset Station is being financed through
$110 million of non-recourse debt under the Sunset Loan Agreement and a $40
million operating lease provided by the Company. See "Description of
Certain Indebtedness and Capital Stock." As of March 31, 1997, the Company
has made equity contributions of $54.0 million to the project and plans to
fund all of the remaining construction and preopening expenses in excess of
the $110 million note and $40 million operating lease through additional
equity contributions of approximately $33.0 million.

- - Station Casino St. Charles - The Company has commenced construction of the
St. Charles Expansion Project. In connection with this expansion project,
the Company is constructing a man-made backwater basin that would contain
two new gaming vessels, which will be similar to the gaming vessels at
Station Casino Kansas City. The project also includes a transition deck to
provide direct access from the 4,000-space parking garage into the new
casino facilities. This project is expected to cost approximately $190
million (excluding construction period interest and preopening expenses),
of which $99.6 million had been incurred at March 31, 1997. Management
estimates that the St. Charles Expansion Project will be completed by
mid-summer 1998. The scope and timing of this expansion project depend on
several factors, including, but not limited to, the Company's ability to
draw under its Bank Facility as restricted by the maximum funded debt to
EBITDA (as adjusted for preopening expenses) ratio described herein. In
addition, the Company has entered into a non-binding letter of intent with
the Gordon Group to develop a substantial portion of the new retail and
entertainment complex portion of the St. Charles Expansion Project. The
Company anticipates that between $50 million and $70 million of financing
will be required by the Gordon Group for the development of a uniquely
styled shopping and entertainment area, including a variety of specialty
retail stores, restaurants and entertainment attractions. If the Gordon
Group fails to proceed with development of the retail and entertainment
complex, the Company plans to complete a smaller-scale build-out of the
retail and entertainment complex for an estimated cost of $16 million (net
of construction period interest and preopening expenses). No assurances
can be given that the Company and the Gordon Group will enter into a
definitive development agreement with respect to the project, that the
Gordon Group will be able to obtain the necessary financing, that the
Gordon Group will complete the build-out of the complex within the
Company's estimated completion time of mid-summer 1998 or that the Gordon
Group will be able to develop and operate the project successfully.

- - Construction Contracts Payable - The payment of approximately $95 million
of construction contracts payable and retention outstanding as of March
31, 1997. This includes approximately $35.3 million related to the
construction and development of Sunset Station.

Other planned uses of capital include (i) maintenance capital expenditures
at Palace Station, Boulder Station, Texas Station, Sunset Station, Station
Casino Kansas City, Station Casino St. Charles and SGSI, (ii) principal and
interest payments on indebtedness, (iii) dividend payments on convertible
preferred stock and (iv) general corporate purposes. The Company has delayed
commencement of construction on a 507-room hotel project at Boulder Station.
Management is currently evaluating the timing of this Boulder Station project
which depends significantly on the operating results of the Company, including
its new facility Station Casino Kansas City, as well as the Las Vegas market's
ability to absorb significantly increased hotel capacity. The Company
capitalizes significant preopening expenses associated with its construction
projects, including Sunset Station, which amounts will be expensed upon the
opening of the related project and could have a material adverse impact on the
Company's earnings.

The Company believes cash flows from operations, borrowings under the
Bank Facility borrowings under the Sunset Loan Agreement, net proceeds from
the issuance of the Old Notes in April 1997, vendor and lease financing of
equipment and existing cash balances will be adequate to satisfy the
Company's anticipated uses of capital during fiscal year 1998. The

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Company, however, is continually evaluating the financing needs of its current
and planned projects. If more attractive financing alternatives become
available to the Company, the Company may amend its financing plans with respect
to such projects, assuming such financing would be permitted under its debt
agreements (see "Description of Certain Indebtedness and Capital Stock") and
other applicable agreements.

The Company's plans for the development of additional new gaming
opportunities, as well as further expansion of the existing operations, may
require substantial amounts of additional capital. The Company has entered
into various option agreements to acquire or lease land for the development
of existing and potential new gaming projects with purchase prices totaling
$31.3 million as of March 31, 1997. In consideration for these options, the
Company had paid or placed in escrow $6.0 million as of March 31, 1997, all
of which would be forfeited and written off should the Company not exercise
its option to acquire or lease the land. To develop all of these projects,
together with any new commitments the Company may enter into, the Company
will be required to obtain additional capital through debt or equity
financings. There can be no assurance that any such financing would be
available to the Company or, if available, that any such financing would be
available on favorable terms. The Company's Bank Facility and the
Indenture and Existing Indentures limit the incurrence of additional
indebtedness by the Company and its subsidiaries and contain various
financial and other covenants. In addition, the Sunset Loan Agreement
contains similar restrictions related to the Sunset Station project. See
"Description of Certain Indebtedness and Capital Stock."

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BUSINESS

GENERAL

Station Casinos, Inc. (the "Company") is an established
multi-jurisdictional gaming company that owns and operates six
distinctly-themed casino properties, four of which are located in Las Vegas,
Nevada, one which is located in Kansas City, Missouri and one which is
located in St. Charles, Missouri. The Company also owns and provides slot
route management services in southern Nevada and Louisiana. Management's
growth strategy includes the master-planned expansion of the Company's
existing gaming facilities in Nevada and Missouri, as well as the evaluation
and pursuit of additional development opportunities in Nevada and other
emerging gaming markets.

In Las Vegas, the Company owns and operates Palace Station Hotel & Casino
("Palace Station"), Boulder Station Hotel & Casino ("Boulder Station"), Texas
Station Gambling Hall & Hotel ("Texas Station") and Sunset Station Hotel &
Casino ("Sunset Station"). Palace Station caters primarily to Las Vegas
residents and repeat visitors and aggressively markets itself as "The Local
Favorite." Located on Sahara Avenue adjacent to Interstate 15, Palace Station
is near major attractions on the Las Vegas Strip and downtown Las Vegas. Boulder
Station is situated on 40 acres along the Boulder Highway, immediately adjacent
to Interstate 515, and is strategically located on the opposite side of Las
Vegas from Palace Station. Boulder Station caters primarily to Las Vegas
residents living on the eastern side of Las Vegas. Texas Station is
strategically located on 47 acres at the corner of Lake Mead Boulevard and
Tonopah Highway in North Las Vegas and draws customers from the rapidly growing
North Las Vegas and Summerlin residential areas. Sunset Station, which commenced
operations in June 1997, is strategically located on 100 acres at the
intersection of Interstate 515 and Sunset Road on the southeast side of Las
Vegas. Sunset Station caters primarily to residents living in the rapidly
growing Henderson/Green Valley area.

In Missouri, the Company owns and operates Station Casino Kansas City and
Station Casino St. Charles. Station Casino Kansas City, which commenced
operations in January 1997, is situated on 171 acres immediately east of the
heavily traveled Interstate 435 bridge, seven miles east of downtown Kansas
City. Station Casino Kansas City caters to local customers within the greater
Kansas City area, as well as tourists from outside the region. Station Casino
St. Charles is situated immediately north of the Interstate 70 bridge in St.
Charles, and is strategically located to attract customers from the St. Charles
and greater St. Louis areas, as well as tourists from outside the region.
Management is employing the same operating strategies that have been successful
at the Company's properties in the competitive Las Vegas market in order to
secure a strong presence in the Missouri markets. The Company is currently
expanding Station Casino St. Charles through an expansion project. See
"Expansion of Station Casino St. Charles."

Management's expansion strategy includes the master-planned expansion of
the Company's existing gaming facilities in Nevada and Missouri, as well as the
evaluation and pursuit of additional development opportunities in Nevada,
Missouri, and other emerging gaming markets. Management believes that the
following factors enable the Company to capitalize on its expertise in the local
and repeat visitor markets as well as on its reputation as a provider of a
high-quality, affordable gaming and entertainment experience.

OPERATING STRATEGY

Management believes that the following key principles have been integral to
its success as a gaming operator and intends to continue to employ these
strategies at each of its various operations.

TARGETED CUSTOMER BASE

The Company's operating strategy emphasizes attracting and retaining
customers primarily from the local and repeat visitor markets. The Casino
Properties attract customers from their local markets through innovative,
frequent and high-profile promotional programs, focused marketing efforts and
convenient locations, and from the repeat visitor market through aggressive
marketing and the development of strong relationships with specifically targeted
travel wholesalers. Although perceived value initially attracts a customer to
the Casino Properties, actual value generates customer satisfaction and loyalty.
Management believes that actual value becomes apparent during the customer's
visit through an enjoyable, affordable and

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high-quality entertainment experience. Las Vegas, which is and has been one of
the fastest growing cities in the United States, is characterized by a strong
economy and demographics which include an increasing number of retirees and
other active gaming customers. This strategy applies as well to the Missouri
markets. The Company believes that its visitor patrons are also discerning
customers who enjoy the Company's value-oriented, high-quality approach. This is
particularly true in Las Vegas where patrons view the Company's hotel and casino
product as a preferable alternative to attractions located on the Las Vegas
Strip and downtown Las Vegas.

PROVIDE A HIGH-VALUE EXPERIENCE

Because the Company targets the repeat customer, management is committed to
providing a high-value entertainment experience for its customers in its
restaurants, hotels and casinos. Management believes that the value offered by
restaurants at each of the Casino Properties is a major factor in attracting its
local gaming customers, as dining is a primary motivation for casino visits by
many locals. Through their restaurants, each of which has a distinct theme and
style of cuisine, the Company's Casino Properties offer generous portions of
high-quality food at reasonable prices. In addition, the Company's operating
strategy focuses on slot and video poker machine play. The Company's target
market consists of frequent gaming patrons who seek not only a friendly
atmosphere and convenience, but also higher than average payout rates. Because
locals and repeat visitors demand variety and quality in their slot and video
poker machine play, the Casino Properties offer the latest in slot and video
poker technology, including several games designed exclusively for the Company.

As part of its commitment to providing a quality entertainment experience
for its patrons, the Company is dedicated to ensuring a high level of customer
satisfaction and loyalty by providing attentive customer service in a friendly,
casual atmosphere. Management recognizes that consistent quality and a
comfortable atmosphere stem from the collective care and friendliness of each
employee. The Company, which began as a family-run business, has maintained
close-knit relationships among its management and endeavors to instill among its
employees this same sense of loyalty. Toward this end, management takes a
hands-on approach through active and direct involvement with employees at all
levels. An indication of the value of this approach is seen by the number of Las
Vegas residents seeking employment with the Company.

MARKETING AND PROMOTION

The Company employs an innovative marketing strategy that utilizes
frequent, high-profile promotional programs in order to attract customers and
establish a high level of name recognition. In addition to aggressive marketing
through television, radio and newspaper advertising, the Company has created and
sponsored such promotions as the annual Car-A-Day in May-TM-, "Paycheck Bonanza"
and the "Great Giveaway," a popular football season contest. These promotions
have become a tradition in the locals market and have had a positive impact upon
the Company's patronage during their respective promotion periods.

EXPANSION STRATEGY

SELECTION CRITERIA

Management believes that a highly visible central location, convenient
access and ample parking are critical factors in attracting local patronage and
repeat visitors. Additionally, sites must be large enough to support
multi-phased master-planned growth. The Company selects sites that are
centrally located within a dense population base so that the facility cannot be
cut-off from its primary market. These sites generally have been adjacent to
high-traffic surface streets and interstate highways. Management believes that
each of its casino properties' locations has provided the Company with a
significant competitive advantage to attract its targeted customer base.

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MASTER-PLANNED DEVELOPMENT

Management's expansion strategy includes the master-planned expansion of
its existing and future gaming locations. In designing project sites, the
Company plans and engineers for multi-phased facility expansion to accommodate
future growth and to allow the Company to develop dominant properties in each
market place. A project's master-planned design typically allows the option of
adding hotel rooms, casino space and non-gaming entertainment such as movie
theaters, additional restaurants, retail shops, and various other entertainment
venues.

EXPANSION AND DEVELOPMENT OPPORTUNITIES

EXPANSION OF STATION CASINO ST. CHARLES

STATION CASINO ST. CHARLES

Upon completion, the new gaming facility at Station Casino St. Charles will
feature two new gaming vessels which will be located in the newly-formed
backwater basin adjacent to the Missouri River and the 4,000-space parking
garage. Both of the new gaming vessels will be 132 feet wide by 350 feet long
and offer gaming on each of two levels, similar to the Station Casino Kansas
City vessels. Combined, the new vessels will have approximately 3,000 slot and
video poker machines and 190 gaming tables and will comprise over 140,000 square
feet of casino space (compared to 47,000 square feet at the existing vessels).
The new gaming facilities are designed to offer guests a more complete
entertainment experience.

The Company has entered into a non-binding letter of intent with Gordon
Group Holdings, Ltd. (the "Gordon Group") pursuant to which the Gordon Group
will lease from the Company a substantial portion of the new retail and
entertainment complex. The Company selected the Gordon Group for this project
based upon its experience in developing unique shopping and entertainment
destinations, including experience as the developer of the successful Forum
Shops at Caesars Palace. The Company anticipates that between $50 million and
$70 million of financing will be required by the Gordon Group for the
development of a uniquely styled shopping and entertainment area, including a
variety of specialty retail stores, restaurants and entertainment attractions.
The Company will retain certain space in the entertainment facility for selected
restaurant concepts, a high-quality movie theater, a gift shop and other
customer services as well as passenger ticketing and back of the house
facilities. The gaming facilities and retail and entertainment space will be
accessible from the adjacent 4,000-space parking structure and elevated roadway.
The Company believes that the St. Charles Expansion Project will enable the
Company to leverage the success of its current operations at Station Casino St.
Charles and position itself as the premier facility in the St. Louis
marketplace.

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The Company anticipates that the Company's cost for the St. Charles
Expansion Project will be approximately $190 million (excluding net
construction period interest and preopening expenses) of which approximately
$99.6 million had been incurred as of March 31, 1997. Upon completion of the
St. Charles Expansion Project, the new facilities will replace the existing
riverboat, gaming barge and restaurant facilities. Management estimates that
the St. Charles Expansion Project will be completed by mid-summer 1998. The
scope and timing of this expansion project depend upon several factors,
including, but not limited to, the Company's ability to draw amounts under
the Bank Facility, which are restricted based on the Company's operating cash
flow, the execution of a definitive development agreement with the Gordon
Group, the Gordon Group's ability to secure financing, the cash flow
generated by the Company's operations including Station Casino Kansas City,
regulatory requirements unique to the state of Missouri and gaming in general
and construction risks. Additionally, the letter of intent is subject to
various termination provisions and a 90-day due diligence period which
the parties have continued to conduct beyond the original June 19, 1997
diligence expiration date. If the Gordon Group fails to proceed with
development of the retail and entertainment complex, the Company plans to
complete a smaller-scale build-out of the retail and entertainment complex
for an estimated cost of $16 million (net of construction period interest and
preopening expenses). No assurances can be given that the Company and the
Gordon Group will enter into a definitive development agreement with respect
to the project, that the Gordon Group will be able to obtain the necessary
financing, that the Gordon Group will complete the build-out of the complex
within the Company's estimated completion time of mid-summer 1998 or that the
Gordon Group will be able to develop and operate the project successfully.

LAS VEGAS CASINO PROPERTIES

PALACE STATION

Palace Station is situated on 39 acres strategically located at the
intersection of Sahara Avenue and Interstate 15, one of Las Vegas' most heavily
traveled areas, and a short distance from the McCarran International Airport and
from major attractions on the Las Vegas Strip and downtown Las Vegas. With
Palace Station's ample parking and its convenient location, customers are
assured easy access to the hotel and casino, a factor that management believes
is particularly important in attracting and retaining its customers. The Palace
Station complex has approximately 287,000 square feet of main facility area and
features a turn-of-the-century railroad station theme. The complex includes a
1,028-room hotel, an approximately 84,000-square foot casino, two swimming
pools, 3,700 parking spaces (including 1,900 spaces in two multi-level parking
structures), an approximately 20,000-square foot banquet and convention center,
five full-service restaurants, two fast-food outlets, a 24-hour gift shop and a
non-gaming video arcade. The casino offers approximately 2,220 slot and video
poker machines, 53 gaming tables, two keno lounges, a poker room, a bingo
parlor, and a race and sports book.

The hotel features 587 rooms in a modern 21-story tower. Guests in the
tower enjoy a view of the Las Vegas Strip, downtown Las Vegas and the
surrounding mountains. The remaining 441 hotel rooms are located in low-rise
buildings adjoining the tower and casino. Palace Station's hotel rooms are
spacious and well-appointed. Standard tower rooms average approximately 377
square feet and include a king or queen-size bed, a vanity and a sitting area.
These amenities are offered to visitors at rates that compare favorably to those
at other Las Vegas hotels. Each of the hotel's two landscaped courtyard areas
includes a swimming pool and a jacuzzi.

Palace Station's five full-service restaurants have a total of over 1,225
seats. These restaurants offer a variety of high-quality food at reasonable
prices, including the 24-hour Iron Horse Cafe (featuring a Chinese menu in
addition to American fare), an all-you-can-eat buffet known as "The Feast," the
Broiler (a steak and seafood restaurant), the Pasta Palace (an Italian
restaurant) and the Guadalajara Bar & Grille (a Mexican restaurant). Palace
Station guests also may take advantage of the Palace Saloon Piano Bar and the
Loading Dock Lounge which provide music, dancing and entertainment. Quick
service meals and snacks are offered at the Pizza Palace, Samueli's Deli,
Manhattan Bagel and Burger King.

In planning the 1991 addition of the hotel tower, management created a
master plan that provides for the addition of 1,500 new tower rooms and improved
recreational facilities, replacing 441 existing low rise rooms. This, added to
the existing 587 tower rooms, would result in approximately 2,100 hotel rooms at
Palace Station. With this master plan in mind, management reconfigured the
facility and developed a significant

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portion of the overall infrastructure in conjunction with the 1991 expansion in
order to achieve economies of scale, reduce costs and minimize disruptions that
might be experienced with future expansion.

The Company has received approvals from the City of Las Vegas for an
expansion of an additional 1,200 hotel rooms and up to 195,000 square feet of
additional public space at Palace Station. With the assistance of its
architectural design consultant, the Company will develop detailed construction
plans and budgets for the Palace Station expansion project. The Company
anticipates that it will engage one or more general contractors to perform the
required construction in accordance with the Company's plans and budgets. To
date, there are neither definitive construction plans nor budgets for the
project, nor has any general contractor been engaged, and the scope of the
project may vary significantly from that which is currently anticipated. While a
significant portion of the requisite infrastructure is already in place, and the
Palace Station site has the capacity for significant expansion, the Company's
decision to complete this expansion and the master plan is subject to future
market and strategic considerations and the availability of capital.

BOULDER STATION

Boulder Station, which opened in August 1994, is situated on 40 acres
strategically located on the opposite side of Las Vegas from Palace Station.
Patrons enjoy convenient access to this facility which is located on the Boulder
Highway and immediately adjacent to the Interstate 515 interchange. Interstate
515 and the Boulder Highway are the major thoroughfares into Las Vegas for
visitors from Arizona. Management believes that its highly visible location at
this well-traveled intersection offers a competitive advantage relative to
existing hotels and casinos located on the Boulder Highway. Boulder Station is
located approximately four miles east of the Las Vegas Strip and approximately
four miles southeast of downtown Las Vegas. The Boulder Station complex has
approximately 337,000 square feet of main facility area and, like Palace
Station, features a turn-of-the-century railroad station theme. The complex
includes a 300-room hotel, an approximately 86,000-square foot casino, 4,350
parking spaces (including a 1,900-space multi-level parking structure), five
full-service restaurants, several fast-food outlets, a 280-seat entertainment
lounge, eight additional bars, a high-quality 11-screen movie theater complex, a
child-care facility, a swimming pool, a non-gaming video arcade and a gift shop.
The casino offers approximately 2,950 slot and video poker machines, 38 gaming
tables, a keno lounge, a poker room, a bingo parlor and a race and sports book.
The Company entered into a 25-year lease agreement with Act III Theaters ("Act
III"), a premier national theater operator, whereby Act III has provided all
interior theater construction, operates the theaters and pays the Company a
percentage of the monthly gross sales. The lease prohibits Act III from
operating or developing theaters at gaming facilities in Las Vegas other than
the Company's facilities and provides the Company the right to participate in
future Act III theater developments at non-gaming facilities in Las Vegas on
similar terms.

Boulder Station's five full-service restaurants have a total of over 1,400
seats. These restaurants offer a variety of high-quality food at reasonable
prices. Restaurant themes and menus are similar to Palace Station's, allowing
Boulder Station to benefit from the market acceptance and awareness of this
product. Restaurants include the 24-hour Iron Horse Cafe (featuring a Chinese
menu in addition to American fare), an all-you-can-eat buffet known as "The
Feast," the Broiler (a steak and seafood restaurant), the Pasta Palace (an
Italian restaurant), and the Guadalajara Bar & Grille (a Mexican restaurant). In
addition to these restaurants which are similar to the offerings at Palace
Station, Boulder Station offers fast-food outlets, including Pizza Palace, Viva
Salsa, and China Express. Additionally, the Company leases space to the
operators of such restaurants as Burger King and Starbuck's Coffee to enhance
the customers' dining selection. Boulder Station's restaurants and bars are
located in open settings that are designed to intermingle the dining and gaming
experience. Boulder Station also is master-planned for expansion, but the
Company's decision to complete this expansion and the master plan is subject to
future market and strategic considerations and the availability of capital. The
Company has delayed commencement of construction on a 507-room hotel project at
Boulder Station. Management is currently evaluating the timing of this project
which depends significantly on the operating results of the Company, including
Station Casino Kansas City, as well as the Las Vegas market's ability to absorb
significantly increased hotel capacity.

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TEXAS STATION

Texas Station, which commenced operations in July 1995, is situated on 47
acres strategically located at the corner of Lake Mead Boulevard and Tonopah
Highway in North Las Vegas. The facility features a friendly, "down-home" Texas
atmosphere, highlighted by the distinctive early Texas architecture. Texas
Station has approximately 258,000 square feet of main facility area in a low
rise complex plus a six story, 200-room hotel tower and approximately 4,000
parking spaces (including a recently opened 1,500-space covered parking
structure). The complex includes an approximately 75,000-square foot casino,
five full-service restaurants, several fast-food outlets, a 132-seat
entertainment lounge, seven additional bars, a high-quality 12-screen movie
theater complex, a swimming pool, a non-gaming video arcade and a gift shop.
The casino offers approximately 1,985 slot and video poker machines, 36 gaming
tables, a keno lounge, a poker room, a bingo parlor which opened in May 1996,
and a race and sports book. Management believes that the theater complex
provides a competitive advantage for the property and is an additional
attraction that draws a significant number of patrons to the facility. Texas
Station has entered into a 25-year lease agreement with Act III with terms
substantially the same as the Boulder Station agreement noted above.

Texas Station's five full-service restaurants have a total of over 1,300
seats. These restaurant facilities offer a variety of high-quality food at
reasonable prices, including the 24-hour Yellow Rose Cafe (a 24-hour coffee
shop), the Stockyard Steakhouse, the Laredo Cantina and Cafe (a Mexican
restaurant), the San Lorenzo (an Italian restaurant) and the Market Street
Buffet (featuring seven different food stations). In addition to the Texas
Station themed restaurants, guests may also take advantage of the unique
features of the Whiskey Bar with a seven-foot high bronco rider, which rotates
on a pedestal and may be viewed by patrons on all sides, the Garage Bar which
features a 1976 fire-engine red Cadillac Eldorado with seven-foot Texas
long-horns on the hood, or the Armadillo Honky Tonk where a 3,000 piece cut
glass armadillo is the centerpiece of a dance hall. The facility also offers
fast-food outlets, including a pizza kitchen and deli. Management believes that
the quality and variety of the restaurants offered at the facility are a major
draw in the rapidly growing North Las Vegas and Summerlin markets.

In December 1996, the Company completed construction of an approximately $7
million multi-level parking structure which added approximately 1,500 parking
spaces. This addition was designed to alleviate parking constraints during peak
periods and has resulted in improved customer traffic at the facility. To
accommodate future expansion, Texas Station has been master-planned for
additional hotel rooms, casino space and entertainment facilities.

SUNSET STATION

Sunset Station, which commenced operations in June 1997, is located on a
nearly 100-acre parcel at the intersection of Interstate 515 and Sunset Road.
Multiple access points provide customers convenient access to the gaming
complex and parking areas. Situated in the path of development along
Interstate 515, the major thoroughfare into Las Vegas from Boulder City and
Arizona, the project has prominent visibility from the freeway and the Sunset
commercial corridor. The Sunset Station facility features approximately
350,000 square feet of main facility area, plus a 20-story, 467-room hotel
tower and approximately 4,200 parking spaces. The complex includes an
approximately 80,000-square foot casino, 2,700 slot and video poker machines,
40 gaming tables, a keno lounge, a 10-table poker room and a 300-seat race
and sports book. The complex also includes five full-service restaurants,
themed to capitalize on the restaurants at the Company's other properties, an
entertainment lounge, additional bars, a microbrewery operated by Gordon
Biersch, a gift shop, a non-gaming video arcade, several fast-food outlets, a
high-quality 13-screen movie theater complex, a child-care facility, an
outdoor swimming pool and an amphitheater. Sunset Station has entered into a
25-year lease agreement with Act III with terms substantially the same as the
Boulder Station agreement noted above.

Sunset Station's five full-service restaurants have a total of over 1,700
seats. These restaurant facilities offer a variety of high-quality food at
reasonable prices, including the 24-hour Sunset Cafe (a 24-hour coffee shop),
an all-you-can-eat live action buffet "Feast Around the World," featuring
Italian, Mexican, Chinese, barbecue and traditional American fare, Capri
Ristorante (an Italian restaurant), Rosalitas (a Mexican restaurant), and
Costa Del Sol (a steak and seafood restaurant). In addition to these
restaurants, Sunset Station offers fast-food outlets, including Capri Pizza
Kitchen and Viva Salsa. The Company also leases

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space to the operators of Fatburger, Manhattan Bagel and Ben and Jerry's Ice
Cream. Like Boulder Station, Sunset Station restaurants are located in open
settings that are designed to intermingle the dining and gaming experience.

The Company believes that growth in the Henderson/Green Valley area of Las
Vegas will fuel significant growth and expansion opportunities at Sunset Station
that can be implemented on an incremental basis. The Sunset Station master plan
includes a total of approximately 2,000 hotel rooms, additional restaurants,
meeting space, a parking structure, additional casino space and other
entertainment amenities. The development of the additional facilities is
subject to numerous uncertainties, including future market conditions,
regulatory approvals and ultimate financial viability.

MISSOURI CASINO PROPERTIES

STATION CASINO KANSAS CITY

Station Casino Kansas City commenced operations in January 1997. This
facility is a master-planned gaming and entertainment destination facility
featuring a historic Missouri riverboat theme and is strategically located to
attract customers from the greater Kansas City area as well as tourists from
outside the region. The facility is located on a 171-acre site immediately east
of the heavily traveled Interstate 435 bridge, seven miles east of downtown
Kansas City, one mile south of Worlds of Fun and Oceans of Fun Amusement Parks,
six miles north of the Truman Sports Complex, which includes Arrowhead Stadium
and Kauffman Stadium, and 12 miles from the Kansas City International Airport.
Station Casino Kansas City's marketing programs are specifically designed to
effectively target and capture repeat customer demand from the local customer
base and also emphasize the strong visitor and overnight markets. Management
believes that Station Casino Kansas City has specific advantages relative to
both existing and future riverboat facilities in the region and that it is the
premier facility in the Kansas City market. The site is adjacent to the
Interstate 435 bridge, which supports traffic flow of approximately 71,000 cars
per day. Interstate 435 is a six-lane, north-south expressway offering quick and
easy accessibility to the site, and also provides direct visibility of the site.
The high visibility and easy access to the Station Casino Kansas City site helps
attract auto travelers who are visiting the theme parks and sports facilities
along this entertainment corridor.

The Station Casino Kansas City facility features two continuously docked
gaming vessels situated in a man-made protective basin. The two gaming
facilities feature approximately 140,000 square feet of gaming space that offers
approximately 3,300 slot and video poker machines and 190 gaming tables and a
poker room. Station Casino Kansas City is the fourth largest casino in the
United States in terms of casino square footage and the Company believes the
facility offers the first Las Vegas-style gaming experience in the Midwest. The
gaming facilities are docked adjacent to a land-based entertainment facility
with approximately 526,000 square feet of main facility area which includes a
200-room hotel, seven full-service restaurants, several fast-food outlets, 11
bars and lounges, a 1,400-seat Grand Pavillion featuring headline entertainment,
a Kid's Quest child-care facility, a gift shop and parking for 5,000 vehicles.
Act III is currently constructing a high-quality 18-screen movie theater complex
adjacent to the facility pursuant to a long-term ground lease and the Company is
completing a 5,700-square foot non-gaming video arcade and midway operated by
Sega Game Works both of which are scheduled to open in July 1997.

Station Casino Kansas City's restaurants offer a variety of high-quality
food at reasonable prices. Restaurants include an all-you-can-eat live action
buffet "Feast Around the World," featuring Italian, Mexican, Chinese, barbecue,
and traditional American fare, Bugatti's Little Italy Cafe, featuring fine
Italian cuisine and a wine bar with an extensive selection, Pancho Villa's
Cantina, featuring southwestern foods guided by culinary sensation Mark Miller
of Sante Fe, the Orleans Seafood Co. and Oyster Bar, featuring fresh Louisiana
style seafood, managed by renowned Chef Paul Prudhomme and the Hafbrauhaus
Brewery & Biergarten featuring a wide selection of micro-brewed lagers, an
assortment of American and Bavarian cuisine and live entertainment. In
addition, Station Casino Kansas City leases space to two well-known Kansas City
favorites, Arthur Bryant's Barbeque and The Phoenix Piano Bar & Grill, known as
one of the best jazz clubs in the city. Additionally, the complex offers the
Morning Glory Coffee Cafe and Bakery featuring Starbuck's Coffee and fresh-baked
goods and the Royal Chieftan Cigar Co., offering a wide variety of fine cigars
and cigar accessories.

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The Company believes that Station Casino Kansas City offers significant
growth and expansion opportunities that can be implemented on an incremental
basis. The project is master-planned for multi-phased growth including
additional hotel rooms, restaurants and other entertainment facilities. The
development of the additional facilities is subject to numerous uncertainties,
including future market conditions, regulatory approvals and ultimate financial
viability.

STATION CASINO ST. CHARLES

Station Casino St. Charles commenced operations in May 1994. Station
Casino St. Charles is a master-planned gaming and entertainment complex
featuring a historic riverboat theme. Station Casino St. Charles is situated
immediately north of the Interstate 70 bridge in St. Charles on approximately 52
acres owned by the Company. The Station Casino St. Charles complex is
strategically located to attract customers from the St. Charles and greater St.
Louis area, as well as tourists from outside the region. Management believes
that this location offers the Company certain competitive advantages relative to
both existing and future riverboat facilities in the region. The site is
adjacent to the Interstate 70 bridge. Interstate 70 is a 10-lane, east-west
expressway offering quick and easy accessibility to and direct visibility of the
Station Casino St. Charles site. Furthermore, the Station Casino St. Charles
location is approximately seven miles from St. Louis' airport, offering
convenience to the air traveler and access to the large number of hotel rooms in
the area, approximately 4,750 of which surround the airport.

Station Casino St. Charles currently features two gaming vessels -- a
292-foot long by 74-feet wide gaming riverboat known as "The Station Casino
Belle" and a floating two-story, 105,000-square foot gaming and entertainment
facility. The two current gaming vessels have 47,000 square feet of gaming
space with capacity for 4,000 gaming customers, as well as food and beverage and
other related facilities. Station Casino St. Charles offers approximately 1,810
slot and video poker machines, 85 gaming tables and a poker room. Station
Casino St. Charles features a 250-seat all-you-can-eat buffet known as "The
Feast," as well as an 80-seat specialty steakhouse known as "The Broiler." In
addition to the casinos and restaurants, the facility offers seven bars, a
fast-food court, an entertainment lounge, a lobby, a ticketing facility and a
gift shop. The Company has commenced the St. Charles Expansion Project, which
is ultimately intended to replace the existing facilities at Station Casino St.
Charles upon completion of such project.

Capitalizing on its operating experience in Las Vegas, the facility has
emphasized convenience in offering two separate gaming facilities. In doing so,
the Company is able to stagger its two hour cruises to begin each hour of the
day from nine in the morning until two the following morning, seven days a week.
With a 45 minute boarding time, the longest a customer has to wait is 15 minutes
to enter a gaming facility. Additionally, the Company received approval for
continuously docked gaming on each of the gaming facilities. In Missouri,
continuously docked gaming requires "simulated cruising," which allows customers
to board only at certain specified times, however, the customer may leave at any
time, which is significantly more convenient for the customer.

In furtherance of the Station Casino St. Charles master plan, the Company
completed construction of a new elevated roadway and a 4,000-space five-story
parking structure in May 1996. This project includes a turn-around deck and
porte-cochere. The parking facility is constructed above the existing flood
plain and provides the infrastructure for the current facilities as well as the
St. Charles Expansion Project. The elevated roadway and parking structure
provide improved access to the current and new gaming facilities and
significantly diminish Station Casino St. Charles' susceptibility to closure
during the spring flooding season. This was evidenced in May 1996 when flooding
on the Missouri River occurred and the parking garage and elevated roadway
served one of its intended purposes in minimizing business disruption caused by
the flood.

In addition, Station Casino St. Charles has been chosen by the City of St.
Charles, Missouri as the redeveloper of a designated Redevelopment Project Area
(the "TIF District") totaling approximately 107 acres adjacent to Station Casino
St. Charles. In connection with this redevelopment, Station Casino St. Charles
has entered into an agreement for property acquisition with the City of St.
Charles that allows for the acquisition by Station Casino St. Charles of the
property within the TIF District. This agreement designated Station Casino St.
Charles as the city's agent to acquire property using the city's power of
eminent domain, and required, subject to certain limitations, Station Casino St.
Charles to initiate eminent domain proceedings on all property

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in the TIF District by March 22, 1997. Station Casino St. Charles has
initiated, completed or, with the consent of the City of St. Charles, dismissed
eminent domain proceedings on all land in the designated Phase I of the TIF
District (approximately 40 acres). This land has been or may be acquired for
the construction of a mixed-use development, which may include retail space, a
hotel, office space, convention space, or restaurants. Eminent domain
proceedings on all land in the designated Phase II and III of the TIF District
have been postponed or suspended in light of the condemnation awards in the
Phase I proceedings. The property acquisition agreement provides Station Casino
St. Charles with the right to terminate this agreement in the event the cost to
purchase the property, relocate existing tenants and demolish existing
structures exceeds $13.7 million.

THE SOUTHWEST COMPANIES

The Company provides slot route management services to numerous food and
beverage establishments and commercial businesses in southern Nevada and
Louisiana through its subsidiary, Southwest Gaming Services, Inc. ("SGSI").
(SGSI, together with Southwest Services, Inc. ("SWSI") and their respective
subsidiaries, the "Southwest Companies").

SGSI commenced its slot route business in southern Nevada in December 1990.
Management combined its gaming experience with its route management abilities
from SWSI to capitalize on the rapidly expanding slot route business. SGSI has
approximately 720 machines in service throughout southern Nevada. In July 1992,
SGSI entered into a joint venture with a corporation owned by certain Louisiana
residents to form Southwest Gaming of Louisiana ("SGLA"), in which SGSI owns a
49% equity interest. SGLA operates approximately 90 video poker machines at
Louisiana Downs Race Track ("Louisiana Downs") and over 210 machines at other
locations in Louisiana. The Company's contract with Louisiana Downs expires in
June 1997 and will not be renewed. Due to the addition of three riverboat
gaming facilities in Shreveport Louisiana, revenues and operating cash flows
from the Company's Louisiana joint venture have significantly declined.

COMPETITION

The gaming industry includes land-based casinos, dockside casinos,
riverboat casinos, casinos located on Indian reservations and other forms of
legalized gaming. There is intense competition among companies in the gaming
industry, many of which have significantly greater resources than the Company.
Certain states have recently legalized, and several other states are currently
considering legalizing, casino gaming in designated areas. Legalized casino
gaming in such states and on Indian reservations will provide strong competition
to the Company and could adversely affect the Company's operations, particularly
to the extent that such gaming is conducted in areas close to the Company's
operations.

Palace Station, Boulder Station, Texas Station and Sunset Station face
competition from all other casinos and hotels in the Las Vegas area,
including to some degree, from each other. Such competition includes at
least eight hotel-casinos targeted primarily towards local residents and
repeat visitors, as well as numerous non-hotel gaming facilities targeted
towards local residents. The Company competes with other locals oriented
hotel-casinos by focusing on repeat customers and attracting these customers
through innovative marketing programs, which include the annual Car-A-Day in
May-TM- promotion. The Company's value-oriented, high-quality approach is
designed to generate repeat business. Additionally, the casino properties are
strategically located and designed to permit convenient access and ample
parking, which are critical factors in attracting local visitors and repeat
patrons. In recent months, several of the Company's direct competitors who
cater to the "locals" market have completed major expansion projects, and
other expansions are in progress or are planned. Currently, there are
approximately 27 major gaming properties located on or near the Las Vegas
Strip, 14 located in the downtown area and several located in other areas of
Las Vegas. In the past year, four large hotel-casinos have opened on or near
the Las Vegas Strip. In addition, nine new hotel-casinos and three
hotel-casino expansions are under construction or have been announced, which
will add approximately 21,000 rooms to the Las Vegas area over approximately
the next two years. Five of the new hotel-casinos are major resorts with a
theme and an attraction which are expected to draw significant numbers of
visitors. These new facilities could have a positive effect on Palace
Station, Boulder Station, Texas Station and Sunset Station if more visitors
are drawn to Las Vegas. Any other major additions, expansions or
enhancements of existing properties or the construction of new properties by
competitors, could have a

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material adverse effect on the businesses of Palace Station, Boulder Station,
Texas Station and Sunset Station. The additional capacity has had little, if
any, impact on Palace Station's, Boulder Station's or Texas Station's hotel
occupancy or casino volume to date, although there can be no assurance that
hotel occupancy or casino volume will not be adversely affected in the future.

The Company's Las Vegas casino properties face more direct competition from
eight hotel-casinos primarily targeted to the local and the repeat visitor
markets. Many of these competitors have completed major expansions and existing
competitors and new entrants into these markets are in the planning stages or
well under construction. Although the Company has competed strongly in these
marketplaces, there can be no assurance that this additional capacity will not
have a negative impact on the Company.

The Missouri Gaming Commission has been empowered to determine the number
of gaming licenses supportable by the region's economic situation. As of March
31, 1997, 38 applications for gaming licenses had been filed with the State of
Missouri, including 12 applications to operate in the St. Louis marketplace. 16
of these 38 applicants have been granted a license, permitting gaming operations
in St. Louis, Kansas City, St. Joseph and Caruthersville, Missouri. Station
Casino St. Charles competes primarily with other gaming operations in and around
St. Louis, Missouri. Currently, in addition to Station Casino St. Charles,
there are four facilities operating in the St. Louis market, including a
facility in Maryland Heights which opened in March 1997. In particular, the
Company expects that Station Casino St. Charles will be directly impacted by
competition from the facility located in Maryland Heights due to its size,
quality and close proximity. While the Company has experienced a decline in
revenues at Station Casinos St. Charles since the opening of the Maryland
Heights facility, the Company is taking steps to mitigate the effects of such
competition, including undertaking the St. Charles Expansion Project.
Additionally, two of the four competitors operating in the St. Louis market are
located in Illinois, which does not impose a $500 loss limit. Gaming also has
been approved by local voters in jurisdictions near St. Louis, including
St. Charles, Jefferson City and other cities and counties along the Mississippi
and Missouri Rivers. Any new gaming operations developed near St. Louis would
likely provide significant competition to Station Casino St. Charles. Gaming
laws in surrounding states and in other areas may be amended in ways that would
increase the competition to Station Casino St. Charles. This increasing
competition could have a material adverse effect on the Company's business.

Recently, Davis Gaming was selected for investigation for licensure for a
gaming operation which it intends to develop in Boonville, Missouri, a city in
central Missouri near Jefferson City and Columbia, and Mark Twain Casino L.L.C.
was selected for investigation for licensure for a gaming operation which it
intends to develop in LaGrange, Missouri, a city in northeastern Missouri.
Neither area is currently served by a Missouri gaming facility.

Station Casino Kansas City competes primarily with other gaming operations
in and around Kansas City, Missouri. Currently there are five gaming facilities
operating in the Kansas City market. Earlier entrants to the Kansas City market
may have an advantage over the Company due to their ability to establish early
market share. Gaming has been approved by local voters in jurisdictions near
Kansas City, including St. Josephs (which currently has one riverboat gaming
operation), Jefferson City and other cities and counties along the Missouri
River. Any new gaming operations developed near Kansas City would likely
provide significant competition to Station Casino Kansas City.

Several companies are engaging in riverboat gaming in states neighboring
Missouri. Illinois sites, including Alton, East St. Louis, and Metropolis,
enjoy certain competitive advantages over Station Casino St. Charles because
Illinois, unlike Missouri, does not impose limits on the size of losses and
places fewer restrictions on the extension of credit to customers. In contrast,
Missouri gaming law provides for a maximum loss of $500 per player on each
cruise and prohibits the extension of credit (except credit cards and checks).
Unlike Illinois gaming law, the Missouri gaming law places no limits on the
number of gaming positions allowed at each site. As of March 31, 1997, Illinois
had approved a total of ten licenses. While riverboats currently are the only
licensed form of casino-style gaming in Illinois and the number of licenses is
restricted to ten, possible future competition may arise if gaming is legalized
in or around Chicago, which was specifically excluded from the legislation
permitting gaming in Illinois.

The Company's Missouri gaming operations also compete to a lesser extent
with the riverboat and floating gaming facilities in Mississippi, Louisiana,
Iowa and Indiana. Like Illinois, neither Mississippi nor

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Louisiana gaming legislation imposes limits on wagers or losses. Mississippi
had 33 licensed riverboats and three pending applications as of March 31, 1997.
In addition, Mississippi has one land-based casino located on Indian lands. In
Louisiana, 15 licenses for gaming vessels have been granted, which is the
maximum number of licenses currently authorized in the state, and 12 vessels
have commenced operations. The opening of three riverboat gaming facilities in
Shreveport, Louisiana, has had a negative impact on the revenues and cash flows
of the Company's Louisiana joint venture. Gaming laws in these surrounding
states and in other areas may be amended in ways that would increase the
competition to the Company's Missouri gaming operations.

To a lesser extent, the Company's operations compete with gaming operations
in other parts of the state of Nevada, such as Reno, Laughlin and Lake Tahoe,
with facilities in Atlantic City, New Jersey and other parts of the world and
with state-sponsored lotteries, on-and-off-track pari-mutuel wagering, card
parlors and other forms of legalized gambling.

EMPLOYEES

As of May 31, 1997, the Company and its subsidiaries had approximately
10,000 employees. Management believes that it has good relationships with its
employees.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the meaning at
Section 27A of the Securities Act and Section 21E of the Exchange Act. The
forward-looking statements in this document are intended to be subject to the
safe harbor protection provided by Section 27A and Section 21E. All
forward-looking statements involve risks and uncertainties. Although the
Company believes that its expectations are based upon reasonable assumptions
within the bounds of its knowledge of its business and operations, there can
be no assurance that actual results will not materially differ from its
expectations. Factors that could cause actual results to differ materially
from expectations include, among other things, the Company's competition, the
limitation on capital resources imposed by the Company's Bank Facility, the
Sunset Loan Agreement (as defined herein) and the terms of the Indenture and
the Existing Indentures, the Company's ability to meet its interest expense
and principal repayment obligations, loss of the Company's riverboat and
dockside facilities from service, construction risks, the Company's dependence
on key gaming markets, the Company's ability to take advantage of new gaming
development opportunities and gaming and liquor regulations. See
"Risk Factors." Readers are cautioned not to place undue reliance on any
forward looking statements, which speak only as the date thereof. The Company
undertakes no obligation to publicly release any revisions to such
forward-looking statments to reflect events or circumstances after the date
hereof.

PROPERTIES

Palace Station is situated on 39 acres located on the west side of Las
Vegas, Nevada. The Company owns 26 acres and leases the remaining 13 acres
pursuant to five long-term ground leases with unaffiliated third parties. The
property is subject to a lien to secure borrowings under the Company's reducing
revolving bank credit facility.

Boulder Station is situated on 40 acres located on the east side of Las
Vegas, Nevada. The Company owns 13 acres and leases the remaining 27 acres from
a trust pursuant to a long-term ground lease. The trustee of such trust is Bank
of America NT&SA and the beneficiary of which is KB Enterprises, an affiliated
company owned by Frank J. Fertitta, Jr. and Victoria K. Fertitta (the "Related
Lessor"), the parents of Frank J. Fertitta III, Chairman of the Board and Chief
Executive Officer of the Company. The lease has a maximum term of 65 years,
ending in June 2058. Currently, the lease provides for monthly payments of
$125,000 until June 1998. In June 1998 and every ten years thereafter the rent
will be adjusted to the product of the fair market value of the land and the
greater of (i) the then prevailing annual rate of return for comparably situated
property or (ii) 8% per year. The rent will be further adjusted in June 2003 and
every ten years thereafter by a cost of living factor. In no event will the rent
for any period be less than the immediately prior period. Pursuant to the ground
lease, the Company has an option, exercisable at five-year intervals beginning
in June 1998, to purchase the land at fair market value. The Company believes
that the terms of the ground lease are as fair to the Company as could be
obtained from an independent third party. The Company's leasehold interest in
the property and the acreage it owns directly are subject to a lien to secure
borrowings under the Company's reducing revolving bank credit facility.

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Texas Station is situated on 47 acres located in North Las Vegas, Nevada.
The Company leases the property from a trust pursuant to a long-term ground
lease. The trustee of such trust is Bank of America NT&SA and the beneficiary of
which is Texas Gambling Hall & Hotel, Inc. an affiliate company of the Related
Lessor. The lease has a maximum term of 65 years, ending in May 2060. The
lease provides for monthly rental payments of $150,000 until July 2000. In July
2000, and every ten years thereafter, the rent will be adjusted to the product
of the fair market value of the land and the greater of (i) the then prevailing
rate of return being realized for owners of comparable land in Clark County or
(ii) 8% per year. The rent will be further adjusted by a cost of living factor
after the first ten years and every ten years thereafter. In no event will the
rent for any period be less than the immediately prior period. Pursuant to the
ground lease, the Company has an option, exercisable at five-year intervals, to
purchase the land at fair market value. The Company believes that the terms of
the ground lease are as fair to the Company as could be obtained from an
independent third party. The Company's leasehold interest in the property is
subject to a lien to secure borrowings under the Company's reducing revolving
bank credit facility.

Station Casino St. Charles is situated on 52 acres located immediately
north of Interstate 70 on the edge of the Missouri River in St. Charles,
Missouri. The Company owns the entire 52 acres. The Company's ownership
interests in the St. Charles property is subject to liens to secure borrowings
under the Company's reducing revolving bank credit facility.

Station Casino Kansas City is situated on 171 acres in Kansas City,
Missouri. The Company entered into a joint venture with an unaffiliated third
party to acquire the property. Station Casino Kansas City leases the site from
the joint venture with monthly payments of $100,000. The Company will make
monthly payments of $85,000 through March 31, 1997, and $90,000 through the
remainder of the lease term. The lease term was extended to March 31, 2006,
with the option to extend the lease for up to eight renewal periods of ten
years each plus one additional period of seven years. Commencing April 1, 1998,
and every anniversary thereafter the rent shall be adjusted by a cost of living
factor. In connection with the joint venture agreement, the Company received an
option that provided for the right to acquire the joint venture partners
interest in this joint venture. The Company has the option to purchase this
interest at any time after April 1, 2002 through April 1, 2011 for $11.7
million, however, commencing April 1, 1998, the purchase price will be adjusted
by a cost of living factor of not more than 5% or less than 2% per annum. The
Company paid $2.6 million for this option. The Company's leasehold interest in
the property is subject to a lien to secure borrowings under the Company's
reducing revolving bank credit facility, and under certain circumstances the
Bank Facility permits the lenders to force the exercise of such option.

Sunset Station is situated on approximately 100 acres located in the
Green Valley/Henderson area of Las Vegas, Nevada. The Company leases
approximately 48 acres pursuant to a long-term ground lease with an
unaffiliated third party. The lease was entered into in June 1994, and has a
term of 65 years with monthly rental payments of $120,000, adjusted on each
subsequent five-year anniversary by a cost of living factor. On the seventh
anniversary date of the lease, the Company has the option to purchase the
land for $23.8 million. The lessor also has an option to sell the land to the
Company for $21.8 million on the seventh anniversary of the lease. The
remaining approximate 52 acres were purchased by the Company in September
1995, for approximately $11 million.

The Company has acquired several parcels of land in various jurisdictions
as part of the Company's development activities. At March 31, 1997, $22.6
million of land had been acquired for potential gaming projects in jurisdictions
where gaming has been approved. In addition, $3.7 million of land had been
acquired in certain jurisdictions where gaming has not yet been approved. No
assurances can be made that these jurisdictions will approve gaming in the
future.

The Company has entered into various purchase agreements whereby the
Company has the option to acquire or lease land for developing existing and
potential new gaming projects with purchase prices totaling $31.3 million at
March 31, 1997. In consideration for these options, the Company has paid or
placed in escrow $6.0 million at March 31, 1997, all of which would be forfeited
should the Company not exercise its options to acquire or lease the land.

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LITIGATION

The Company and its subsidiaries are defendants in various lawsuits
relating to routine matters incidental to their business. Management does not
believe that the outcome of such litigation, in the aggregate, will have a
material adverse effect on the Company.

A suit seeking status as a class action lawsuit was filed by plaintiff,
William H. Poulos, et. al, as class representative, on April 26, 1994, in the
United States District Court, Middle District of Florida, naming 41
manufacturers, distributors and casino operators of video poker and electronic
slot machines, including the Company. On May 10, 1994, a lawsuit alleging
substantially identical claims was filed by another plaintiff, William Ahearn,
et. al, as class representative, in the United States District Court, Middle
District of Florida, against 48 manufacturers, distributors and casino operators
of video poker and electronic slot machines, including the Company and most of
the other major hotel-casino companies. The lawsuits allege that the defendants
have engaged in a course of fraudulent and misleading conduct intended to induce
persons to play such games based on a false belief concerning how the gaming
machines operate, as well as the extent to which there is an opportunity to win.
The two lawsuits have been consolidated into a single action, and have been
transferred to the United States District Court, for the State of Nevada. On
September 26, 1995, a lawsuit alleging substantially identical claims was filed
by plaintiff, Larry Schreier, et. al, as class representative, in the United
States District Court for the District of Nevada, naming 45 manufacturers,
distributors, and casino operators of video poker and electronic slot machines,
including the Company. Motions to dismiss the Poulos/Ahearn and Schreier cases
were filed by Defendants. On April 17, 1996, the Poulos/Ahearn lawsuits were
dismissed, but plaintiffs were given leave to file Amended Complaints on or
before May 31, 1996. On May 31, 1996, an Amended Compliant was filed, naming
William H. Poulos, et. al, as plaintiff. Defendants filed a motion to dismiss.
On August 15, 1996, the Schreier lawsuit was dismissed with leave to amend. On
September 27, 1996, Schreier filed an Amended Complaint. Defendants filed
motions to dismiss the Amended Complaint. In December 1996, the Court
consolidated the Poulos/Ahearn, the Schreier, and a third case not involving the
Company and ordered all pending motions be deemed withdrawn without prejudice,
including Defendants' Motions to Dismiss the Amended Complaints. The plaintiffs
filed a Consolidated Amended Complaint on February 13, 1997. The Defendants
have filed motions to dismiss, substantially identical to those filed in the
earlier separate actions. The motions to dismiss remain pending before the
Court. Management believes that the claims are wholly without merit and does
not expect that the lawsuits will have a material adverse effect on the
Company's financial position or results of operations.

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REGULATION AND LICENSING

NEVADA GAMING REGULATIONS

The ownership and operation of casino gaming facilities, the operation of
gaming device routes and the manufacture and distribution of gaming devices in
Nevada are subject to the Nevada Gaming Control Act (the "Nevada Act") and to
the licensing and regulatory control of the Nevada Gaming Commission ("Nevada
Commission"), the Nevada State Gaming Control Board ("Nevada Board"), and
various other local city and county regulatory agencies (collectively, the
Nevada Gaming Authorities").

The Company's direct and indirect subsidiaries that conduct gaming
operations in Nevada are required to be licensed by the Nevada Gaming
Authorities. The gaming licenses require the periodic payment of fees and taxes
and are not transferable. SGSI is licensed as a distributor and as an operator
of a slot machine route. PSHC has been licensed to conduct nonrestricted gaming
operations at Palace Station. BSI has been licensed to conduct nonrestricted
gaming operations at Boulder Station and TSI has been licensed to conduct
nonrestricted gaming operations at Texas Station. The Company is registered by
the Nevada Commission as a publicly traded corporation (a "Registered
Corporation") and has been found suitable to own the stock of PSHC, BSI, TSI,
SSI and SGSI (individually a "Gaming Subsidiary" and collectively the "Gaming
Subsidiaries") under the terms of the Nevada Act. As a Registered Corporation,
the Company is required periodically to submit detailed financial and operating
reports to the Nevada Commission and the Nevada Board and furnish any other
information which the Nevada Commission or the Nevada Board may require. No
person may become a stockholder or holder of an interest of, or receive any
percentage of profits from the Gaming Subsidiaries without first obtaining
licenses and approvals from the Nevada Gaming Authorities. The Company and the
Gaming Subsidiaries have obtained from the Nevada Gaming Authorities the various
registrations, findings of suitability, approvals, permits and licenses
(collectively, the "Gaming Licenses") required in order to engage in gaming
activities in Nevada.

The Nevada Gaming Authorities may investigate any individual who has a
material relationship to, or material involvement with, a Registered
Corporation, such as the Company or the Gaming Subsidiaries, which holds a
license, in order to determine whether such individual is suitable or should be
licensed as a business associate of a Registered Corporation or a gaming
licensee. No person may become a controlling stockholder of the Company without
the prior approval of the Nevada Commission, although any beneficial owner of
the Company's voting securities, regardless of the number of shares owned, may
be required to file applications, be investigated and have his suitability
determined if the Nevada Commission has reason to believe that such ownership
would be inconsistent with the declared policies of the State of Nevada.

The Nevada Act provides that persons who acquire beneficial ownership of
more than 5% of the voting securities of a Registered Corporation must report
the acquisition to the Nevada Commission. The Nevada Act also requires that
beneficial owners of more than 10% of the voting securities of a Registered
Corporation must apply to the Nevada Commission for a finding of suitability
within thirty days after the Chairman of the Nevada Board mails the written
notice requiring such filing. An "institutional investor," as defined in the
Nevada Commission's regulations, which acquires beneficial ownership of more
than 10%, but not more than 15% of the Company's voting securities may apply to
the Nevada Commission for a waiver of such finding of suitability if such
institutional investor holds the voting securities for investment purposes only.
Further, the Nevada Commission may, in its discretion, require the holder of any
security of a Registered Corporation, such as the Company, including the Common
Stock or the Notes, to file applications, be investigated and be found suitable
to own a security of the Registered Corporation. The applicant for licensing or
a finding of suitability must pay all the costs of the investigation.

The Company is required to maintain a current stock ledger in Nevada which
may be examined by the Nevada Gaming Authorities at any time. If any securities
are held in trust by an agent or by a nominee, the record holder may be required
to disclose the identity of the beneficial owner to the Nevada Gaming
Authorities. A failure to make such disclosure may be grounds for finding the
record holder unsuitable. The Company is also required to render maximum
assistance in determining the identity of the beneficial owner. The Nevada
Commission has the power to require the Company's stock certificates to bear a
legend indicating that the securities are subject to the Nevada Act. However,
to date, the Nevada Commission has not imposed such a requirement on the
Company.

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<PAGE>

The Company may not make a public offering of its securities without the
prior approval of the Nevada Commission if the securities or proceeds
therefrom are intended to be used to construct, acquire or finance gaming
facilities in Nevada, or to retire or extend obligations incurred for such
purposes. On March 20, 1997, the Nevada Commission granted the Company prior
approval to make offerings under a Shelf Registration for a period of two
years, subject to certain conditions ("Shelf Approval"). However, the Shelf
Approval may be rescinded for good cause without prior notice upon the
issuance of an interlocutory stop order by the Chairman of the Nevada Board
and must be renewed at the end of the two year approval period. The Shelf
Approval also applies to any affiliated company wholly-owned by the Company
(an "Affiliate") which is a publicly traded corporation or would thereby
become a publicly traded corporation pursuant to a public offering. The
Shelf Approval also includes approval for the Gaming Subsidiaries to
guarantee any security issued by, or to hypothecate their assets to secure
the payment or performance of any obligations issued by, the Company or an
Affiliate in a public offering under the Shelf Approval. The Shelf Approval
does not constitute a finding, recommendation or approval by the Nevada
Commission or the Nevada Board as to the accuracy or adequacy of the
prospectus or the investment merits of the securities offered. Any
representation to the contrary is unlawful. The exchange of the Old Notes
for the New Notes will qualify as a public offering (as such term is defined in
the Nevada Act) and will be made pursuant to the Shelf Approval.

The loss or restriction of the Company's Gaming Licenses in Nevada would
have a material adverse effect on its business and could require the Company to
cease gaming operations in Nevada. For a more detailed discussion of Nevada's
regulatory requirements, see the Company's Annual Report on Form 10-K for the
year ended March 31, 1997.

NEVADA LIQUOR REGULATIONS

The sale of alcoholic beverages at Palace Station and Boulder Station are
subject to licensing, control and regulation by the City of Las Vegas and the
Clark County Board, respectively. Texas Station is subject to licensing control
and regulation of the City of North Las Vegas. Sunset Station is subject to the
licensing, control and regulation of the City of Henderson. Barley's Casino is
subject to licensing control and regulation of the City of Henderson and the
Department of Treasury, Bureau of Alcohol, Tobacco and Firearms. All licenses
are revocable and are not transferable. The agencies involved have full power
to limit, condition, suspend or revoke any such license, and any such
disciplinary action could (and revocation would) have a material adverse effect
on the operations of the Gaming Subsidiaries.

MISSOURI GAMING REGULATIONS

Gaming was originally authorized in the State of Missouri and the City of
St. Charles on November 3, 1992, although no governmental action was taken to
enforce or implement the original law. On April 29, 1993, Missouri enacted the
Missouri Gaming Law which replaced the original law and established the Missouri
Gaming Commission, which is responsible for the licensing and regulation of
riverboat gaming in Missouri. The Missouri Gaming Commission has discretion to
approve gaming license applications for both permanently moored ("dockside")
riverboat casinos and powered ("excursion") riverboat casinos. On September 20,
1993, the Company filed its initial application with the Missouri Gaming
Commission for either a dockside or a cruising gaming license in St. Charles,
Missouri, which license was issued on May 27, 1994, thereby making the Company
one of the first two entrants in the Missouri riverboat gaming market.

However, due to both a January 25, 1994, ruling by the Missouri Supreme
Court which held that games of chance, including certain games authorized under
the Missouri Gaming Law such as bingo and keno, constitute "lotteries" and were
therefore prohibited under the Missouri Constitution and the failure of a state
wide election on April 5, 1994, to adopt a constitutional amendment that would
have exempted excursion boats and floating facilities from such constitutional
prohibition on lotteries, the Company commenced operations only with those games
which involve some element of skill ("limited gaming"), such as poker and
blackjack, that would be constitutionally permissible. The authorization of both
games of skill and games of chance ("full-scale gaming") occurred on November 9,
1994 with passage by Missouri voters of a constitutional amendment virtually
identical to the measure which was defeated on April 5, 1994. Full-scale gaming
became effective on December 9, 1994, and by the end of December 1994, the
Company was conducting full scale gaming on both its excursion and dockside
casinos in St. Charles, Missouri.

51
<PAGE>

Opponents of gaming in Missouri have brought several legal challenges to
gaming in the past and may possibly bring similar challenges in the future.
There can be no assurances that any future challenges, if brought, would not
further interfere with full-scale gaming operations in Missouri, including the
operations of the Company and its subsidiaries.

On January 16, 1997, the Missouri Gaming Commission granted Station Casino
Kansas City a Class A and Class B Excursion Gambling Boat license to own and
operate the River King and River Queen floating gaming facilities.

Under the Missouri Gaming Law, the ownership and operation of riverboat
gaming facilities in Missouri are subject to extensive state and local
regulation. By virtue of its gaming license in Missouri, the Company, any
subsidiaries it has or it may form and certain of its officers and employees are
subject to the Missouri Gaming Law and the regulations of the Missouri Gaming
Commission.

As part of the application and licensing process for a gaming license, the
applicant must submit detailed financial, operating and other reports to the
Missouri Gaming Commission. Each applicant has an ongoing duty to update the
information provided to the Missouri Gaming Commission in the application. In
addition to the information required of the applicant, directors, officers and
other key persons must submit Personal Disclosure Forms which include detailed
personal financial information and are subject to thorough investigations. All
gaming employees must obtain an occupational license issued by the Missouri
Gaming Commission. The operators' licenses are issued through application to
the Missouri Gaming Commission, which requires, among other things, (a)
investigations into an applicant's character, financial responsibility and
experience qualifications and (b) that applicants furnish (i) an affirmative
action plan for the hiring and training of minorities and women and (ii) an
economic development or impact report. License fees are a minimum of $50,000
for the initial application and $25,000 annually thereafter.

The Missouri Gaming Commission may revoke or suspend gaming licenses and
impose other penalties for violation of the Missouri Gaming Law and the rules
and regulations which may be promulgated thereunder, including, without
limitation, forfeiture of all gaming equipment used for improper gaming and
fines of up to three times an operator's highest daily gross adjusted receipts
during the preceding twelve months. The gaming licenses may not be transferred
nor pledged as collateral, and the Missouri Gaming Law regulations bar a
licensee from taking any of the following actions without 15 days' prior notice
to, and approval by, the Missouri Gaming Commission: any issuance of an
ownership interest of five percent or more of the issued and outstanding
ownership interest, any private incurrence of debt by the licensee or any
holding company of $1,000,000 or more, and any public issuance of debt by a
licensee or its holding company. The Missouri Gaming Commission may reopen the
licensing hearing of the applicable gaming licensee prior to or following the
consummation date to consider the effect of the transaction on the gaming
licensee's suitability. In addition, the licensee must notify the Missouri
Gaming Commission of other transactions, including the transfer of five percent
or more of an ownership interest in the licensee or holding company, the pledge
of five percent or more of the ownership interest in a license or holding
company, and any transaction of at least $1,000,000. The restrictions on
transfer of ownership apply to the Company and its subsidiaries.

The Missouri Gaming Law imposes operational requirements on riverboat
operators, including a charge of two dollars per gaming customer that licensees
must pay to the Missouri Gaming Commission, certain minimum payout requirements,
a 20% tax on adjusted gross receipts, prohibitions against providing credit to
gaming customers (except for the use of credit cards and cashing checks) and a
requirement that each licensee reimburse the Missouri Gaming Commission for all
costs of any Missouri Gaming Commission staff necessary to protect the public on
the licensee's riverboat. Licensees must also submit audited quarterly
financial reports to the Commission and pay the associated auditing fees. Other
areas of operation which are subject to regulation under Missouri rules are the
size, denomination and handling of chips and tokens; the surveillance methods
and computer monitoring of electronic games; accounting and audit methods and
procedures; and approval of an extensive internal control system. The Missouri
rules also require that all of an operator's purchases of chips, tokens, dice,
playing cards and electronic gaming devices must be acquired from suppliers
licensed by the Missouri Gaming Commission. The Missouri Gaming Law provides
for a loss limit of $500 per person per excursion and requires licensees to
maintain scheduled excursions with boarding and debarking times regardless of
whether the riverboat cruises. Although the Missouri Gaming Law provides no
limit on the amount of riverboat space that may be used for gaming, the Missouri
Gaming Commission is

52
<PAGE>

empowered to impose such space limitations through the adoption of rules and
regulations. Additionally, United States Coast Guard safety regulations could
affect the amount of riverboat space that may be devoted to gaming. The Missouri
Gaming Law also includes requirements as to the form of riverboats, which must
resemble Missouri's riverboat history to the extent practicable and include
certain non-gaming amenities. All eleven licensees in Missouri are authorized
to conduct all or a portion of their operations on a dockside basis.

With respect to the availability of dockside gaming, which may be more
profitable than excursion gaming, the Missouri Gaming Commission is empowered to
determine on a site-by-site basis where such gaming is appropriate and shall be
permitted.

LOUISIANA GAMING REGULATIONS

The Company, through SGSI and other subsidiaries, provides slot route
management services to numerous food and beverage establishments, commercial
businesses and major hotels and casinos in southern Nevada and Louisiana. In
July 1992, SGSI entered into a joint venture with a corporation owned by certain
Louisiana residents to form Southwest Gaming Services of Louisiana ("SGLA"), in
which SGSI owns a 49% equity interest.

The manufacture and distribution of video draw poker devices in Louisiana
and the ownership of video poker terminals ("Terminals") in Louisiana, are
subject to the Louisiana Draw Poker Control Law and the Rules and Regulations
promulgated thereunder (the "Louisiana Act") and to licensing and regulatory
control by the Louisiana Gaming Control Board and the Video Gaming Division of
the Gaming Enforcement Section of the Office of State Police within the
Louisiana Department of Public Safety and Corrections (the "Louisiana Gaming
Authorities"). The laws and regulations of the Louisiana Gaming Authorities are
based upon declarations of policy which are concerned with protecting the video
gaming industry from elements of organized crime, illegal gambling activities
and other harmful elements, and protection of the public from illegal and
unscrupulous gaming to ensure the fair play of devices.

SGLA has been granted a license as a Terminal owner by the Louisiana Gaming
Authorities. SGSI owns a 49% equity interest in SGLA, with the remaining 51%
interest owned by River Cities Gaming Corporation, a Louisiana corporation not
otherwise affiliated with the Company. The license held by SGLA is not
transferable and must be renewed annually through payment of fees.

The Louisiana Gaming Authorities may, upon compliance with certain
regulatory procedures, limit, condition, suspend or revoke the license of
SGLA for any cause deemed reasonable by such licensing agency. Fines for
violations of gaming laws or regulations may be levied against the licensees
and the persons involved. In addition, SGLA could be subject to fines for
each violation of the gaming laws. Suspension or revocation of any of the
licenses of SGLA could have a material adverse effect upon the business of
the Company.

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<PAGE>

Every person who has or controls more than a 5% ownership, income or profit
interest in an entity which has or applies for a license in accordance with the
provisions of the Louisiana Gaming Authorities, to exercise a significant
influence over the activities of a licensee must meet all suitability
requirements and qualifications for licensees. Thus, any holder of more than 10%
of the equity securities of the Company will be required to meet such
suitability requirements and qualifications. Frank J. Fertitta III, Blake L. and
Delise F. Sartini, and Lorenzo J. Fertitta have already obtained such requisite
licenses. The Louisiana Gaming Authorities may deny an application for licensing
for any cause which they deem reasonable. The Louisiana Gaming Authorities
require the submission of detailed personal and financial information followed
by a thorough investigation. The applicant for licensing must pay a filing fee
which also covers the cost of investigation. Determinations of suitability or of
questions pertaining to licensing are subject to review under the provisions of
Louisiana's Administrative Procedures Act.

In order for an entity such as a joint venture to be licensed by the
Louisiana Gaming Authorities, it must be demonstrated that a majority of the
interest in the joint venture is owned by persons who have been domiciled in
Louisiana for a period of a least two years prior to the date of the
application.

Terminals must meet strict specifications established by the Louisiana
Gaming Authorities. There are also restrictions on the number of Terminals that
can be operated at certain locations. Fees are paid to the Louisiana Gaming
Authorities based upon a percentage of net revenues from the operation of such
Terminals, together with license renewal fees payable quarterly and annually.

GENERAL GAMING REGULATIONS IN OTHER JURISDICTIONS

If the Company becomes involved in gaming operations in any other
jurisdictions, such gaming operations will subject the Company and certain of
its officers, directors, key employees, stockholders and other affiliates
("Regulated Persons") to strict legal and regulatory requirements, including
mandatory licensing and approval requirements, suitability requirements, and
ongoing regulatory oversight with respect to such gaming operations. Such legal
and regulatory requirements and oversight will be administered and exercised by
the relevant regulatory agency or agencies in each jurisdiction (the "Regulatory
Authorities"). The Company and the Regulated Persons will need to satisfy the
licensing, approval and suitability requirements of each jurisdiction in which
the Company seeks to become involved in gaming operations. These requirements
vary from jurisdiction to jurisdiction, but generally concern the
responsibility, financial stability and character of the owners and managers of
gaming operations as well as persons financially interested or involved in
gaming operations. In general, the procedures for gaming licensing, approval and
finding of suitability require the Company and each Regulated Person to submit
detailed personal history information and financial information to demonstrate
that the proposed gaming operation has adequate financial resources generated
from suitable sources and adequate procedures to comply with the operating
controls and requirements imposed by law and regulation in each jurisdiction,
followed by a thorough investigation by such Regulatory Authorities. In general,
the Company and each Regulated Person must pay the costs of such investigation.
An application for any gaming license, approval or finding of suitability may be
denied for any cause that the Regulatory Authorities deem reasonable. Once
obtained, licenses and approvals may be subject to periodic renewal and
generally are not transferable. The Regulatory Authorities may at any time
revoke, suspend, condition, limit or restrict a license, approval or finding of
suitability for any cause they deem reasonable. Fines for violations may be
levied against the holder of a license or approval and in certain jurisdictions,
gaming operation revenues can be forfeited to the state under certain
circumstances. There can be no assurance that the Company will obtain all of
the necessary licenses, approvals and findings of suitability or that its
officers, directors, key employees, other affiliates and certain other
stockholders will satisfy the suitability requirements in one or more
jurisdictions, or that such licenses, approvals and findings of suitability, if
obtained, will not be revoked or renewed in the future.

Failure by the Company to obtain, or the loss or suspension of, any
necessary licenses, approval or findings of suitability would prevent the
Company from conducting gaming operations in such jurisdiction and possibly in
other jurisdictions. The Company may be required to submit detailed financial
and operating reports to Regulatory Authorities.

54
<PAGE>

The laws, regulations and procedures pertaining to gaming are subject to
the interpretation of the Regulatory Authorities and may be amended. Any changes
in such laws, regulations, or their interpretations could have a material
adverse effect on the Company.

55
<PAGE>

MANAGEMENT

The following table sets forth the directors, executive officers and
certain key management personnel of the Company and certain of its subsidiaries
as of May 31, 1997. All directors hold their positions until the annual meeting
of stockholders at which their term expires or until their respective
successors are elected and qualified. Executive officers are elected by and
serve at the discretion of the Board of Directors until their successors are
duly chosen and qualified.

NAME AGE POSITION
---- --- --------

Frank J. Fertitta III* . . . 35 Chairman of the Board, President, Chief
Executive Officer and Director

Glenn C. Christenson . . . . 47 Executive Vice President, Chief
Financial Officer, Chief Administrative
Officer, Treasurer and Director

Blake L. Sartini*. . . . . . 37 Executive Vice President, Chief
Operating Officer and Director

Scott M. Nielson . . . . . . 39 Executive Vice President, General
Counsel and Secretary

Lorenzo J. Fertitta* . . . . 28 Director

Delise F. Sartini* . . . . . 37 Director

R. Hal Dean. . . . . . . . . 80 Director

Lowell H. Lebermann, Jr. . . 58 Director

- ----------
* Frank J. Fertitta III and Lorenzo J. Fertitta are brothers and Delise F.
Sartini is their sister. Delise F. Sartini is married to Blake L. Sartini.

FRANK J. FERTITTA III. Mr. Fertitta has served as Chairman of the Board of
the Company since February 1993, Chief Executive Officer since July 1992 and
President of the Company since 1989. He has held senior management positions
since 1985, when he was named General Manager of Palace Station Hotel & Casino,
a subsidiary of the Company ("Palace Station"). He was elected a director of
the company in 1986, at which time he was also appointed Executive Vice
President and Chief Operating Officer. In 1992, he co-founded St. Charles
Riverfront Station, Inc., a subsidiary of the Company ("Station Casino St.
Charles") and has served as Chairman of the Board of Directors of that company
since that time.

GLENN C. CHRISTENSON. Mr. Christenson was appointed Chief Administrative
Officer in March 1997 and has served as Executive Vice President of the Company
since February 1994. From 1989 to 1993, he served as Vice President. He has
served as Chief Financial Officer since 1989, as Treasurer since 1992 and as a
director since 1993. Mr. Christenson is a Certified Public Accountant. From
1983 to 1989, he was a partner of the international accounting firm of Deloitte
Haskins & Sells (now Deloitte & Touche), where he served as partner-in-charge of
audit services for the Nevada practice and National Audit partner for the
Hospitality Industry. Mr. Christenson has served on the Board of Directors of
the Nevada Resort Association and was Chairman of the Nevada Resort
Associations's Internal Revenue Service ("IRS") Liaison Committee.

BLAKE L. SARTINI. Mr. Sartini was appointed Chief Operating Officer in
March 1997 and has served as Executive Vice President since February 1994. From
February 1994 to March 1997 he also served as President-Nevada Operations of the
Company. From 1991 to 1993, he served as Vice President of Gaming Operations.
He has served as a director since 1993 and has over 14 years of experience in
the hotel and casino industry. From 1985 to 1990, Mr. Sartini held various
management positions at the Company and has served as President of Southwest
Gaming Services, Inc., a subsidiary of the Company ("Southwest Gaming") since
January 1993. In 1992, he co-founded Station Casino St. Charles and serves as
its Vice President.

56
<PAGE>

SCOTT M. NIELSON. Mr. Nielson was appointed Executive Vice President of
the Company in June 1994. In 1991 he was appointed General Counsel and in 1992
he was appointed Secretary of the Company. From 1991 through June 1994, he
served as Vice President of the Company. From 1986 to 1991, Mr. Nielson was in
private legal practice, most recently as a partner in the Las Vegas firm of
Schreck-Morris, (formerly known as Schreck, Jones, Bernhard, Woloson & Godfrey),
where he specialized in gaming law and land use planning and zoning. Mr.
Nielson is a member of the American Bar Association, the Nevada Bar Association
and the International Association of Gaming Attorneys.

LORENZO J. FERTITTA. Mr. Fertitta has served as a director of the Company
since 1991. He has served as President and Chief Executive Officer of Fertitta
Enterprises, Inc. since June 1993, where he is responsible for managing an
investment portfolio consisting of marketable securities and real property.
From time to time, the investment portfolio contains investments in other gaming
operations. Mr. Fertitta was a co-founder of Southwest Gaming in 1990 and of
Station Casino St. Charles in 1992 and has served on their respective boards
since their inception. From 1991 to 1993, he served as Vice President of the
Company.

DELISE F. SARTINI. Ms. Sartini was appointed a director of the company on
August 30, 1995. She has served as Vice President of Community Affairs at
Palace Station in excess of five years. Ms. Sartini was a co-founder of
Southwest Gaming in 1990 and of Station Casino St. Charles in 1992. Ms.
Sartini is involved in various charitable organizations and serves on the Board
of Directors of St. Jude's Ranch for Children.

R. HAL DEAN. Mr. Dean has served as a director of the Company since June
1993 and is chairman of the Human Resources Committee. Mr. Dean presently is a
member of the Board of Directors of LaBarge, Inc. (from 1984) in St. Louis.
Mr. Dean retired in 1982 from the Ralston Purina Company, having served 44 years
in various capacities including Chairman of the Board (1968-1982) and Chief
Executive Officer (1964-1982). Mr. Dean has served on several other Boards of
Directors including those of Gulf Oil Corp., Pittsburgh, Pennsylvania
(1970-1985), Chase Manhattan Bank International Advisory Group, New York, New
York (1965-1970), Mercantile Trust Co., St. Louis, Missouri (1969-1987), General
American Life Insurance Co., St. Louis, Missouri (1972-1987), Barnes Hospital,
St. Louis, Missouri (1979-1985) and Chevron Corp., San Francisco, California
(1985-1989).

LOWELL H. LEBERMANN, JR. Mr. Lebermann has served as a director of the
Company since October 1993 and is chairman of the Audit Committee. He is also a
director of Valero Energy Corporation, San Antonio, serving as a member of the
executive committee. He is a former director of Franklin Federal Bancorp,
Austin (now Norwest), and founding member of the board of directors of the Texas
Workers' Compensation Fund. He is president and CEO of Centex Beverages, Inc.,
wholesale distributor of Miller beer and imported beverages. Since 1993, he has
been a member of the Board of Regents of The University of Texas System. He was
a Council Member on the Austin City Council from 1971-1977.

57
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth as of May 31, 1997 certain information
regarding the shares of Common Stock beneficially owned by each stockholder who
is known by the Company to beneficially own in excess of 5% of the outstanding
shares of Common Stock, by each director and named executive officer and by all
executive officers and directors as a group.

NAME AND ADDRESS OF BENEFICIAL OWNER (1) NUMBER (2) PERCENT OF CLASS
---------------------------------------- ---------- -----------------

Frank J. Fertitta III . . . . . . . . . . . . . 5,764,268 16.0

Blake L. Sartini(3) . . . . . . . . . . . . . . 4,852,807 13.7

Lorenzo J. Fertitta . . . . . . . . . . . . . . 4,787,719 13.5

Delise F. Sartini(3) . . . . . . . . . . . . . 4,728,115 13.4

The Capital Group Companies(4). . . . . . . . . 3,317,830 9.4

Columbia Funds Management Company(5). . . . . . 2,176,600 6.2

Glenn C. Christenson . . . . . . . . . . . . . 172,335 *

Scott M. Nielson . . . . . . . . . . . . . . . 153,816 *

R. Hal Dean . . . . . . . . . . . . . . . . . . 41,765 *

Lowell H. Lebermann, Jr. . . . . . . . . . . . 18,500 *

Executive Officers and Directors as a Group 15,803,642 43.2
(8) persons)
---------------------------------
*Less than one percent

(1) Unless otherwise indicated in the footnotes to this table and subject to
the community property laws where applicable, each of the stockholders
named in this table has sole voting and investment power with respect to
the shares shown as beneficially owned. The address of each of the
stockholders named in this table is: c/o Station Casinos, Inc., 2411 West
Sahara Avenue, Las Vegas, Nevada 89102.

(2) Of the total number of shares reported in this table, the following are the
approximate number of vested options beneficially owned by each individual
in the table: Frank J. Fertitta III 742,410; Blake L. Sartini 137,124;
Delise F. Sartini 12,432; Lorenzo J. Fertitta 84,150; Glenn C.
Christenson 134,135; Scott M. Nielson 109,816; R. Hal Dean 20,000 and
Lowell H. Lebermann, Jr. 17,500.

(3) Reflects beneficial ownership shared by Blake and Delise Sartini. Blake
and Delise Sartini do not, however, share beneficial ownership of the
vested options reflected in note (2) and thus have different total
ownership figures.

(4) As reported in a Schedule 13G dated February 14, 1997 and filed with the
Securities and Exchange Commission. Beneficial ownership is disclaimed.
The Capital Group Companies, Inc. reports that it is the parent holding
company of a group of investment management companies which hold the
reported stock and that Capital Research and Management Company, one of
such subsidiaries, is the beneficial owner of 2,609,470 shares.
Includes 1,263,830 shares resulting from the assumed conversion of the
Company's convertible preferred stock.

(5) As reported in a Schedule 13G dated February 10, 1997 and filed with the
Securities and Exchange Commission. Beneficial ownership is disclaimed.
58
<PAGE>

DESCRIPTION OF CERTAIN INDEBTEDNESS AND CAPITAL STOCK

BANK FACILITY

The Company's secured, Amended and Restated Reducing Revolving Loan
Agreement, dated as of March 19, 1996, as amended June 27, 1997 (the
"Bank Facility"), is a reducing revolving credit facility which provides for
borrowings up to an aggregate principal amount of $368 million as of March
31, 1997, reducing to $360 million as of July 1, 1997. The Bank Facility is
secured by substantially all of the assets of Palace Station, Boulder
Station, Texas Station, Station Casino Kansas City and Station Casino St.
Charles (collectively, the "Borrowers"). The Company and SGSI guarantee the
borrowings under the Bank Facility (collectively the Guarantors"). The Bank
Facility matures on September 30, 2000 and available borrowings reduce
quarterly by varying amounts (including $10.0 million for each quarter ending
September 30, 1997, December 31, 1997, and March 31, 1998, and by
substantially higher amounts thereafter). Borrowings under the Bank Facility
bear interest at a margin above the bank's prime rate or the Eurodollar Rate,
as selected by the Company. The margin above such rates, and the fee on the
unfunded portions of the Bank Facility, will vary quarterly based on the
combined Borrower's and the Company's consolidated (exclusive of Sunset
Station) ratio of funded debt to earnings before interest, taxes,
depreciation and amortization ("EBITDA") adjusted for preopening expenses.
As of March 31, 1997, the Company's margin above the Eurodollar Rate on
borrowings under the Bank Facility is 2.0%. Such margin will increase to
2.75% if the maximum funded debt to EBITDA (adjusted for preopening expenses)
ratio is reached.

The Bank Facility contains certain financial and other covenants. These
include a maximum funded debt to EBITDA (adjusted for preopening expenses) ratio
for the Borrowers combined of 3.00 to 1.00 for each fiscal quarter through June
30, 1997, 2.75 to 1.00 for each fiscal quarter through June 30, 1998, and 2.50
to 1.00 for each fiscal quarter thereafter, a minimum fixed charge coverage
ratio for the preceding four quarters for the Borrowers combined of 1.35 to 1.00
for the periods March 31, 1996 through June 30, 1998, and 1.50 to 1.00 for
periods thereafter, a limitation on indebtedness, and limitations on capital
expenditures. As of March 31, 1997, the Borrowers funded debt to EBITDA ratio
was 1.97 to 1.00 and the fixed charge coverage ratio for the fiscal year ended
March 31, 1997 was 2.54 to 1.00. A tranche of the Bank Facility contains a
minimum tangible net worth requirement for Palace Station ($10 million plus 95%
of net income determined as of the end of each fiscal quarter with no reduction
for net losses) and certain restrictions on distributions of cash from Palace
Station to the Company. As of March 31, 1997, Palace Station's tangible net
worth exceeded the requirement by approximately $7 million. These covenants
limit Palace Station's ability to make payments to the Company, a significant
source of anticipated cash for the Company.

In addition, the Bank Facility has financial covenants relating to the
Company. These include prohibitions on dividends on or redemptions of the
Company's Common Stock, restrictions on repayment of any subordinated debt,
limitations on the incurrence of additional indebtedness, the Company's
senior subordinated notes and other specified indebtedness, minimum
consolidated tangible net worth requirements (adjusted upwards for post
October 1, 1995 preopening expenses, not to exceed $18 million and for
potential losses on disposed or discontinued assets, not to exceed $30
million), for the Company of $165 million plus 95% of post October 1, 1995
net income (not reduced by net losses) and 100% of net equity offering
proceeds, and limitations on capital expenditures and investments. As of
March 31, 1997, the Company's consolidated net worth exceeded the requirement
by approximately $20 million. In March and June 1997 the Company obtained
certain amendments to the Bank Facility in order to enhance its borrowing
capacity under its Bank Facility to fund the expansion strategy described
herein. As amended through June 1997, the Bank Facility includes a maximum
funded debt to EBITDA (adjusted for preopening expenses) ratio, including
annualized EBITDA (adjusted for preopening expenses) for any new venture, as
defined, open less than a year, for the Company on a consolidated basis of
5.00 to 1.00 for the fiscal quarter ending March 31, 1997, 5.75 to 1.00 for
the fiscal quarter ending June 30, 1997, 5.85 to 1.00 for the fiscal quarter
ending September 30, 1997, 5.75 to 1.00 for each fiscal quarter through March
31, 1998, 5.00 to 1.00 for the fiscal quarter ending June 30, 1998, 4.75 to
1.00 for the fiscal quarter ending September 30, 1998, 4.50 to 1.00 for the
fiscal quarter ending December 31, 1998, 4.25 to 1.00 for each fiscal quarter
through June 30, 1999, 4.00 to 1.00 for the fiscal quarter ending September
30, 1999 and 3.75 to 1.00 thereafter. As of March 31, 1997, the Company's
funded debt to EBITDA ratio was 4.54 to 1.00. Such consolidated calculations
for the Company do not include Sunset Station. In addition, the Bank
Facility prohibits the Company from holding cash and cash equivalents in
excess

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of the sum of the amounts necessary to make the next scheduled interest or
dividend payments on the Company's senior subordinated notes and preferred
stock, the amounts necessary to fund casino bankroll in the ordinary course of
business and $2.0 million. The Guarantors waive certain defenses and rights
including rights of subrogation and reimbursement. The Bank Facility contains
customary events of default and remedies and is cross-defaulted to the Company's
senior subordinated notes and the Change of Control Triggering Event as defined
in the indentures governing the senior subordinated notes.

The Company also obtained an amendment to the Bank Facility in May 1997
that permits the Company to form a wholly-owned limited partnership to enter
into a financing transaction to lease the two new gaming vessels under
construction at Station Casinos St. Charles pursuant to an operating lease.

SENIOR SUBORDINATED NOTES

The Company has $383.1 million, net of unamortized discount of $8.0
million, of senior subordinated notes outstanding as of March 31, 1997
(collectively the "Existing Senior Subordinated Notes"). $186.2 million of
Existing Senior Subordinated Notes bear interest, payable semi-annually, at a
rate of 9 5/8% per year and $196.8 million of Existing Senior Subordinated
Notes bear interest, payable semi-annually, at a rate of 10 1/8 % per year.
In April 1997, the Company issued the Old Notes, which rank PARI PASSU with
the Existing Senior Subordinated Notes. The indentures governing the
Existing Senior Subordinated Notes ("Existing Indentures") contain certain
customary financial and other covenants which prohibit the Company and its
subsidiaries from incurring indebtedness (including capital leases) other
than (a) non-recourse debt for certain specified subsidiaries, (b) certain
equipment financings, (c) the Notes, (d) up to $15 million of additional
indebtedness, (e) additional indebtedness if, after giving effect thereto, a
2.00 to 1.00 pro forma Consolidated Coverage Ratio (as defined) has been met,
(f) Permitted Refinancing Indebtedness (as defined), (g) borrowings of up to
$72 million under the Bank Facility, and (h) certain other indebtedness. At
March 31, 1997, the Company's Consolidated Coverage Ratio was 2.66 to 1.00.
In addition, the Existing Indentures prohibit the Company from paying
dividends on any of its capital stock unless at the time of and after giving
effect to such dividends, among other things, the aggregate amount of all
Restricted Payments and Restricted Investments (as defined in the Existing
Indentures, and which include any dividends on any capital stock of the
Company) do not exceed the sum of (i) 50% of Cumulative Consolidated Net
Income (as defined) of the Company (less 100% of any consolidated net
losses), (ii) certain net proceeds from the sale of equity securities of the
Company and (iii) $15 million. The limitation on the incurrence of
additional indebtedness and dividend restrictions in the Existing Indentures
may significantly affect the Company's ability to pay dividends on its
capital stock. The Existing Indentures also give the holders of the Existing
Senior Subordinated Notes the right to require the Company to purchase the
Existing Senior Subordinated Notes at 101% of the principal amount of the
Existing Senior Subordinated Notes plus accrued interest thereon upon a
Change of Control and Rating Decline (each as defined in the Exisiting
Indentures) of the Company.

SUNSET LOAN AGREEMENT, SUPPLEMENTAL LOAN AGREEMENT AND SUNSET OPERATING LEASE

On September 25, 1996, Sunset Station, a wholly-owned subsidiary of the
Company, entered into a Construction/Term Loan Agreement (the "Sunset Loan
Agreement") with Bank of America National Trust and Savings Association ("Bank
of America NT&SA"), Bank of Scotland, Societe Generale and each of the other
lenders party to such agreement, pursuant to which Sunset Station received a
commitment for $110 million to finance the remaining development and
construction costs of Sunset Station. The Company also entered into an
operating lease for certain furniture, fixtures and equipment with a cost of $40
million to be subleased to Sunset Station.

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is subject to prepayment subsequent to July 1998 by an amount equal to a
specified percentage of Excess Cash Flow (as defined). The Sunset Note carries
an interest rate of 375 basis points over the Eurodollar Rate (as defined in the
Sunset Loan Agreement). The Sunset Note is secured by substantially all of the
assets of Sunset Station, including a deed of trust with respect to the real
property on which Sunset Station is being constructed, a portion of which is
subject to a lease from the Company to Sunset Station, and the remainder of
which property is owned by Sunset Station, and a security agreement as to all
tangible and intangible personal property including Sunset Station's rights
under an operating lease for certain furniture, fixtures and equipment.

The Sunset Loan Agreement contains certain customary financial and other
covenants (related exclusively to Sunset Station) including a minimum fixed
charge coverage ratio as of the last day of any full quarter after the opening
of Sunset Station of not less than 1.10 to 1.00, a maximum senior funded debt to
EBITDA (adjusted for certain cash contributions or advances by the Company)
ratio after opening of 4.50 to 1.00 for the first full quarter reducing by 0.25
on certain quarters thereafter to 3.25 to 1.00 for the tenth quarter and each
quarter thereafter, and a minimum net worth as of any quarter end after opening
of not less then $52 million plus 80% of net income (not reduced by net losses)
for each quarter after opening, plus 100% of certain additional equity
contributions by the Company and Supplemental Loans (as defined). In addition,
the agreement places restrictions on indebtedness and guarantees, dividends,
stock redemptions, mergers, acquisitions, sale of assets or sale of stock in
subsidiaries and limitations on capital expenditures.

In addition, the Company has provided a funding commitment to Sunset
Station of up to an additional $25 million pursuant to a supplemental loan
agreement (the "Supplemental Loan Agreement"). The Sunset Loan Agreement
requires Sunset Station to draw amounts under the Supplemental Loan Agreement in
the event of the failure of certain financial covenants under the Sunset Loan
Agreement. Loans under this funding commitment may be drawn down beginning on
the last day of the first full calendar quarter ending after Sunset Station
opens for business in the amount of up to $10 million during the first year
after such date, up to $10 million during the second year after such date and up
to $5 million during the third year after such date. The Supplemental Loan
Agreement also provides for an additional, separate funding commitment up to $40
million in connection with a purchase option for certain furniture, fixtures and
equipment currently financed under the Sunset Operating Lease (as defined
herein). Sunset Station will pay interest at a rate per annum equal to the
three month Eurodollar Rate, the interest being payable solely in the form of
commensurate additions to the principal of the Supplemental Loans. The
Supplemental Loan Agreement expires in September 2001. The funding commitments
under the Supplemental Loan Agreement are subject to limitations imposed by the
Existing Indentures, the Indenture and the Bank Facility.

In order to manage the interest rate risk associated with the Sunset Note,
Sunset Station entered into an interest rate swap agreement with Bank of America
NT&SA. This agreement swaps the variable rate interest pursuant to the Sunset
Note to a fixed rate of 9.58% on $35 million notional amount as of January 1997
increasing to $60 million at March 1997, $90 million at June 1997, $100 million
at September 1997 and then decreasing to $95 million at June 1998. The
agreement expires in December 1998. The difference paid or received pursuant to
the swap agreement is accrued as interest rates change and recognized as an
adjustment to interest expense for the Sunset Note. Sunset Station is exposed
to credit risk in the event of non-performance by the counterparty to the
agreement. The Company believes the risk of non-performance by the counterparty
is minimal.

The Company has also entered into an operating lease for furniture,
fixtures and equipment (the "Equipment") with a cost of $40 million, dated as of
September 25, 1996 (the "Sunset Operating Lease") between the Company and First
Security Trust Company of Nevada. The Sunset Operating Lease expires in October
2000 and carries a lease rate of 225 basis points above the Eurodollar Rate.
The Company has entered into a sublease with Sunset Station for the Equipment
pursuant to an operating lease with financial terms substantially similar to the
Sunset Operating Lease. In the event that Sunset Station elects to purchase the
Equipment, the Company has provided a funding commitment up to the amount
necessary for such purchase pursuant to the Supplemental Loan Agreement
(subject to the limitations on funding contained in the Supplemental Loan
Agreement).

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In connection with the Sunset Operating Lease, the Company also entered
into a participation agreement, dated as of September 25, 1996 (the
"Participation Agreement") with the trustee, as lessor under the Sunset
Operating Lease, and holders of beneficial interests in the Lessor Trust (the
"Holders"). Pursuant to the Participation Agreement, the Holders will advance
funds to the trustee for the purchase by the trustee of, or to reimburse the
Company for the purchase, of the Equipment, which will then be leased to the
Company under the Sunset Operating Lease, and in turn subleased to Sunset
Station. Pursuant to the Participation Agreement, the Company also agreed to
indemnify the Lessor and the Holders against certain liabilities.

COMMON STOCK

The Company is authorized to issue up to 90,000,000 shares of its common
stock, $.01 par value per share (the "Common Stock"), 35,318,057 shares of which
were issued and outstanding as of March 31, 1997. Each holder of the Common
Stock is entitled to one vote for each share held of record on each matter
submitted to a vote of stockholders. Holders of the Common Stock have no
cumulative voting, conversion, redemption or preemptive rights or other rights
to subscribe for additional shares. Subject to any preferences that may be
granted to the holders of the Company's preferred stock, each holder of Common
Stock is entitled to receive ratably such dividends as may be declared by the
Board of Directors out of funds legally available therefor as well as any
distributions to the stockholders and, in the event of liquidation, dissolution
or winding up of the Company, is entitled to share ratably in all assets of the
Company remaining after payment of liabilities.

PREFERRED STOCK

The Company is authorized to issue up to 5,000,000 shares of its preferred
stock, $.01 par value per share (the "Preferred Stock"). In March 1996, the
Company completed an offering of 1,800,000 shares of $3.50 Convertible Preferred
Stock (the "Convertible Preferred Stock"). In April 1996, the underwriters
exercised the over allotment option of an additional 270,000 shares of the
Convertible Preferred Stock. The Board of Directors, without further action by
the holders of Common Stock or the Convertible Preferred Stock, may issue shares
of Preferred Stock in one or more series and may fix or alter the rights,
preferences, privileges and restrictions, including the voting rights,
redemption provisions (including sinking fund provisions), dividend rights,
dividend rates, liquidation rates, liquidation preferences, conversion rights
and the description and number of shares constituting any wholly unissued series
of Preferred Stock. Except as described above, the Board of Directors, without
further stockholder approval, may issue shares of Preferred Stock with rights
that could adversely affect the rights of the holders of Common Stock or the
Convertible Preferred Stock. The issuance of shares of Preferred Stock under
certain circumstances could have the effect of delaying or preventing a change
of control of the Company or other corporate action.

CONVERTIBLE PREFERRED STOCK

As of March 31, 1997, the Company has 2,070,000 shares of Convertible
Preferred Stock outstanding, each with a liquidation preference of $50.00 per
share plus an amount equal to any accumulated and unpaid dividends at the annual
rate of $3.50 per share, or 7.0% of such liquidation preference. Such dividends
accrue and are cumulative from the date of issuance and are payable quarterly.
The Convertible Preferred Stock is convertible at the option of the holder
thereof at any time, unless previously redeemed, into shares of Common Stock at
an initial conversion rate of 3.2573 shares of Common Stock for each share of
Convertible Preferred Stock, subject to adjustment in certain circumstances. The
Company may reduce the conversion price of the Convertible Preferred Stock by
any amount for any period of at least 20 days, so long as the decrease is
irrevocable during such period. The Convertible Preferred Stock is redeemable,
at the option of the Company, in whole or in part, for shares of Common Stock,
at any time after March 15, 1999, initially at a price of $52.45 per share of
Convertible Preferred Stock, and thereafter at prices decreasing annually to
$50.00 per share of Convertible Preferred Stock on and after March 15, 2006,
plus accrued and unpaid dividends. The Common Stock to be issued is determined
by dividing the redemption price by the lower of the average daily closing price
for the Company's Common Stock for the preceding 20 trading days or the closing
price of the

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Company's Common Stock on the first business day preceding the date of the
redemption notice. Any fractional shares would be paid in cash. There is no
mandatory sinking fund obligation with respect to the Convertible Preferred
Stock. The holders of the Convertible Preferred Stock do not have any voting
rights, except as required by applicable law and except that, among other
things, whenever accrued and unpaid dividends on the Convertible Preferred Stock
are equal to or exceed the equivalent of six quarterly dividends payable on the
Convertible Preferred Stock, the holders of the Convertible Preferred Stock,
voting separately as a class with the holders of any other series of parity
stock upon which like voting rights have been conferred and are exercisable,
will be entitled to elect two directors to the Board of Directors until dividend
arrearage has been paid or amounts have been set apart for such payment. The
Convertible Preferred Stock is senior to the Common Stock with respect to
dividends and upon liquidation, dissolution or winding-up.

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THE EXCHANGE OFFER

PURPOSE OF THE EXCHANGE OFFER; REGISTRATION RIGHTS

The Old Notes were sold by the Company on April 3, 1997 (the "Closing
Date") to BancAmerica Securities, Inc. (the "Initial Purchaser"). As a
condition to the sale of the Old Notes, the Company and the Initial Purchaser
entered into the Registration Rights Agreement on the Closing Date. This
Registration Statement, of which this Prospectus is part, is intended to satisfy
certain of the Company's obligations under the Registration Rights Agreement
summarized below.

Pursuant to the Registration Rights Agreement, the Company agreed to
file with the Commission the Exchange Offer Registration Statement on the
appropriate form under the Securities Act with respect to the New Notes.
Upon the effectiveness of the Exchange Offer Registration Statement, the
Company will offer to the Noteholders of Old Notes who are able to make
certain representations the opportunity to exchange their Old Notes for the
New Notes. If (i) the Company is not permitted to consummate the Exchange
Offer because the Exchange Offer is not permitted by applicable law or
Commission policy or (ii) any Noteholder notifies the Company within the
specified time period that (A) it is prohibited by law or Commission policy
from participating in the Exchange Offer or (B) that it may not resell the
New Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and the prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales or
(C) that it is a broker-dealer and owns Old Notes acquired directly from the
Company or an affiliate of the Company, the Company will file with the
Commission a Shelf Registration Statement to cover resales of the Old Notes
by the Noteholders who satisfy certain conditions relating to the provision
of information in connection with the Shelf Registration Statement.

The Registration Rights Agreement, as amended as of May 27, 1997,
provides that (i) the Company will file an Exchange Offer Registration
Statement with the Commission on or prior to July 2, 1997, (ii) the Company
will use its best efforts to have the Exchange Offer Registration Statement
declared effective by the Commission on or prior to August 31, 1997, (iii)
unless the Exchange Offer would not be permitted by applicable law or
Commission policy, the Company will commence the Exchange Offer and use its
best efforts to issue on or prior to 30 business days (or longer if required
by applicable law) after the date on which the Exchange Offer Registration
Statement was declared effective by the Commission, New Notes in exchange for
all Old Notes tendered prior thereto in the Exchange Offer and (iv) if
obligated to file the Shelf Registration Statement, the Company will use its
best efforts to file the Shelf Registration Statement with the Commission on
or prior to 60 days after such filing obligation arises and to cause the
Shelf Registration Statement to be declared effective by the Commission as
soon as practicable thereafter (and in any event by September 30, 1997;
provided that such period shall be extended if necessary to provide the
Company with 30 days notice of its filing obligation). If (a) the Company
fails to file any of the Registration Statements required by the Registration
Rights Agreement on or before the date specified for such filing, (b) any of
such Registration Statements is not declared effective by the Commission on
or prior to the date specified for such effectiveness (the "Effectiveness
Target Date"), or (c) the Company fails to Consummate the Exchange Offer
within 30 business days after the Effectiveness Target Date with respect to
the Exchange Offer Registration Statement, or (d) the Shelf Registration
Statement is declared effective but thereafter ceases to be effective or
usable in connection with resales of the Transfer Restricted Securities
during the periods specified in the Registration Rights Agreement (each such
event referred to in clauses (a) through (d) above a "Registration Default"),
then the Company will pay Liquidated Damages to each Noteholder, with respect
to the first 90-day period immediately following the occurrence of such
Registration Default in an amount equal to $.05 per week per $1,000 principal
amount of Old Notes held by such Holder. The amount of the Liquidated
Damages will increase by an additional $.05 per week per $1,000 principal
amount constituting Transfer Restricted Securities (as defined herein) with
respect to each subsequent 90-day period until all Registration Defaults have
been cured, up to a maximum amount of Liquidated Damages of $.15 per week per
$1,000 principal amount of Old Notes constituting Transfer Restricted
Securities. All accrued Liquidated Damages will be paid by the Company on
each Damages Payment Date to the Global Note Holder by wire transfer of
immediately available funds or by federal funds check and to Holders of
Certificated Securities by mailing checks to their registered addresses.
Following the cure of all Registration Defaults, the accrual of Liquidated
Damages will cease.

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TRANSFER RESTRICTED SECURITIES

For purposes of the foregoing, "Transfer Restricted Securities" means each
Old Note until (i) the date on which such Old Note has been exchanged by a
person other than a broker-dealer for a New Note in the Exchange Offer, (ii)
following the exchange by a broker-dealer in the Exchange Offer of an Old Note
for a New Note, the date on which such New Note is sold to a purchaser who
receives from such broker-dealer on or prior to the date of such sale a copy of
the prospectus contained in the Exchange Offer Registration Statement, (iii) the
date on which such Old Note has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement or (iv)
the date on which such Old Note may be distributed to the public pursuant to
Rule 144 or another applicable resale exemption under the Securities Act.

TERMS OF THE EXCHANGE OFFER

Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all the Old
Notes validly tendered and not withdrawn prior to the Expiration Date. As of
the date of this Prospectus, $150 million aggregate principal amount of the Old
Notes is outstanding. This Prospectus, together with the Letter of Transmittal,
is first being sent on or about Augsut 8, 1997, to all Noteholders known to the
Company. The Company's obligation to accept the Old Notes for exchange pursuant
to the Exchange Offer is subject to certain conditions as set forth under
" - Certain Conditions to the Exchange Offer" below. The Company will issue
$1,000 principal amount of New Notes in exchange for each $1,000 principal
amount of outstanding Old Notes accepted in the Exchange Offer. Noteholders may
tender some or all of their Old Notes pursuant to the Exchange Offer. See
" - Consequences of Failure to Exchange." However, the Old Notes may be tendered
only in integral multiples of $1,000.

The New Notes will evidence the same debt as the Old Notes for which they
are exchanged, and are entitled to the benefits of the Indenture. The form and
terms of the New Notes are the same as the form and terms of the Old Notes
except that the New Notes have been registered under the Securities Act and
hence will not bear legends restricting the transfer thereof.

Noteholders do not have any appraisal or dissenters' rights under the
Indenture in connection with the Exchange Offer. The Company intends to conduct
the Exchange Offer in accordance with the applicable requirements of Regulation
14E under the Exchange Act.

The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering
Noteholders for the purpose of receiving the New Notes from the Company.

If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, such unaccepted tenders of Old Notes will be returned, without
expense to the Noteholder thereof, as promptly as practicable after the
Expiration Date.

Noteholders whose Old Notes are not tendered or are tendered but not
accepted in the Exchange Offer will continue to hold such Old Notes and will be
entitled to all the rights and preferences and subject to the limitations
applicable thereto under the Indenture. Following consummation of the Exchange
Offer, the Noteholders will continue to be subject to the existing restrictions
upon transfer thereof and the Company will have no further obligation to such
Noteholders to provide for the registration under the Securities Act of the Old
Notes held by them. To the extent that Old Notes are tendered and accepted in
the Exchange Offer, the trading market for untendered and tendered but
unaccepted Old Notes could be adversely affected. See "Risk Factors -
Restrictions Upon Transfer of and Limited Trading Market for Old Notes."

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Noteholders who tender Old Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
" - Fees and Expenses; Solicitation of Tenders."

EXPIRATION DATE; EXTENSIONS; AMENDMENTS

The term "Expiration Date" shall mean 5:00 p.m., New York City time on
September 12, 1997, unless the Company extends the Exchange Offer, in which case
the term "Expiration Date" shall mean the date and time to which the Exchange
Offer is extended.

In order to extend the Expiration Date, the Company will notify the
Exchange Agent of any extension by oral or written notice, mail to the
registered Noteholders an announcement thereof and will make a release to the
Dow Jones News Services each prior to 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date.

The Company reserves the right at its sole discretion (i) to delay
accepting any Old Notes, (ii) to extend the Exchange Offer, (iii) to terminate
the Exchange Offer and not accept the Old Notes not previously accepted if any
of the conditions set forth below under " - Certain Conditions to the Exchange
Offer" shall have occurred and shall not have been waived by the Company, by
giving oral or written notice of such delay, extension or termination to the
Exchange Agent, or (iv) to amend the terms of the Exchange Offer in any manner.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof to the
Noteholders. If the Exchange Offer is amended in a manner determined by the
Company to constitute a material change, the Company will promptly disclose such
amendment by means of a Prospectus supplement that will be distributed to all
Noteholders, and the Company will extend the Exchange Offer for a period of five
to ten business days, depending upon the significance of the amendment and the
manner of disclosure to Noteholders, if the Exchange Offer would otherwise
expire during such five to ten business day period. During any extension of the
Expiration Date, all Old Notes previously tendered will remain subject to the
Exchange Offer and may be accepted for exchange by the Company.

The Company shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to the Dow Jones News Service.

INTEREST ON THE NEW NOTES

Interest accrues on the New Notes at the rate of 9 3/4% per annum and will
be payable in cash semiannually in arrears on each October 15 and April 15,
commencing October 15, 1997. No interest will be payable on the Old Notes on
the date of the exchange for the New Notes and therefore no interest will be
paid thereon to the Noteholders at such time.

PROCEDURES FOR TENDERING THE OLD NOTES

The tender to the Company of the Old Notes by a beneficial owner thereof as
set forth below and the acceptance by the Company thereof will constitute a
binding agreement between the tendering Noteholder and the Company upon the
terms and subject to the conditions set forth in this Prospectus and the Letter
of Transmittal.

Except as set forth below, a Noteholder who wishes to tender the Old
Notes for exchange pursuant to the Exchange Offer must transmit a properly
completed and duly executed Letter of Transmittal, including all other
documents required by such Letter of Transmittal, to the Exchange Agent at
one of the addresses set forth below under "Exchange Agent" on or prior to
the Expiration Date. In addition, (i) certificates for such Old Notes must
be received by the Exchange Agent along with the Letter of Transmittal, (ii)
a timely confirmation of a book-entry transfer (a "Book-Entry Confirmation")
of such Old Notes into the Exchange Agent's account at the Depository Trust
Company (the "Book-Entry Transfer Facility") pursuant to the procedure for
book-entry transfer described

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below, must be received by the Exchange Agent prior to the Expiration Date, or
(iii) the Noteholder must comply with the guaranteed delivery procedures
described below. THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE NOTEHOLDERS.
IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY
INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD
NOTES SHOULD BE SENT TO THE COMPANY.

Each signature on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (I) by a registered Noteholder who has not
completed the box entitled "Special Issuance Instructions" or the box entitled
"Special Delivery Instructions" in the Letter of Transmittal or (II) for the
account of an Eligible Institution (as defined below). In the event that a
signature on a Letter of Transmittal or a notice of withdrawal, as the case may
be, is required to be guaranteed, such guarantee must be by a firm which is a
member of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States or otherwise an "eligible
guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act
(collectively, "Eligible Institutions"). If the Old Notes are registered in the
name of a person other than the person signing the Letter of Transmittal, the
Old Notes surrendered for exchange must be endorsed by, or be accompanied by, a
written instrument or instruments of transfer or exchange, in satisfactory form
as determined by the Company in its sole discretion, duly executed by the
registered Noteholder with the signature thereon guaranteed by an Eligible
Institution.

If the Letter of Transmittal is signed by a person or persons other than
the registered Noteholder or Noteholders, such Old Notes must be endorsed by the
registered Noteholder with signature guaranteed by an Eligible Institution or
accompanied by appropriate powers of attorney with signature guaranteed by an
Eligible Institution, in either case signed exactly as the name or names of the
registered Noteholder or Noteholders that appear on the Old Notes.

If the Letter of Transmittal or any Old Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such person should so indicate when signing and, unless waived by the
Company, proper evidence satisfactory to the Company of its authority so to act
must be submitted with the Letter of Transmittal.

By tendering, each Noteholder will represent to the Company that, among
other things, (i) the New Notes acquired pursuant to the Exchange Offer are
being acquired in the ordinary course of business of the person receiving such
New Notes, whether or not such person is the Noteholder, (ii) neither the
Noteholder nor any such other person has an arrangement or understanding with
any person to participate in the distribution of such New Notes, (iii) if the
Noteholder is not a broker-dealer, or is a broker-dealer but will not receive
New Notes for its own account in exchange for the Old Notes, neither the
Noteholder nor any such other person is engaged in or intends to participate in
the distribution of such New Notes and (iv) neither the Noteholder nor any such
other person is an "affiliate," as defined under Rule 405 of the Securities Act,
of the Company. If the tendering Noteholder is a broker-dealer that will
receive New Notes for its own account in exchange for Old Notes that were
acquired as a result of market-making activities or other trading activities, it
will be required to acknowledge that it will deliver a Prospectus in connection
with any resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a Prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.

DELIVERY OF DOCUMENTS TO THE DEPOSITORY TRUST COMPANY OR THE COMPANY DOES
NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT

All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of the Old Notes tendered for exchange will be
determined by the Company in its sole discretion, which determination

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shall be final and binding. The Company reserves the absolute right to reject
any and all tenders of any particular Old Notes not properly tendered or to not
accept any particular Old Notes which acceptance might, in the judgment of the
Company or its counsel, be unlawful. The Company also reserves the absolute
right in its sole discretion to waive any defects or irregularities or
conditions of the Exchange Offer as to any particular Old Notes either before or
after the Expiration Date (including the right to waive the ineligibility of any
Noteholder who seeks to tender Old Notes in the Exchange Offer). The
interpretation of the terms and conditions of the Exchange Offer as to any
particular Old Notes either before or after the Expiration Date (including the
Letter of Transmittal and instructions thereto) by the Company shall be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with the tenders of Old Notes for exchange must be cured within such
reasonable period of time as the Company shall determine. Neither the Company,
the Exchange Agent nor any other person shall be under any duty to give
notification of any defect or irregularity with respect to any tender of Old
Notes for exchange, nor shall any of them incur any liability for failure to
give such notification.

ACCEPTANCE OF THE OLD NOTES FOR EXCHANGE; DELIVERY OF THE NEW NOTES

Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Company will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the New Notes promptly after acceptance of the
Old Notes. See " - Certain Conditions to the Exchange Offer" below. For
purposes of the Exchange Offer, the Company shall be deemed to have accepted
properly tendered Old Notes for exchange when, and if the Company has given oral
or written notice thereof to the Exchange Agent.

In all cases, issuance of the New Notes for the Old Notes that are accepted
for exchange pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of certificates for such Old Notes or a timely
Book-Entry Confirmation of such Old Notes into the Exchange Agent's account at
the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, a properly completed and duly executed Letter of Transmittal
and all other required documents. If any tendered Old Notes are not accepted
for any reason set forth in the terms and conditions of the Exchange Offer or if
certificates representing the Old Notes are submitted for a greater principal
amount than the Noteholder desires to exchange, such unaccepted or non-exchanged
Old Notes will be returned without expense to the tendering Noteholder thereof
(or, in the case of Old Notes tendered by book-entry transfer into the Exchange
Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry
transfer procedures described below, such non-exchanged Old Notes will be
credited to an account maintained with such Book-Entry Transfer Facility) as
promptly as practicable after the expiration or termination of the Exchange
Offer.

BOOK-ENTRY TRANSFER

The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer promptly after the date of this Prospectus. Any financial
institution that is a participant in the Book-Entry Transfer Facility's systems
may make book-entry delivery of the Old Notes by causing the Book-Entry Transfer
Facility to transfer such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's Automated Tender Offer Program ("ATOP") procedures for transfer.
However, the exchange for the Old Notes so tendered will only be made after
timely confirmation of such book-entry transfer of Old Notes into the Exchange
Agent's account, and timely receipt by the Exchange Agent of an Agent's Message
(as such term is defined in the next sentence) and any other documents required
by the Letter of Transmittal on or prior to the Expiration Date or pursuant to
the guaranteed delivery procedures described below. The term "Agent's Message"
means a message, transmitted by the Book-Entry Transfer Facility and received by
the Exchange Agent and forming a part of a Book-Entry Confirmation, which states
that the Book-Entry Transfer Facility has received an express acknowledgement
from a participant tendering Old Notes that are the subject of such Book-Entry
Confirmation that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal, and that the Company may enforce such
agreement against such participant.

GUARANTEED DELIVERY PROCEDURES

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If a registered Noteholder of the Old Notes desires to tender such Old
Notes and the Old Notes are not immediately available, or time will not permit
such Noteholder's Old Notes or other required documents to reach the Exchange
Agent before the Expiration Date, or the procedure for book-entry transfer
cannot be completed on a timely basis, a tender may be effected if (i) the
tender is made through an Eligible Institution, (ii) prior to the Expiration
Date, the Exchange Agent receives from such Eligible Institution a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) and
Notice of Guaranteed Delivery, substantially in the form provided by the Company
(by telegram, telex, facsimile transmission, mail or hand delivery), setting
forth the name and address of the Noteholder and the amount of Old Notes
tendered, stating that the tender is being made thereby and guaranteeing that
within five New York Stock Exchange ("NYSE") trading days after the date of
execution of the Notice of Guaranteed Delivery, the certificates of all
physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and any other documents required by the Letter
of Transmittal will be deposited by the Eligible Institution with the Exchange
Agent, and (iii) the certificates for all physically tendered Old Notes, in
proper form for transfer, or a Book-Entry Confirmation, as the case may be, and
all other documents required by the Letter of Transmittal, are received by the
Exchange Agent within five NYSE trading days after the date of execution of the
Notice of Guaranteed Delivery.

WITHDRAWAL RIGHTS

Tenders of the Old Notes may be withdrawn at any time prior to the
Expiration Date.

For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at one of the addresses set forth below under
"Exchange Agent." Any such notice of withdrawal must specify the name of the
person having tendered the Old Notes to be withdrawn, identify the Old Notes to
be withdrawn (including the principal amount of such Old Notes), and (where
certificates for Old Notes have been transmitted) specify the name in which such
Old Notes are registered, if different from that of the withdrawing Noteholder.
If certificates for Old Notes have been delivered or otherwise identified to the
Exchange Agent, then, prior to the release of such certificates, the withdrawing
Noteholder must also submit the serial numbers of the particular certificates to
be withdrawn and a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution unless such Noteholder is an Eligible Institution. If Old
Notes have been tendered pursuant to the procedure for book-entry transfer
described above, any note of withdrawal must specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Old Notes and otherwise comply with the procedures of such facility. All
questions as to the validity, form and eligibility (including time of receipt)
of such notices will be determined by the Company, whose determination shall be
final and binding on all parties. Any Old Notes so withdrawn will be deemed not
to have been validly tendered for exchange for purposes of the Exchange Offer.
Any Old Notes which have been tendered for exchange but which are not exchanged
for any reason will be returned to the Noteholder thereof without cost to such
Noteholder (or, in the case of Old Notes tendered by book-entry transfer
procedures described above, such Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility for the Old Notes) as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Old Notes may be retendered by following one of the
procedures described under "Procedures for Tendering the Old Notes" above at any
time on or prior to the Expiration Date.

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CERTAIN CONDITIONS TO THE EXCHANGE OFFER

Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer, if at any time
before the acceptance of such Old Notes for exchange or the exchange of the New
Notes for such Old Notes, there shall be threatened, instituted or pending any
action or proceeding before, or any injunction, order or decree shall have been
issued by, any court or governmental agency or other governmental regulatory or
administrative agency or commission (i) seeking to restrain or prohibit the
making or consummation of the Exchange Offer or any other transaction
contemplated by the Exchange Offer, or assessing or seeking any damages as a
result thereof, or (ii) resulting in a material delay in the ability of the
Company to accept for exchange or exchange some or all of the Old Notes pursuant
to the Exchange Offer; or any statute, rule, regulation, order or injunction
shall be sought, proposed, introduced, enacted, promulgated or deemed applicable
to the Exchange Offer or any of the transactions contemplated by the Exchange
Offer by any government or governmental authority, domestic or foreign, or any
action shall have been taken, proposed or threatened, by any government,
governmental authority, agency or court, domestic or foreign, that in the sole
judgment of the Company might directly or indirectly result in any of the
consequences referred to in clause (i) or (ii) above or, in the sole judgment of
the Company, might result in the holders of New Notes having obligations with
respect to resales and transfers of New Notes which exceed those described
herein, or would otherwise make it inadvisable to proceed with the Exchange
Offer.

If the Company determines in good faith that any of the conditions are not
met, the Company may (i) refuse to accept any Old Notes and return all tendered
Old Notes to exchanging Noteholders, (ii) extend the Exchange Offer and retain
all Old Notes tendered prior to the expiration of the Exchange Offer, subject,
however, to the rights of Noteholders to withdraw such Old Notes (see
" - Withdrawal Rights") or (iii) waive certain of such unsatisfied conditions
with respect to the Exchange Offer and accept all properly tendered Old Notes
which have not been withdrawn or revoked. If such waiver constitutes a material
change to the Exchange Offer, the Company will promptly disclose such waiver by
means of a Prospectus supplement that will be distributed to all Noteholders.

Noteholders have certain rights and remedies against the Company under the
Registration Rights Agreement, including liquidated damages of up to $.05 per
week per $1,000 principal amount of Old Notes, should the Company fail to
consummate the Exchange Offer within a certain period of time, notwithstanding a
failure due to the occurrence of any of the conditions stated above. Such
conditions are not intended to modify those rights or remedies in any respect.

The foregoing conditions are for the benefit of the Company and may be
asserted by the Company in good faith regardless of the circumstances giving
rise to such condition or may be waived by the Company in whole or in part at
any time and from time to time in its discretion. The failure by the Company
at any time to exercise the foregoing rights shall not be deemed a wavier of
any such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time.

EXCHANGE AGENT

First Union National Bank has been appointed as Exchange Agent
for the Exchange Offer. Questions and requests for assistance, requests for
additional copies of this Prospectus or of the Letter of Transmittal should
be directed to the Exchange Agent addressed as follows:

BY REGISTERED OR CERTIFIED MAIL; BY OVERNIGHT COURIER; OR BY HAND.
First Union National Bank
Corporate Trust Reorg. Dept.
1525 West W.T. Harris Blvd.
Charlotte, NC 28288-1153
Attention: Mike Klotz
Telephone: (704) 590-7408
Facsimile: (704) 590-7628

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DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY

FEES AND EXPENSES; SOLICITATION OF TENDERS

The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.

The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith.

The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be $250,000
which includes fees and expenses of the Exchange Agent and Trustee and
accounting and legal fees.

The Company will pay all transfer taxes, if any, applicable to the exchange
of the Old Notes pursuant to the Exchange Offer. If, however, certificates
representing the New Notes or the Old Notes for principal amounts not tendered
or accepted for exchange are to be delivered to, or are to be registered or
issued in the name of, any person other than the registered Noteholders
tendered, or if a transfer tax is imposed for any reason other than the exchange
of the Old Notes pursuant to the Exchange Offer, then the amount of any such
transfer taxes (whether imposed on the registered holder or any other persons)
will be payable by the tendering Noteholder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted to the Exchange
Agent, the amount of such transfer taxes will be billed directly to such
tendering Noteholder.

No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this Prospectus. If given or made, such information or representations
should not be relied upon as having been authorized by the Company. Neither the
delivery of this Prospectus nor any exchange made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the respective dates as of which information is
given herein. The Exchange Offer is not being made to (nor will tenders be
accepted from or on behalf of) Noteholders in any jurisdiction in which the
making of the Exchange Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction.

ACCOUNTING TREATMENT

The New Notes will be recorded by the Company at the same carrying value as
the Old Notes, which is face value, as recorded in the Company's accounting
records on the date of the exchange. Accordingly, no gain or loss for
accounting purposes will be recognized. The costs of the Exchange Offer will be
expensed over the term of the New Notes.

CONSEQUENCES OF FAILURE TO EXCHANGE

Noteholders who do not exchange their Old Notes for New Notes pursuant to
the Exchange Offer will continue to be subject to the restrictions on transfer
of such Old Notes as set forth in the legend thereon. In general, the Old Notes
may not be offered or sold, unless registered under the Securities Act, except
pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Company does not
intend to register the Old Notes under the Securities Act. The Company believes
that, based upon interpretations contained in no-action letters issued to third
parties by the staff of the Commission,

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the New Notes issued pursuant to the Exchange Offer in exchange for the Old
Notes may be offered for resale, resold or otherwise transferred by Noteholders
thereof (other than any such Noteholder which is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) without compliance with
the registration and prospectus delivery provisions of the Securities Act,
provided that such New Notes are acquired in the ordinary course of such
Noteholders' business and such Noteholders have no arrangement with any person
to participate in the distribution of such Old Notes, and provided, further,
that each broker-dealer that receives New Notes for its own account in exchange
for Old Notes must acknowledge that it will deliver a Prospectus in connection
with any resale of such New Notes. See "Plan of Distribution." If any
Noteholder (other than a broker-dealer described in the preceding sentence) has
any arrangement or understanding with respect to the distribution of the New
Notes to be acquired pursuant to the Exchange Offer, such Noteholder (i) could
not rely on the applicable interpretations of the staff of the Commission and
(ii) must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. In addition, to
comply with the securities laws of certain jurisdictions, if applicable, the New
Notes may not be offered or sold unless they have been registered or qualified
for sale in such jurisdiction or an exemption from registration or qualification
is available and is complied with.

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DESCRIPTION OF THE NEW NOTES

The Old Notes were issued and the New Notes are to be issued under the
Indenture dated as of April 3, 1997 between SCI, as issuer, and First Union
National Bank, as Trustee (the "Indenture"). The form and terms of the New
Notes will be substantially identical to those of the Old Notes except that the
New Notes will have been registered under the Securities Act and hence are not
subject to certain transfer restrictions, registration rights and related
liquidated damages applicable to the Old Notes. The Old Notes and the New Notes
are referred to collectively as the "Notes". The following summary includes a
description of all material provisions of the Indenture. The summary of the
Indenture and of the related documents hereunder, however, does not purport to
be complete and is subject to, and qualified in its entirety by reference to,
all of the provisions of the Indenture and related documents, including the
definitions contained therein of certain terms and those terms made part of the
Indenture by reference to the Trust Indenture Act of 1939 as in effect on the
date of the Indenture. Capitalized terms used herein and not otherwise defined
in this Prospectus have the meanings ascribed to them in the Indenture.

GENERAL

The New Notes will be issued in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. The New Notes will be
unsecured general obligations of the Company, limited to $150,000,000 aggregate
principal amount, and will mature on April 15, 2007. As of the date of the
Indenture, all of the Company's Subsidiaries will be Restricted Subsidiaries
except for SSI, which the Company has designated as an Unrestricted Subsidiary.
Under certain circumstances, the Company will be able to designate certain
additional current or future Subsidiaries as Unrestricted Subsidiaries.
Unrestricted Subsidiaries will not be subject to many of the restrictive
covenants set forth in the Indenture. See "Description of Certain Indebtedness
and Capital Stock - Sunset Loan Agreement, Supplemental Loan Agreement and
Sunset Operating Lease."

INTEREST ON THE NEW NOTES

The New Notes will pay interest semiannually at a rate of 9 3/4% per annum
from the date of original issuance of the Old Notes until maturity.

Interest on the New Notes will accrue from the date of original issuance of
the Old Notes. Interest on the New Notes will be payable on October 15 and
April 15 of each year, commencing October 15, 1997 to the person in whose name
the New Note is registered (a "Holder") at the close of business on the
preceding October 1 or April 1, as the case may be.

Principal of and interest on the New Notes are payable at the offices of
the Paying Agent for the New Notes, located at the principal corporate offices
of the Trustee, PROVIDED that the payment of interest may be made at the
Company's option by check mailed to a Holder's registered address. The New
Notes are transferable at the offices of the Registrar for the New Notes,
located at the principal corporate offices of the Trustee.

CERTAIN DEFINITIONS

Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.

"AFFILIATE" of any specified person means any other person (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified person, (ii)
which directly or indirectly through one or more intermediaries beneficially
owns or holds 10% or more of any class of the Voting Stock of such specified
person (or a 10% or greater equity interest in such person

<PAGE>

which is not a corporation) or (iii) of which 10% or more of any class of the
Voting Stock (or, in the case of a person which is not a corporation, 10% or
more of the equity interest) is beneficially owned or held directly or
indirectly through one or more intermediaries by such person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a person, whether
through the ownership of voting securities, by contract or otherwise.

"AMORTIZATION EXPENSE" means, for any period, amounts recognized during
such period as amortization of all goodwill and other assets classified as
intangible assets in accordance with GAAP.

"AVERAGE LIFE" means, as of the date of determination, with reference to
any Indebtedness, the quotient obtained by dividing (i) the sum of the products
of the number of years from the date of determination to the dates of each
successive scheduled principal payment of such Indebtedness multiplied by the
amount of such principal payment by (ii) the sum of all such principal payments.

"BANK FACILITY" means the Reducing Revolving Loan Agreement dated as of
July 5, 1995, by and among PSHC, BSI, TSI, Bank of Scotland and Societe
Generale, as co-agents, Bank of America National Trust and Savings
Association, as managing agent and certain lenders named therein, as amended,
modified or refinanced from time to time, provided that the managing agent
for the lenders under such refinancing is a banking institution with over
$500 million in assets and subject to supervision and examination by federal
or state banking authorities.

"BSI" means Boulder Station, Inc.

"CAPITAL LEASE OBLIGATIONS" of a person means any obligation that is
required to be classified and accounted for as a capital lease on the face of a
balance sheet of such person prepared in accordance with GAAP; the amount of
such obligation shall be the capitalized amount thereof, determined in
accordance with GAAP; the stated maturity thereof shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty; and such obligation shall be deemed secured by a Lien on any property
or assets to which such lease relates.

"CAPITAL STOCK" means, with respect to any person, any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents (including partnerships or partnership interests) or ownership
interests (however designated) of such person, including each class of common
stock and preferred stock of such person, but excluding convertible
Indebtedness.

"CHANGE OF CONTROL" means an event or series of events by which (i) the
Company sells, conveys, transfers or leases, directly or indirectly, all or
substantially all of the properties and assets of the Company and its Restricted
Subsidiaries to any person, corporation, entity or group, (ii) any "person" (as
such term is used in Section 13(d) and 14(d) of the Exchange Act) (other than
the Existing Equity Holders) is or becomes the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly of securities representing 40% or
more of the combined voting power of the Company's Voting Stock and at such time
as the Existing Equity Holders together shall fail to beneficially own, directly
or indirectly, securities representing at least the same percentage of the
combined voting power of the Company's Voting Stock as is "beneficially owned"
by such "person," (iii) the Company consolidates with or merges into another
corporation, or any corporation consolidates with or merges into the Company, in
either event pursuant to a transaction in which the outstanding Voting Stock of
the Company is changed into or exchanged for cash, securities or other property,
other than any such transactions between the Company and its wholly-owned
Restricted Subsidiaries, with the effect that any "person" (other than the
Existing Equity Holders) becomes the "beneficial owner," directly or indirectly,
of securities representing 40% or more of the combined voting power of the
Company's Voting Stock and at such time as the Existing Equity Holders together
shall fail to beneficially own, directly or indirectly, securities representing
at least the same percentage of the combined voting power

<PAGE>

of the Company's Voting Stock as is "beneficially owned" by such "person," (iv)
during any period of 24 consecutive months, individuals who at the beginning of
such period constituted the Company's Board of Directors (together with any new
or replacement directors whose election by the Company's Board of Directors, or
whose nomination for election by the Company's stockholders, was approved by a
vote of at least a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the directors then in office or (v) the Company shall, as a result
of any transaction or series of transactions, cease to own all of the
outstanding Capital Stock of, or all or substantially all of the assets of PSHC,
BSI, SCRSI, SGSI and SWSI; provided that no Change of Control shall be deemed to
occur if the Company sells, in one transaction or a series of transactions,
stock or assets of such Subsidiaries having an aggregate book value, determined
in accordance with GAAP and net of related debt, which is less than 5% of the
aggregate book value of the net assets of the Company and its consolidated
Restricted Subsidiaries, determined in accordance with GAAP. The meaning of the
term "all or substantially all of its properties and assets" is not determinable
with absolute certainty. Such term is likely to be interpreted by reference to
applicable state law in effect at the relevant time and the interpretation will
be dependent upon the facts and circumstances existing at that time. It is
therefore possible that Holders and the Company (or different holders) will
disagree as to whether or not a Change of Control or Change of Control
Triggering Event has occurred.

"CHANGE OF CONTROL TRIGGERING EVENT" is defined as the occurrence of both
(i) a Change of Control and (ii) a Rating Decline.

"COMPLETION GUARANTEE AND KEEP-WELL AGREEMENT" means (i) the guarantee by
the Company or a Restricted Subsidiary of the completion of the development,
construction and opening of a new gaming facility by an Affiliate of the
Company, (ii) the agreement by the Company or a Restricted Subsidiary to advance
funds, property or services on behalf of an Affiliate of the Company in order to
maintain the financial condition of such Affiliate in connection with the
development, construction and opening of a new gaming facility by such Affiliate
and (iii) performance bonds incurred in the ordinary course of business;
provided that, in the case of clauses (i) and (ii) above, such guarantee or
agreement is entered into in connection with obtaining financing for such gaming
facility or is required by a Gaming Authority.

"CONSOLIDATED COVERAGE RATIO" means, for any period, for any person, the
ratio of the aggregate amount of Operating Cash Flow of such person for such
period to the aggregate amount of Consolidated Interest Expense of such person
for such period.

"CONSOLIDATED INTEREST EXPENSE" means, for any period, the total interest
expense of a person and its consolidated Restricted Subsidiaries, including (i)
interest expense attributable to Capital Lease Obligations, (ii) amortization of
debt discount, (iii) capitalized interest, (iv) cash and noncash interest
payments, (v) commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing, (vi) net costs
under Interest Rate Protection Agreements (including amortization of discount)
and (vii) interest expense in respect of obligations of other persons deemed to
be Indebtedness of the Company or its Restricted Subsidiaries under clause (v)
or (vi) of the definition of Indebtedness.

"CONSOLIDATED NET INCOME" means, for any period, the net income of a person
and its consolidated Restricted Subsidiaries determined on a consolidated basis
in accordance with GAAP; provided, however, that there shall not be included in
such Consolidated Net Income: (i) any net income (loss) of any person if such
person is not a Restricted Subsidiary, except that (A) the Company's equity in
the net income of any such person (including, without limitation, an
Unrestricted Subsidiary) for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash actually distributed by such
person during such period to the Company or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution to a Restricted Subsidiary, to the limitations contained in clause
(iii) below); and (B) the Company's equity in the net loss of any such person
for such period shall be included in determining such Consolidated Net Income
(subject, with respect to the net loss of an Unrestricted Subsidiary, to clause
(vi) below); (ii) any net income (loss) of any person acquired by the Company or
a Restricted Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition; (iii) any net income (loss)

<PAGE>

of any Restricted Subsidiary if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making
of distributions by such Restricted Subsidiary, directly or indirectly, to the
Company, except that (A) the Company's equity in the net income of any such
Restricted Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash which could have been distributed by
such Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution to another Restricted Subsidiary, to the
limitation contained in this clause) unless at the time of computation no cash
would be permitted to be distributed and (B) the Company's equity in the net
loss of any such Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income; (iv) any gain or loss realized upon
the sale or other disposition of any property, plant or equipment of the Company
or its consolidated Restricted Subsidiaries which is not sold or otherwise
disposed of in the ordinary course of business and any gain or loss realized
upon the sale or other disposition of any Capital Stock of any person; (v) the
cumulative effect of a change in accounting principles; and (vi) the net loss of
any Unrestricted Subsidiary.

"CONSOLIDATED NET WORTH" of any person means the total of the amounts shown
on the balance sheet of such person and its consolidated Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP, as of
any date selected by the Company not more than 90 days prior to the taking of
any action for the purpose of which the determination is being made (and
adjusted for any material events since such date), as (i) the par or stated
value of all outstanding Capital Stock plus (ii) paid-in capital or capital
surplus relating to such Capital Stock plus (iii) any retained earnings or
earned surplus, less (A) any accumulated deficit, (B) any amounts attributable
to Redeemable Stock and (C) any amounts attributable to Exchangeable Stock.

"DESIGNATED SENIOR INDEBTEDNESS" shall mean each issue of Senior
Indebtedness that (i) has an outstanding principal amount of at least
$25,000,000 (including the amount of all reimbursement obligations pursuant to
letters of credit thereunder and the maximum principal amount available to be
drawn thereunder, assuming in the case of the Bank Facility that all conditions
precedent to any such drawing could be satisfied) and (ii) has been designated
as Designated Senior Indebtedness pursuant to an Officer's Certificate of the
Company received by the Trustee.

"EXCHANGEABLE STOCK" means any Capital Stock of a corporation that is
exchangeable or convertible into another security (other than into Capital Stock
of such corporation that is neither Exchangeable Stock or Redeemable Stock).

"EXISTING EQUITY HOLDERS" means Frank J. Fertitta III, Blake L. Sartini,
Delise F. Sartini, Lorenzo J. Fertitta, Glenn C. Christenson, Joseph J. Canfora,
Scott M. Nielsen and the Former Equity Holder and their executors,
administrators or the legal representatives of their estates, their heirs,
distributees and beneficiaries, any trust as to which any of the foregoing is a
settlor or co-settlor and any corporation, partnership or other entity which is
an Affiliate of any of the foregoing. Existing Equity Holders shall also mean
any lineal descendants of such persons, but only to the extent that the
beneficial ownership of the Voting Stock held by such lineal descendants was
directly received (by gift, trust or sale) from any such person.

"EXISTING INDEBTEDNESS" means the following: (i) Note payable to Primerit
Bank, dated as of September 23, 1994 in the original principal amount of
approximately $5.5 million, (ii) Promissory Note secured by a Deed of Trust
payable to PH Property Development Company, dated as of September 12, 1995 in
the original principal amount of approximately $6.2 million, (iii) Note payable
to GE Capital Corp., amended and restated as of May 31, 1995 in the original
principal amount of approximately $16 million, (iv) Note payable to CIT Group
Financing, dated as of October 21, 1994 in the original principal amount of
approximately $10 million, (v) Note payable to Brad Pederson, dated as of
October 1992 in the original principal amount of approximately $400,000 and (vi)
Promissory Note payable to GE Capital, dated as of March 20, 1992 in the
original principal amount of approximately $1.5 million, in each case, existing
as of the date of the Indenture.

<PAGE>

"EXISTING SENIOR SUBORDINATED NOTES" means the $110,000,000 9 5/8% Senior
Subordinated Notes of the Company Due 2003, the $83,000,000 9 5/8% Senior
Subordinated Notes of the Company Due 2003 and the $198,000,000 10 1/8% Senior
Subordinated Notes of the Company Due 2006.

"FF&E FINANCING" means Indebtedness which is non-recourse to the borrower,
the proceeds of which will be used to finance the acquisition or lease by the
Company or its Restricted Subsidiaries of furniture, fixtures or equipment
("FF&E") used in the operation of its business and secured by a Lien on such
FF&E.

"FORMER EQUITY HOLDER" means Frank J. Fertitta, Jr.

"GAAP" means generally accepted accounting principles as in effect in the
United States on the date that the Old Notes were issued.

"GAMING AUTHORITY" means the Nevada Gaming Commission, the Nevada Gaming
Control Board or any agency of any state, county, city or other political
subdivision which has, or may at any time after the date of the Indenture have,
jurisdiction over all or any portion of the gaming activities of the Company or
any of its Subsidiaries or any successor to such authority.

"GAMING LICENSE" of any person means every license, franchise or other
authorization on the date of the Indenture or thereafter required to own, lease,
operate or otherwise conduct the gaming operations of such person, including,
without limitation, all such licenses granted under the Nevada Gaming Control
Act as from time to time amended, or any successor provision at law, the
regulations of the Gaming Authorities and other applicable laws.

"GOVERNMENTAL AUTHORITY" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
any city or other political subdivision or otherwise and whether now or
hereafter in existence, or any officer or official thereof.

"GVSI" means Green Valley Station, Inc.

"GVV" means Green Valley Ventures.

"INDEBTEDNESS" of any person means, without duplication, (i) the principal
of and premium (if any) in respect of (A) indebtedness of such person for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such person is responsible or
liable; (ii) all Capital Lease Obligations of such person; (iii) all obligations
of such person issued or assumed as the deferred purchase price of property,
assets or services, all conditional sale obligations and all obligations under
any title retention agreement (but excluding operating leases and trade accounts
payable arising in the ordinary course of business); (iv) all obligations of
such person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction (other than obligations with
respect to letters of credit securing obligations (other than obligations
described in (i) through (iii) above) entered into in the ordinary course of
business of such person to the extent such letters of credit are not drawn upon
or, if and to the extent drawn upon, such drawing is reimbursed no later than
the third Business Day following receipt by such person of a demand for
reimbursement following payment on the letter of credit); (v) all obligations of
the type referred to in clauses (i) through (iv) of other persons and all
dividends of other persons for the payment of which, in either case, such person
is responsible or liable as obligor, guarantor or otherwise; and (vi) all
obligations of the type referred to in clauses (i) through (v) of other persons
secured by any Lien on any property or asset of such person (whether or not such
obligation is assumed by such person), the amount of such obligation being
deemed to be the lesser of the value of such property or asset or the amount of
the obligation so secured.

<PAGE>

"INTEREST RATE PROTECTION AGREEMENT" means any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the Company or any Subsidiary against
fluctuations in interest rates.

"INVESTMENT GRADE" designates a rating of BBB- or higher by S&P or Baa3 or
higher by Moody's or the equivalent of such ratings by S&P or Moody's. In the
event that the Company shall select any other Rating Agency, the equivalent of
such ratings by such Rating Agency shall be used.

"KCSC" means Kansas City Station Corporation.

"LEGAL REQUIREMENTS" means, with respect to any project, all laws, statutes
and ordinances (including building codes and zoning and environmental laws,
regulations and ordinances), and all rules, orders, rulings, regulations,
directives and requirements of all Governmental Authorities, which are now or
which may hereafter be in existence, and which are applicable to the Company or
any Affiliate thereof in connection with the construction or development of any
project or the operation of its business, or any part thereof, including,
without limitation, the Nevada Gaming Control Act, as modified by any variances,
special use permits, waivers, exceptions or other exemptions which may from time
to time be applicable to the Company or any Affiliate thereof.

"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset
(including any agreement to give any security interest). For the purposes of
the Indenture, a person shall be deemed to own subject to a Lien any asset that
it has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, Capital Lease Obligation or other title retention
agreement (other than operating leases) relating to such asset.

"MOODY'S" means Moody's Investors Service, Inc. and its successors.

"NET PROCEEDS" means, with respect to any issuance, sale or contribution in
respect of Capital Stock, the aggregate proceeds of such issuance, sale or
contribution, including the fair market value (as determined by the Board of
Directors and net of any associated debt) of property other than cash, received
by the Company, net of attorneys' fees, accountants' fees, underwriters' fees,
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees actually incurred in connection with such issuance or sale and net of
taxes paid or payable as a result thereof; PROVIDED, HOWEVER, that if such fair
market value as determined by the Board of Directors of property other than cash
is greater than $15 million, the determination of fair market value thereof
shall be based upon an opinion from an independent nationally recognized firm
experienced in the appraisal of similar types of transactions.

"OPERATING CASH FLOW" means, for any period, for any person, the aggregate
amount of Consolidated Net Income of such person before Consolidated Interest
Expense, income taxes, depreciation expense, Amortization Expense and any
noncash amortization of debt issuance cost. Notwithstanding the foregoing, the
Consolidated Interest Expense, income taxes, depreciation expense, Amortization
Expense and any noncash amortization of debt issuance cost of a subsidiary of a
person shall be added to Consolidated Net Income to compute Operating Cash Flow
in the same proportion that the net income of such subsidiary was included in
calculating the Consolidated Net Income of such person.

"PERMITTED REFINANCING INDEBTEDNESS" means Indebtedness of the Company or a
Restricted Subsidiary (i) issued in exchange for, or the proceeds from the
issuance and sale or disbursement of which are used to substantially
concurrently repay, redeem, refund, refinance, discharge or otherwise retire for
value, in whole or in part (collectively, "repay"), or (ii) constituting an
amendment, modification or supplement to, or a deferral or renewal of
(collectively, an "amendment"), any Indebtedness of the Company or a Restricted
Subsidiary (and any penalties, fees and expenses actually incurred by the
Company or such Restricted Subsidiary in connection with the repayment or
amendment thereof) existing immediately after the original issuance of the Old
Notes or incurred pursuant to clauses (iii), (vi), (vii) and (viii) (subject to
proviso (C) below) of the Indenture covenant described under "Limitation on
Indebtedness," in a principal amount (or, if such

<PAGE>

Permitted Refinancing Indebtedness provides for an amount less than the
principal amount thereof to be due and payable upon the acceleration thereof,
with an original issue price) not in excess of (1) the principal amount of the
Indebtedness so refinanced (or, if such Permitted Refinancing Indebtedness
refinances Indebtedness under an agreement providing a commitment for subsequent
borrowings, with a maximum commitment not to exceed the maximum commitment under
such agreement) plus (2) unpaid accrued interest on such Indebtedness plus (3)
penalties, fees and expenses actually incurred by the Company or such Restricted
Subsidiary, as the case may be, in connection with the repayment or amendment
thereof; provided that (A) Permitted Refinancing Indebtedness of the Company
that repays or constitutes an amendment to Subordinated Indebtedness shall not
have an Average Life less than the Indebtedness to be so refinanced at the time
of such incurrence, and shall contain subordination and default provisions no
less favorable in any material respect to the Holders than those contained in
such repaid or amended Indebtedness, (B) notwithstanding the foregoing, any
Permitted Refinancing Indebtedness incurred to repay all of the Notes then
outstanding shall not be limited in principal amount or otherwise if the
Company, contemporaneously with such issuance, irrevocably deposits with the
Trustee or Paying Agent an amount of the proceeds of such Permitted Refinancing
indebtedness sufficient to redeem or repay each installment of the outstanding
principal amount of the Notes on, and all interest accrued to, the date fixed
for such repayment, together with irrevocable instructions to redeem and repay
the Notes on the stated redemption date and (C) to the extent that Permitted
Refinancing Indebtedness includes Indebtedness incurred in connection with the
refinancing of the Bank Facility (whether or not such Indebtedness is existing
on or after the date of the Indenture) and the managing agent for the lenders
under such refinancing Indebtedness is a person other than a banking institution
with over $500 million in assets and subject to supervision and examination by
federal or state banking authorities, the provisions of clause (viii) of the
covenant described under "Limitation on Indebtedness" shall terminate and be of
no further force and effect with respect to such refinancing Indebtedness.

"PSHC" means Palace Station Hotel & Casino, Inc.

"QUALIFIED NON-RECOURSE DEBT" means Indebtedness (i) as to which neither
the Company nor any of its Restricted Subsidiaries (a) provides credit support
of any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender; and (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries, other than by a pledge by the
Company or a Restricted Subsidiary of the stock of an Unrestricted Subsidiary;
provided, however, that the Company or any of its Restricted Subsidiaries may
(x) execute a Completion Guarantee and Keep-Well Agreement for an Unrestricted
Subsidiary whose sole purpose is to develop, construct and operate a new gaming
facility or (y) make a loan to an Unrestricted Subsidiary if such loan is
permitted under the covenant entitled "Limitation on Restricted Payments and
Restricted Investments" at the time of the incurrence of such loan, and such
actions referred to in the foregoing clauses (x) and (y) shall not constitute
Indebtedness which is not Qualified Non-Recourse Debt.

"RATING AGENCIES" means (i) S&P and (ii) Moody's or (iii) if S&P or Moody's
or both shall not make a rating of the Notes publicly available, a nationally
recognized securities rating agency or agencies, as the case may be, selected by
the Company, which shall be substituted for S&P or Moody's or both, as the case
may be.

"RATING CATEGORY" means (i) with respect to S&P, any of the following
categories: BB, B, CCC, CC, C and D (or equivalent successor categories); and
(ii) with respect to Moody's, any of the following categories: Ba, B, Caa, Ca,
C and D (or equivalent successor categories); and (iii) the equivalent of any
such category of S&P or Moody's used by another Rating Agency. In determining
whether the rating of the Notes has decreased by one or more gradation,
gradations within Rating Categories (+ and - for S&P; 1, 2 and 3 for Moody's; or
the equivalent gradations for another Rating Agency) shall be taken into account
(e.g., with

<PAGE>

respect to S&P, a decline in a rating from BB+ to BB, as well as from BB- to B+,
will constitute a decrease of one gradation).

"RATING DATE" means the date which is 90 days prior to the earlier of (i) a
Change of Control or (ii) public notice of the occurrence of a Change of Control
or of the intention by the Company to effect a Change of Control.

"RATING DECLINE" shall be deemed to occur if, within 90 days of public
notice of the occurrence of a Change of Control (which period shall be extended
so long as the rating of the Notes is under publicly announced consideration for
possible downgrade by either of the Rating Agencies): (a) in the event the
Notes are rated by either Rating Agency on the Rating Date as Investment Grade
the rating of the Notes by both Rating Agencies shall be below Investment Grade,
or (b) in the event the Notes are rated below Investment Grade by both Rating
Agencies on the Rating Date, the rating of the Notes by either Rating Agency
shall be decreased by one or more gradations (including gradations within Rating
Categories as well as between Rating Categories).

"REDEEMABLE STOCK" means any Capital Stock that by its terms or otherwise
(other than in consideration of Capital Stock that is not Redeemable Stock), is,
or upon the happening of an event would be, required to be redeemed or
repurchased pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, at any time prior to
the first anniversary of the stated maturity of the Notes.

"RELATED PERSON" of any person means (i) (A) if such person is a
corporation, any person who is a director, officer or employee (x) of such
person, (y) of any subsidiary of such person or (z) of any Affiliate of such
person or (B) if such person is an individual, any immediate family member or
lineal descendent of such person or spouse of such immediate family member or of
such lineal descendant, or (ii) any Affiliate of any person included in clause
(i) and any person who is a director, officer or employee of such Affiliate.

"RESTRICTED SUBSIDIARY" of a person means any subsidiary of the referent
person that is not an Unrestricted Subsidiary.

"S&P" means Standard & Poor's Corporation and its successors.

"SCRSI" means St. Charles Riverfront Station, Inc.

"SENIOR INDEBTEDNESS" means (x) all obligations of the Company now or
hereafter existing to pay the principal of, and interest (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization to the extent a claim for post-filing interest is allowed in such
proceedings) on, any Indebtedness (other than Capital Lease Obligations) of the
Company, whether outstanding on the date of the Indenture or thereafter created,
incurred, assumed, guaranteed or in effect guaranteed by the Company, (y)
Indebtedness of the Company represented by Capital Lease Obligations if the
instrument creating or evidencing the same expressly provides that such
Indebtedness shall be senior in right of payment to the Notes and (z)
Indebtedness of the Company with respect to Interests Rate Protection
Agreements. Notwithstanding the foregoing, Senior Indebtedness shall not
include (a) any Indebtedness, if the instrument creating or evidencing the same
or the assumption or guarantee thereof expressly provides that such Indebtedness
shall not be senior in right of payment to the Notes, (b) in the case of each
Note, the other Notes, (c) the Existing Senior Subordinated Notes, (d)
Indebtedness of the Company to, or guaranteed on behalf of, an Affiliate of the
Company (other than a Restricted Subsidiary), (e) Indebtedness to trade
creditors incurred or assumed in the ordinary course of business in connection
with obtaining goods, materials or services, (f) Indebtedness represented by
Exchangeable Stock or Redeemable Stock, (g) any liability for federal, state,
local or other taxes owed or owing by the Company, (h) Indebtedness incurred in
violation of the Indenture provisions summarized below under "Limitation on
Indebtedness" and (i) any Indebtedness which is, by its express terms,
subordinated in right of payment to any other Indebtedness of the Company.

<PAGE>

"SGSI" means Southwest Gaming Services, Inc.

"SSI" means Sunset Station, Inc.

"SUBORDINATED INDEBTEDNESS" means any Indebtedness of the Company (whether
outstanding on the date of the Indenture or thereafter incurred) which is
subordinate or junior in right of payment to the Notes.

"SUBSIDIARY" of a person means any corporation, association, partnership,
limited liability company or other business entity of which 50% or more of the
Voting Stock is at the time of determination owned or controlled, directly or
indirectly, by such person or by one or more of the other subsidiaries of that
person (or a combination thereof); provided that with respect to any such
corporation, association, partnership, limited liability company or other
business entity of which no more than 50% of the total Voting Stock is so owned
or controlled, then such corporation, association, partnership, limited
liability company or other business entity shall not be deemed to be a
subsidiary of such person unless such person has the power to direct the
policies or management of such corporation, association, partnership, limited
liability company or other business entity.

"SUBSIDIARY" means any subsidiary of the Company.

"SWSI" means Southwest Services, Inc.

"TSI" means Texas Station, Inc.

"UNRESTRICTED SUBSIDIARY" means any Subsidiary (other than PSHC, BSI,
SCRSI, KCSC, TSI, SGSI and SWSI or any successor to any of them) that at the
time of determination shall be designated by the Board of Directors of the
Company as an Unrestricted Subsidiary of the Company by a Board Resolution
and any Subsidiary of an Unrestricted Subsidiary, but only to the extent and
so long as such Subsidiary (and any Subsidiary of such Subsidiary): (a) has
no Indebtedness other than Qualified Non-Recourse Debt; (b) is a person with
respect to which neither the Company nor any of its Restricted Subsidiaries
has any direct or indirect obligation (x) to subscribe for additional equity
interests or (y) to maintain or preserve such person's financial condition or
to cause such person to achieve any specified levels of operating results;
and (c) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of the Company or any of its Restricted
Subsidiaries; provided, however, that either (A) the Subsidiary to be so
designated has total assets of $1,000 or less or (B) if such Subsidiary has
assets greater than $1,000, that such designation would be permitted under
the covenant entitled "Limitation on Restricted Payments and Restricted
Investments;" provided, further, however, that the Company or any of its
Restricted Subsidiaries may execute a Completion Guarantee and Keep-Well
Agreement for an Unrestricted Subsidiary whose sole purpose is to develop,
construct and operate a new gaming facility, and the execution and
performance (if such performance is permitted under the covenants entitled
"Limitation on Indebtedness" and "Limitation on Restricted Payments and
Restricted Investments") of such Completion Guarantee and Keep-Well Agreement
shall not prevent a Subsidiary from becoming or remaining an Unrestricted
Subsidiary. Any such designation by the Board of Directors shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions and was permitted by the covenant described below under the
caption "Limitation on Restricted Payments and Restricted Investments." If,
at any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be
an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness
of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary
of the Company as of such date (and, if such Indebtedness is not permitted to
be incurred as of such date under the covenant described below under the
caption "Limitation on Indebtedness," the Company shall be in Default of such
covenant). The Board of Directors of the Company may at any time designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED that such
designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (i)
such Indebtedness is permitted under the covenant described under the caption
"Limitation on Indebtedness," and (ii) no Default or Event of Default would
be in existence following such designation.

<PAGE>

"VOTING STOCK" means any class of Capital Stock of any person then
outstanding normally entitled (without regard to the occurrence of any
contingency) to vote in elections of directors, managers, managing partners or
trustees.

OPTIONAL REDEMPTION

The New Notes will not be redeemable prior to April 15, 2002. Thereafter,
the New Notes will be redeemable, at the Company's option, in whole or in part,
upon not less than 30 days' nor more than 60 days' notice mailed to each Holder
to be redeemed at the Holder's address of record, on any date on which the New
Notes are outstanding on or after April 15, 2002 and prior to maturity.

The New Notes will be redeemable at the following redemption prices
(expressed as percentages of principal amount), plus accrued and unpaid interest
to the redemption date, if redeemed during the 12-month period beginning April
15 of the years indicated below:

YEAR REDEMPTION PRICES
---- -----------------
2002 . . . . . . . . . . . . . . . 103.79%
2003 . . . . . . . . . . . . . . . 102.53%
2004 . . . . . . . . . . . . . . . 101.26%
2005 and thereafter. . . . . . . . 100.00%

SELECTION FOR REDEMPTION

If fewer than all the New Notes are to be redeemed, the Trustee will select
the New Notes or portions thereof that will be redeemed as provided in the
Indenture on a PRO RATA basis or by lot. Unless the Company defaults in making
the redemption payment, on and after the redemption date, interest will cease to
accrue on the New Notes or portions of them called for redemption.

SUBORDINATION

The New Notes are subordinated in right of payment, as set forth in the
Indenture, to the prior payment in full of all existing and future Senior
Indebtedness. Except with respect to limitations on the aggregate amount of
consolidated Indebtedness that the Company may incur, the Indenture does not
limit the ability of the Company to incur additional Senior Indebtedness or
restrict the ability of the Company to transfer assets to and among its
Restricted Subsidiaries. In the event of bankruptcy, liquidation or
reorganization of the Company, the assets of the Company will be available to
make payments on the New Notes only after all Senior Indebtedness has been paid
in full, and there may not be sufficient assets remaining to pay amounts due on
the New Notes.

Under certain circumstances, as described below, holders of Senior
Indebtedness may block payments on the New Notes. In addition, all of the
Company's operating assets are owned by Subsidiaries of the Company. Any claims
of the Holders against the assets of Subsidiaries would effectively be
subordinate to all existing and future indebtedness and other liabilities
(including trade payables) of such Subsidiaries.

Upon any payment or distribution of cash, securities or other property to
creditors of the Company in a liquidation (total or partial), reorganization or
dissolution of the Company, whether voluntary or involuntary, or in a
bankruptcy, reorganization, insolvency, receivership, assignment for the benefit
of creditors, marshalling of assets or similar proceeding, the payment of the
principal of, interest on, or other distribution with respect to, the New Notes
will be subordinated in right of payment, as set forth in the Indenture, to the
prior payment in full of all Senior Indebtedness. In the event that (i) any
Designated Senior Indebtedness is not paid when due or (ii) any other default on
Designated Senior Indebtedness occurs and in the case of this clause (ii) the
maturity of such Designated Senior Indebtedness is accelerated in accordance
with its terms, no direct or

<PAGE>

indirect payment may be made under the New Notes unless, in either case, (x)
such default has been cured or waived and any such acceleration has been
rescinded or (y) such Designated Senior Indebtedness has been paid in full. In
addition, during the continuance of any other event of default with respect to
Designated Senior Indebtedness that permits acceleration of the maturity
thereof, no direct or indirect payment may be made under the New Notes for a
period of 180 days (the "Payment Blockage Period") commencing on the earlier of
(i) the date the Trustee receives written notice of such default from a
Representative with respect to, or the holders of a majority in principal amount
of, any issue of Designated Senior Indebtedness or (ii) if such event of default
results from the acceleration of the New Notes, the date of such acceleration.
Not more than one Payment Blockage Period may be commenced with respect to the
New Notes during any period of 360 consecutive days. In no event will a Payment
Blockage Period extend beyond 179 days from the date the payment upon or in
respect of the New Notes was due, and there must be 180 days in any 360-day
period in which no Payment Blockage Period is in effect as to the Company. For
all purposes of this paragraph, no default or event of default which existed or
was continuing on the date of the commencement of any Payment Blockage Period
with respect to the Designated Senior Indebtedness initiating such Payment
Blockage Period shall be, or be made, the basis for the commencement of a
subsequent Payment Blockage Period by the Representative or requisite holders of
such Designated Senior Indebtedness whether or not within a period of 360
consecutive days unless such default or event of default shall have been cured
or waived for a period of not less than 90 consecutive days. The failure to
make a payment pursuant to the New Notes because of the restrictions described
in this paragraph shall not be construed as preventing the occurrence of a
Default and such restrictions shall not have any effect on the right to
accelerate the maturity of the New Notes.

The provisions described in the two preceding paragraphs shall not prevent
or delay (i) the Company from redeeming any New Notes if required by any Gaming
Authority as described under "Mandatory Disposition Pursuant to Gaming Laws" or
from otherwise purchasing any New Notes pursuant to any Legal Requirement
relating to the gaming business of the Company or its Subsidiaries or (ii) the
receipt by the Holders of payments of principal and interest on the New Notes,
as described under "Satisfaction and Discharge of the Indenture," from the
application of any money or United States Government Obligations held in trust
by the Trustee.

As of March 31, 1997, after giving effect to the Old Notes Offering and
application of the net proceeds therefrom, and assuming the incurrence by
certain subsidiaries of the Company of $368 million under the Company's Bank
Facility, the Company's Restricted Subsidiaries would have had approximately
$531.3 million of indebtedness and other liabilities (including trade and
construction payables) outstanding, of which $522.6 million would have been
guaranteed by the Company. In addition, $46.0 million of Qualified Non-Recourse
Debt would have been incurred by an Unrestricted Subsidiary under the $110
million Sunset Loan Agreement. The Company also would have had $391 million of
senior subordinated indebtedness that ranked PARI PASSU with the Old Notes. The
Company has no indebtedness outstanding to which the New Notes are senior, and
the Company has no plans to issue any such indebtedness.

CHANGE OF CONTROL AND RATING DECLINE

Upon the occurrence of a Change of Control Triggering Event, each Holder
shall have the right to require that the Company repurchase all or any part
of such Holder's New Notes at a repurchase price in cash equal to 101% of the
principal amount thereof, plus accrued interest to the date of repurchase.
Within 30 days following the date of a Change of Control Triggering Event,
the Company shall mail a notice to each Holder with a copy to the Trustee
stating: (1) that a Change of Control Triggering Event has occurred and that
such Holder has the right to require the Company to repurchase all or any
part of such Holder's New Notes at a repurchase price in cash equal to 101%
of the principal amount, plus accrued interest to the date of repurchase
thereof; (2) the circumstances and relevant facts regarding such Change of
Control Triggering Event (including information with respect to pro forma
historical income, cash flow and capitalization after giving effect to such
Change of Control Triggering Event); and (3) the repurchase date (which shall
be no earlier than 30 days nor later than 60 days from the date such notice
is mailed) (the "Repurchase Date"). Holders electing to have New Notes
repurchased will be required to surrender the New Notes, with an appropriate,
duly completed form, to the Company at the address specified in the notice at
least three

<PAGE>

Business Days prior to the Repurchase Date. Holders will be entitled to
withdraw their election if the Paying Agent receives, not later than three
Business Days prior to the Repurchase Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the New Notes which were delivered for repurchase by the Holder and a
statement that such holder is withdrawing such holder's election to have such
New Notes repurchased.

The source of funds for any repurchase of the New Notes upon a Change of
Control Triggering Event will be the Company's cash or cash generated from
operations or other sources, including borrowings, sales of assets or equity.
However, there can be no assurance that sufficient funds will be available at
the time of any Change of Control Triggering Event to make any required
repurchases. In addition, the ability to repurchase the New Notes upon a Change
of Control Triggering Event would be limited by the Bank Facility and may be
limited by the terms of other then-existing Senior Indebtedness. See
"Description of Certain Indebtedness and Capital Stock - Bank Facility." There
can be no assurance that the Company will be able to fund the repurchase of the
New Notes upon a Change of Control Triggering Event within the limitations
imposed by the Bank Facility and by the terms of other then-existing Senior
Indebtedness. The Indenture requires the Company, if any consent under the Bank
Facility is necessary to permit the repurchase of the New Notes as described in
the preceding paragraph, to (i) repay in full all Indebtedness under the Bank
Facility or offer to repay in full all Indebtedness under the Bank Facility or
(ii) obtain the requisite consent under the Bank Facility. Although the failure
to comply with the covenant set forth in the preceding sentence will not excuse
the failure to repurchase the New Notes upon a Change of Control Triggering
Event, the terms described above in "Subordination" may prevent payment of the
purchase price due following a Change of Control Triggering Event (whether at
the Repurchase Date or upon acceleration of the New Notes). There can be no
assurance that the Company will be able, as required by the Indenture, to repay
the Bank Facility or obtain any consent under the Bank Facility necessary to
permit the repurchase of the New Notes upon a Change of Control Triggering
Event. However, any default by the Company in payment of principal when the
same becomes due and payable upon a Holder's exercise of the repurchase offer
following a Change of Control Triggering Event will be deemed an Event of
Default (as a remedy for which Holders would be entitled to receive the purchase
price due upon a Change of Control Triggering Event).

The Company will comply with Rule 14e-1 under the Exchange Act and any
other securities laws, to the extent such rules and laws are applicable, in the
event that a Change of Control Triggering Event occurs and the Company is
required to repurchase New Notes.

The existence of a Holder's right to require the Company to repurchase such
Holder's New Note upon the occurrence of a Change of Control Triggering Event
may deter a third party from acquiring the Company in a transaction which would
constitute a Change of Control.

LIMITATION ON INDEBTEDNESS

The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or suffer to
exist, or otherwise in any manner become or remain liable, directly or
indirectly, with respect to any Indebtedness, except, without duplication,
for (i) the incurrence by the Company's Unrestricted Subsidiaries of
Qualified Non-Recourse Debt, PROVIDED, HOWEVER, that if any such Indebtedness
ceases to be Qualified Non-Recourse Debt of an Unrestricted Subsidiary, such
event shall be deemed to constitute an incurrence of Indebtedness by a
Restricted Subsidiary of the Company; (ii) FF&E Financing incurred by the
Company or its Restricted Subsidiaries, (iii) the Notes, (iv) all Existing
Senior Subordinated Notes and all Existing Indebtedness, (v) provided no
Event of Default shall have occurred and be continuing, other Indebtedness of
the Company and its Restricted Subsidiaries in an amount not to exceed
$15,000,000 in aggregate principal amount, (vi) additional Indebtedness of
the Company and its Restricted Subsidiaries, if at the time of the incurrence
of such Indebtedness, the pro forma Consolidated Coverage Ratio of the
Company, calculated cumulatively for the four most recent consecutive fiscal
quarters of the Company and ending prior to the date of incurrence (the
"Reference Period") is not less than 2.00 to 1.00, after giving effect to (A)
the incurrence of such Indebtedness as if such Indebtedness was incurred at
the beginning of the Reference Period and (if applicable) the application of
the net proceeds thereof to refinance other

<PAGE>

Indebtedness as if the application of such proceeds occurred at the beginning of
the Reference Period and, (B) the acquisition or disposition of any company or
business acquired or disposed of by the Company or any Restricted Subsidiary
since the first day of the Reference Period, including any acquisition or
disposition which will be consummated contemporaneously with the incurrence of
such Indebtedness, as if such acquisition or disposition occurred at the
beginning of the Reference Period, (vii) Permitted Refinancing Indebtedness,
(viii) Indebtedness incurred under the Bank Facility not to exceed the greater
of (A) $200 million or (B) 1.5 times Operating Cash Flow calculated cumulatively
for the four most recent consecutive fiscal quarters of the Company immediately
preceding the date on which such Indebtedness is incurred, provided that the
exception in this clause (viii) shall not be applicable to any Indebtedness
incurred in refinancing the Bank Facility if the managing agent for the lenders
of such refinancing Indebtedness is a person other than a banking institution
with over $500 million in assets and subject to supervision and examination by
federal or state banking authorities, (ix) Interest Rate Protection Agreements
of the Company or any Restricted Subsidiary covering solely Indebtedness of the
Company or any Restricted Subsidiary which is otherwise permitted to be incurred
pursuant to this paragraph, (x) Indebtedness to the Company or a wholly-owned
Restricted Subsidiary, or (xi) to the extent that such incurrence does not
result in the incurrence by the Company or any Restricted Subsidiary of any
obligation for the payment of borrowed money of others, Indebtedness incurred
solely as a result of the execution by the Company or its Restricted
Subsidiaries of a Completion Guarantee and Keep-Well Agreement; provided,
however, that the foregoing exception shall not be applicable to Indebtedness
incurred in connection with the performance by the Company or its Restricted
Subsidiaries of a Completion Guarantee and Keep-Well Agreement.

LIMITATION ON CAPITAL STOCK OF RESTRICTED SUBSIDIARIES

The Company will not permit any Restricted Subsidiary to issue any Capital
Stock to any person (other than to the Company or any wholly-owned Restricted
Subsidiary) that shall entitle the holder of such Capital Stock to a preference
in right of payment in the event of liquidation, dissolution or winding-up of
such Restricted Subsidiary or with respect to dividends of such Restricted
Subsidiary.

LIMITATION ON RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS

The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, (i) declare or pay any dividend on, or make any
distribution in respect of, or purchase, redeem or retire for value, any Capital
Stock of the Company or of any Restricted Subsidiary, other than, in the case of
the Company, through the issuance (as a dividend or stock split thereon or in
exchange therefor) solely of the Company's own Capital Stock (excluding
Exchangeable Stock or Redeemable Stock) and, in the case of a Restricted
Subsidiary, with respect to shares of its Capital Stock that are owned solely by
the Company or a wholly-owned Restricted Subsidiary, (ii) make any principal
payment on, or redeem, repurchase, defease or otherwise acquire or retire for
value, prior to scheduled principal payment or maturity, Subordinated
Indebtedness, or (iii) incur, create, assume or suffer to exist any guarantee of
Indebtedness of, or make any loan or advancement to, or other investment in, any
Affiliate or Related Person of the Company or a Restricted Subsidiary, other
than the Company or a Restricted Subsidiary (such payments or any other actions
described in clauses (i) and (ii), a "Restricted Payment," and in clause (iii),
a "Restricted Investment") unless (a) at the time of and after giving effect to
the proposed Restricted Payment or Restricted Investment, no Event of Default
(and no event that, after notice or lapse of time, or both, would become an
Event of Default) shall have occurred and be continuing and (b) at the time of
and after giving effect to the proposed Restricted Payment or Restricted
Investment (the value of which, if in a form other than cash, shall be
determined in good faith by the Board of Directors, whose determination shall be
conclusive and evidenced by a board resolution), the aggregate amount, of all
Restricted Payments and Restricted Investments declared or made after June 2,
1993, shall not exceed the sum of, without duplication, (A) 50% of the
cumulative Consolidated Net Income of the Company (or if such cumulative
Consolidated Net Income shall be a loss, 100% of such loss) accrued after June
2, 1993, less any negative extraordinary charges not reflected in Consolidated
Net Income plus (B) an amount equal to the Net Proceeds received by the Company
from the issuance and sale (other than to a Subsidiary) after June 2, 1993 of
Capital Stock (excluding Exchangeable Stock, Redeemable Stock and Capital Stock
issued in exchange for previously outstanding shares of Capital Stock if such
exchange did not

<PAGE>

constitute a Restricted Payment) plus (C) $15,000,000 plus (D) an amount equal
to 50% of any dividends received by and 100% of any Restricted Investments which
are returned or repaid to (in each case, to the extent not included in
Consolidated Net Income of the Company), the Company or a wholly-owned
Restricted Subsidiary after the date of the Indenture from an Unrestricted
Subsidiary of the Company; PROVIDED, HOWEVER, that Net Proceeds received from
the sale of the stock of PSHC, BSI, TSI, SSI, KCSC, SCRSI, SGSI or SWSI, or any
successor or assignee thereof, by the Company shall not be included in clause
(B) above, and PROVIDED, FURTHER, that the foregoing provisions will not prevent
the following Restricted Payments or Restricted Investments: (a) payment of any
dividend within 60 days after the date of its declaration if at the date of
declaration such payment would be permitted by the foregoing provisions; and (b)
Restricted Investments, which together with all other Restricted Investments
since June 2, 1993, do not exceed $20,000,000 in the aggregate, provided that
after giving effect to each such Restricted Investment (as if it had occurred on
the first day of such period) the pro forma Consolidated Coverage Ratio of the
Company, calculated cumulatively for the four most recent consecutive fiscal
quarters of the Company and ending prior to the date of the latest Restricted
Investment, shall be greater than 2.00 to 1.00.

The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default; PROVIDED
that in no event shall the business currently operated by PSHC, BSI, SCRSI,
KCSC, SGSI or SWSI, or the business to be operated by KCSC (or its Affiliates)
at the Station Casino Kansas City property located in Kansas City, Missouri, be
transferred to or held by an Unrestricted Subsidiary. For purposes of making
such determination, all outstanding Investments by the Company and its
Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary
so designated will be deemed to be Restricted Payments at the time of such
designation and will reduce the amount available for Restricted Payments under
the first paragraph of this covenant. All such outstanding Investments will be
deemed to constitute Investments in an amount equal to the fair market value of
such Investments at the date of such designation. Such designation will only be
permitted if such Restricted Payment would be permitted at such time and if such
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.

LIMITATION ON TRANSACTIONS WITH AFFILIATES

The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, conduct any business or enter into any transaction or
series of related transactions (including the purchase, sale, lease or exchange
of any property or the rendering of any service), pursuant to which the Company
or any Restricted Subsidiary shall receive or render value exceeding $1,000,000,
with any Affiliate or Related Person of the Company or of the Existing Equity
Holders (other than the Company or a wholly-owned Restricted Subsidiary of the
Company), unless (i) the terms of such business, transaction or series of
related transactions are (A) set forth in writing and (B) fair and reasonable to
the Company or such Restricted Subsidiary, and no less favorable to the Company
or such Restricted Subsidiary, as the case may be, as terms that would be
obtainable at the time for a comparable transaction or series of related
transactions with an unrelated third person and (ii) the disinterested directors
of the Board of Directors of the Company have, by resolution, determined in good
faith that such business or transaction or series of related transactions meets
the criteria set forth in (i) (B) above, which determination shall be conclusive
and (iii) with respect to any transaction or series of related transactions
otherwise permitted under this paragraph pursuant to which the Company or any
Restricted Subsidiary shall receive or render value exceeding $15,000,000, such
transaction or series of related transactions shall not be permitted unless,
prior to consummation thereof, the Company shall have received an opinion, from
an independent nationally recognized firm experienced in the appraisal or
similar review of similar types of transactions, that such transaction or series
of related transactions is on terms which are fair, from a financial point of
view, to the Company or such Restricted Subsidiary. Notwithstanding the
foregoing, the Company or any of its Restricted Subsidiaries shall be entitled
to provide management services to an Unrestricted Subsidiary whose sole purpose
is to develop, construct and operate a new gaming facility, provided that the
Company or such Restricted Subsidiary, as the case may be, is reimbursed by the
Unrestricted Subsidiary for all costs and expenses (including without limitation
payroll) it incurs in providing such services.

<PAGE>

LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES

The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to: (i) pay dividends or make any other distribution on its Capital
Stock or any other interest or participation in, or measured by, its profits, or
pay any interest or principal due on Indebtedness owed to the Company or any of
its Restricted Subsidiaries; (ii) make loans or advances to the Company or any
of its Restricted Subsidiaries; or (iii) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries, other than (a) any
such encumbrance or restriction imposed by any Gaming Authority, (b) any
encumbrance or restriction existing on the date of the Indenture contained in
any Existing Indebtedness, (c) any encumbrance or restriction existing on the
date of the Indenture contained in the Bank Facility relating to Indebtedness
that does not exceed the greater of (1) $200 million or (2) 1.5 times Operating
Cash Flow calculated cumulatively for the four most recent consecutive fiscal
quarters of the Company immediately preceding the date on which such
indebtedness is incurred, (d) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement relating to any Indebtedness
(other than Indebtedness incurred in anticipation of, as consideration in, or to
provide all or any portion of the funds utilized to consummate, the transaction
or series of related transactions pursuant to which such Restricted Subsidiary
became a Subsidiary of the Company) incurred by such Restricted Subsidiary on or
prior to the date on which such Restricted Subsidiary became a Restricted
Subsidiary of the Company and outstanding on such date (e) any pledge by the
Company or a Restricted Subsidiary of the stock of an Unrestricted Subsidiary if
such pledge is made in connection with the incurrence of Qualified Non-Recourse
Debt by such Unrestricted Subsidiary; and (f) any encumbrance or restriction
pursuant to an agreement relating to Indebtedness issued to repay or amend
Indebtedness referred to in clause (b), (c), (d) or (f) of this paragraph,
PROVIDED, HOWEVER, that any such encumbrance or restriction is no less favorable
to the Holders than encumbrances and restrictions contained in agreements
relating to the Indebtedness so repaid or amended, and PROVIDED FURTHER, that in
the event that Indebtedness is issued to repay or amend the Bank Facility, the
aggregate principal amount of such Indebtedness shall not exceed the greater of
(A) $200 million or (B) 1.5 times Operating Cash Flow calculated cumulatively
for the four most recent consecutive fiscal quarters of the Company immediately
preceding the date on which such Indebtedness is issued. See "Description of
Certain Indebtedness and Capital Stock - Bank Facility."

PROVISION OF FINANCIAL INFORMATION

The Company will file with the Trustee and provide Holders within 15 days
after it files them with the SEC copies of the quarterly and annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) which
the Company files with the SEC pursuant to Sections 13(a) and 13(c) or 15(d) of
the Exchange Act. The Company will continue to file with the SEC and the
Trustee, and provide to Holders, on the same timely basis such reports,
information and other documents as the Company would be required to file with
the SEC as if the Company were subject to the requirements of such Sections
13(a) and 13(c) or 15(d) of the Exchange Act, notwithstanding that the Company
may no longer be subject to Section 13(a) and 13(c) or 15(d) of the Exchange Act
and that the Company would be entitled not to file such reports, information and
other documents with the SEC. In addition, if the Company has any Unrestricted
Subsidiaries at such time, it shall also file with the Trustee, and provide to
the Holders, on the same timely basis, all quarterly and annual financial
statements (which information may be unaudited) that would be required by Forms
10-Q and 10-K if the Company did not have such Unrestricted Subsidiaries.

CONSOLIDATION, MERGER AND SALE OF ASSETS

The Company may not consolidate with or merge with or into any other entity
(other than with a wholly-owned Restricted Subsidiary, provided the Company is
the continuing corporation) or sell, convey, assign, transfer, lease or
otherwise dispose of all or substantially all of its properties and assets
(determined on a consolidated basis for the Company and its Restricted
Subsidiaries taken as a whole) to any entity, unless: (1) either (a) the
Company shall be the continuing corporation or (b) the entity (if other than the
Company)

<PAGE>

formed by such consolidation or into which the Company is merged or the entity
that acquires, by sale, conveyance, assignment, transfer, lease or disposition,
all or substantially all of the properties and assets of the Company shall be a
corporation, partnership or trust organized and validly existing under the laws
of the United States or any state thereof or the District of Columbia, and shall
expressly assume by a supplemental indenture, the due and punctual payment of
the principal of and premium, if any, and interest on all the Notes and the
performance and observance of every covenant of the Indenture on the part of the
Company to be performed or observed; (2) immediately thereafter, no Event of
Default (and no event that, after notice or lapse of time, or both, would become
an Event of Default) shall have occurred and be continuing; (3) immediately
after giving effect to any such transaction involving the incurrence by the
Company or any Restricted Subsidiary, directly or indirectly, of additional
Indebtedness (and treating any Indebtedness not previously an obligation of the
Company or any of its Restricted Subsidiaries incurred in connection with or as
a result of such transaction as having been incurred at the time of such
transaction), the Company (if it is the continuing corporation) or such other
entity could incur at least $1.00 of additional Indebtedness pursuant to clause
(vi) of the Indenture covenant described under " - Limitation on Indebtedness;"
and (4) immediately thereafter, the Company (if it is the continuing
corporation) or such other entity shall have a Consolidated Net Worth equal to
or greater than the Consolidated Net Worth of the Company immediately prior to
such transaction.

RESTRICTION ON LAYERING DEBT

The Company will not incur any Indebtedness that is subordinate or junior
in right of payment to Senior Indebtedness and senior in any respect in right of
payment to the Notes.

EVENTS OF DEFAULT

An "Event of Default" is deemed to occur if: (1) the Company defaults in
the payment of interest on any Note when the same becomes due and payable and
such default continues for a period of 30 days following the due date, whether
or not such payment is prohibited by the provisions described under
"Subordination;" (2) the Company defaults in the payment of the principal of any
Note when the same becomes due and payable at maturity, upon optional redemption
of the Notes by the Company, upon exercise by the Holder of the put option upon
a Change of Control Triggering Event, upon declaration or otherwise, whether or
not such payment is prohibited by the provisions described under
"Subordination;" (3) the Company fails to observe, perform or comply with any of
the provisions described under "Consolidation, Merger and Sale of Assets;" (4)
the Company fails to observe, perform or comply with any of its other agreements
or covenants in, or provisions of, the Notes or the Indenture and such failure
to observe, perform or comply continues for a period of 60 days after receipt by
the Company of notice of Default from the Trustee or the holders of at least 25%
in principal amount of the Notes; (5) the Company fails, after any applicable
grace period, to make any payment of principal of, premium in respect of, or
interest on, any Indebtedness when due, or any Indebtedness of the Company or
any of its Restricted Subsidiaries is accelerated because of a default and the
aggregate principal amount of such Indebtedness with respect to which any such
failure to pay or acceleration has occurred exceeds $10,000,000 or its foreign
currency equivalent; (6) any encumbrance or restriction of the type described
under "Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries" becomes applicable to any Restricted Subsidiary; (7) certain
events of bankruptcy or insolvency of the Company or any of its Restricted
Subsidiaries occur; (8) one or more judgments, orders or decrees are rendered
against the Company or any of its Restricted Subsidiaries in an aggregate amount
in excess of $10,000,000 (to the extent not covered by insurance) and are not
discharged for a period of 60 days during which a stay of enforcement of such
judgments, orders or decrees, by reason of a pending appeal or otherwise, is not
in effect; or (9) any Gaming License of the Company or any of its Restricted
Subsidiaries is revoked, terminated or suspended or otherwise ceases to be
effective, resulting in the cessation or suspension of operation for a period of
more than 90 days of the casino business of any casino-hotel owned, leased or
operated directly or indirectly by the Company or any of its Restricted
Subsidiaries (other than any voluntary relinquishment of a Gaming License if
such relinquishment is, in the reasonable, good faith judgment of the Board of
Directors of the Company, evidenced by a resolution of such Board, both
desirable in the conduct of the business of the Company and its Restricted
Subsidiaries, taken as a whole, and not disadvantageous in any material respect
to the Holders).

<PAGE>

If an Event of Default (other than an Event of Default respecting events of
bankruptcy, insolvency, receivership or reorganization) occurs and is
continuing, the Trustee by notice to the Company, or the holders of at least 25%
in principal amount of the outstanding Notes, by notice to the Company and the
Trustee, may declare to be immediately due and payable the unpaid principal of
and all accrued interest and premium, if any, on the Notes. If an Event of
Default respecting events of bankruptcy, insolvency, receivership or
reorganization occurs, such an amount shall become immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.
The holders of a majority in principal amount of the then outstanding Notes, by
notice to the Trustee, may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived, except non-payment of principal or
interest that has become due solely because of the acceleration. The holders of
a majority in principal amount of the then outstanding Notes, by notice to the
Trustee, may waive an existing Default or Event of Default and its consequences,
except a continuing Default or Event of Default in the payment of the principal
of any Note.

The Company will file annually with the Trustee an Officers' Certificate
regarding compliance by the Company with the terms thereof and specifying any
Defaults of which the signers may have knowledge.

WAIVER AND MODIFICATION OF THE INDENTURE

The Company and the Trustee may amend the Indenture or the Notes without
the consent of any Holders to: (i) cure any ambiguity, defect or inconsistency;
(ii) comply with the provision of the Indenture relating to mergers and
consolidations of the Company; (iii) provide for uncertificated New Notes in
addition to certificated Notes; (iv) make any change that does not adversely
affect the rights of any Holder; or (v) comply with the Trust Indenture Act.

The Company and the Trustee may amend any provisions of the Indenture or
the Notes with the written consent of the holders of at least a majority in
principal amount of the Notes then outstanding. The holders of a majority in
principal amount of the outstanding Notes may waive compliance by the Company
with any such provision. The terms of the Bank Facility require the consent of
the lenders thereunder before the Company may amend, modify or supplement the
Indenture, except for amendments which do not require the consent of any Holder
under the Indenture.

However, without the consent of each Holder affected, no amendment or
waiver of any provision of the Indenture may: (i) reduce the amount of the
Notes whose holders must consent to an amendment or waiver; (ii) reduce the rate
or change the time of payment of interest on any Notes; (iii) reduce the
principal or change the fixed maturity of any Notes or alter the redemption
provisions with respect thereto; (iv) make any Notes payable in money other than
that stated in the Notes; (v) make any change in provisions of the Indenture
relating to waivers of compliance with, or past defaults of, the Indenture or
the Notes, or the right of Holders to receive payments of principal, premium or
interest; or (vi) waive a default in payment of the principal of, or interest
on, any Notes.

SATISFACTION AND DISCHARGE OF THE INDENTURE

The Indenture will be discharged upon payment or redemption of all the
Notes issued thereunder. In addition, upon deposit with the Trustee of money or
noncallable United States Government Obligations sufficient for full payment of
such New Notes and delivery to the Trustee of a satisfactory Opinion of Counsel
regarding federal income tax consequences to the Holders, all obligations under
the Indenture, other than with respect to compensation and indemnity of the
Trustee and certain other obligations, will be discharged.

CONCERNING THE TRUSTEE

First Union National Bank is the Trustee under the Indenture. First Union
National Bank is also the trustee under the indentures for the Existing Senior
Subordinated Notes.

<PAGE>

The Indenture contains certain limitations on the right of the Trustee,
should it be or become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in
other transactions with the Company; however, if it acquires any conflicting
interest (as defined), it must eliminate such conflict or resign.

The holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or the Indenture, is
unduly prejudicial to the rights of other Holders or would involve the Trustee
in personal liability. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its powers, to use the degree of care of a prudent person in the
conduct of his or her own affairs. Subject to such provisions, the Trustee will
be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any of the Holders, unless they shall have offered
to the Trustee satisfactory indemnity.

MANDATORY DISPOSITION PURSUANT TO GAMING LAWS

If a record or a beneficial owner of a Note is required by any Gaming
Authority to be found suitable, the owner shall apply for a finding of
suitability within 30 days after the request of such Gaming Authority. The
applicant for a finding of suitability must pay all costs of the investigation
for such finding of suitability. If a holder or beneficial owner is required to
be found suitable and is not found suitable by such Gaming Authority, (i) such
owner shall, upon request of the Company, dispose of such owner's Notes within
30 days or within that time prescribed by such Gaming Authority, whichever is
earlier, or (ii) the Company may, at its option, redeem such owner's Notes at
the lesser of (x) the principal amount thereof or (y) the price at which the
Notes were acquired by such owner, together with, in either case, accrued
interest to the date of the finding of unsuitability by such Gaming Authority.
See "Regulation and Licensing."

BOOK-ENTRY, DELIVERY AND FORM

Except as set forth below, the New Notes will initially be issued in the
form of one Global Note (the "New Global Note"). The New Global Note will be
deposited on the date of the closing of the exchange of the Old Notes for the
New Notes (the "Closing Date") with, or on behalf of, The Depository Trust
Company, New York, New York (the "Depositary") and registered in the name of
Cede & Co., as nominee of the Depositary (such nominee being referred to herein
as the "Global Note Holder").

New Notes that are issued as described below under "--Certificated
Securities" will be issued in the form of registered definitive certificates
(the "Certificated Securities"). Upon the transfer of Certificated Securities,
such Certificated Securities may, unless the New Global Note has previously been
exchanged for Certificated Securities, be exchanged for an interest in the New
Global Note representing the principal amount of New Notes being transferred.

DEPOSITORY PROCEDURES

The Depositary has advised the Company that the Depositary is a
limited-purpose trust company that was created to hold securities for its
participating organizations (collectively, the "Participants") and to facilitate
the clearance and settlement of transactions in such securities between
Participants through electronic book-entry changes in accounts of its
Participants. The Participants include securities brokers and dealers
(including the Initial Purchaser), banks and trust companies, clearing
corporations and certain other organizations. Access to the Depositary's system
is also available to other entities such as banks, brokers, dealers and trust
companies (collectively, the "Indirect Participants") that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depositary only through the Participants or the
Indirect Participants.

The Company expects that pursuant to procedures established by the
Depositary (i) upon deposit of the New Global Note, the Depositary will credit
the accounts of Participants designated by the Initial Purchaser with portions
of the principal amount of the New Global Note and (ii) ownership of the New
Notes evidenced by the New Global Note will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by the
Depositary (with respect to the interests of the Participants), the Participants
and the Indirect Participants. Investors are advised that the laws of some
states require that certain persons take physical delivery in definitive form of
securities that they own. Consequently, the ability to transfer New Notes
evidenced by the New Global Note will be limited to such extent.

So long as the Global Note Holder is the registered owner of any New Notes,
the Global Note Holder will be considered the sole Noteholder under the
Indenture of any New Notes evidenced by the New Global Note. Beneficial owners
of New Notes evidenced by the New Global Note will not be considered the owners
or holders thereof under the Indenture for any purpose, including with respect
to the giving of any directions, instructions or approvals to the Trustee
thereunder. Neither the Company nor the Trustee will have any responsibility or
liability for any aspect of the records of the Depositary or for maintaining,
supervising or reviewing any records of the Depositary relating to the New
Notes.

Payments in respect of the principal of, premium, if any, and interest on
any New Notes registered in the name of the Global Note Holder on the applicable
record date will be payable by the Trustee to or at the direction of the Global
Note Holder in its capacity as the registered holder under the Indenture. Under
the terms of the Indenture, the Company and the Trustee may treat the persons in
whose names New Notes, including the New Global Note, are registered as the
owners thereof for the purpose of receiving such payments. Consequently,
neither the Company nor the Trustee has or will have any responsibility or
liability for the payment of such amounts to beneficial owners of New Notes.
The Company believes, however, that it is currently the policy of the Depositary
to immediately credit the accounts of the relevant Participants with such
payments, in amounts proportionate to their respective holdings of beneficial
interests in the relevant security as shown on the records of the Depositary.
Payments by the Participants and the Indirect Participants to the beneficial
owners of New Notes will be governed by standing instructions and customary
practice and will be the responsibility of the Participants or the Indirect
Participants.

CERTIFICATED SECURITIES

Subject to certain conditions, any person having a beneficial interest in
the New Global Note may, upon request to the Trustee, exchange such beneficial
interest for New Notes in the form of Certificated Securities. Upon any such
issuance, the Trustee is required to register such Certificated Securities in
the name of, and cause the same to be delivered to, such person or persons (or
the nominee of any thereof). If (i) the Company notifies the Trustee in writing
that the Depositary is no longer willing or able to act as a depositary and the
Company is unable to locate a qualified successor within 90 days or (ii) the
Company, at its option, notifies the Trustee in writing that it elects to cause
the issuance of New Notes in the form of Certificated Securities under the
Indenture, then, upon surrender by the Global Note Holder of its New Global
Note, Notes Notes in such form will be issued to each person that the Global
Note Holder and the Depositary identify as being the beneficial owner of the
related New Notes.

Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of New
Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.

SAME-DAY SETTLEMENT AND PAYMENT

The Indenture will require that payments in respect of the New Notes
represented by the New Global Note (including principal, premium, if any, and
interest) be made by wire transfer of immediately available funds to the
accounts specified by the Global Note Holder. With respect to Certificated
Securities, the Company will make all payments of principal, premium, if any,
and interest by wire transfer of immediately available funds to the accounts
specified by the holders thereof or, if no such account is specified, by mailing
a check to each such holder's registered address.

90
<PAGE>

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

The following is a summary of the material United States federal income tax
consequences resulting from the Exchange Offer and from the ownership of the New
Notes. It deals only with New Notes held as capital assets and not with special
classes of Holders, such as dealers in securities or currencies, life insurance
companies, tax exempt entities, and persons that hold a New Note in connection
with an arrangement that completely or partially hedges the New Note. The
discussion is based upon the Internal Revenue Code of 1986, as amended, and
regulations, rulings and judicial decisions thereunder as of the date hereof.
Such authorities may be repealed, revoked or modified so as to produce federal
income tax consequences different from those discussed below.

NOTEHOLDERS TENDERING THEIR OLD NOTES OR PROSPECTIVE PURCHASERS OF THE NEW
NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE UNITED STATES FEDERAL
INCOME TAX AND ANY STATE OR LOCAL INCOME OR FRANCHISE TAX CONSEQUENCES IN THEIR
PARTICULAR SITUATIONS, AS WELL AS ANY CONSEQUENCES UNDER THE LAWS OF ANY OTHER
TAXING JURISDICTION.

The exchange of New Notes for the Old Notes pursuant to the Exchange Offer
will not be treated as an "exchange" for United States federal income tax
purposes because the New Notes will not be considered to differ materially in
kind or extent from the Old Notes. Rather, the New Notes received by a Holder
will be treated as a continuation of the Old Notes in the hands of such Holder.
As a result, there will be no United States federal income tax consequences to
Holders exchanging the Old Notes for the New Notes pursuant to the Exchange
Offer. The Holder must continue to include stated interest and any original
issue discount in income as if the exchange had not occurred. The adjusted
basis and holding period of the New Notes for any Holder will be the same as the
adjusted basis and holding period of the Old Notes. Similarly, there would be
no United States federal income tax consequences to a holder of Old Notes that
does not participate in the Exchange Offer.

UNITED STATES HOLDERS

For purposes of this discussion, a "United States Holder" means (i) a
citizen or resident of the United States, (ii) a partnership, corporation or
other entity created or organized in or under the law of the United States or of
any State of the United States and (iii) a trust or estate the income of which
is subject to United States federal income tax regardless of its source. The
term also includes certain former citizens of the United States whose income and
gain on the New Notes will be subject to U.S. income tax.

PAYMENTS OF INTEREST

Payments of stated interest on a New Note will constitute "qualified stated
interest" (as defined below under "Original Issue Discount") and will be taxable
to a United States Holder as ordinary interest income at the time it is received
or accrued, depending on the Noteholder's method of accounting for tax purposes.

ORIGINAL ISSUE DISCOUNT

A debt instrument has original issue discount if the excess of its
"stated redemption price at maturity" over its issue price (defined in the
case of debt instruments a substantial portion of which is sold for money as
the first price at which a substantial amount of the debt instruments are
sold, ignoring sales to bond houses, brokers or similar persons acting in the
capacity of underwriters, placement agents or wholesalers) equals or exceeds
1/4 of 1 percent of such debt instrument's stated redemption price at
maturity multiplied by the number of complete years to its stated maturity.
"Stated redemption price at maturity" is the total of all payments provided
by the debt instruments that are not payments of "qualified stated interest."
Generally, "qualified stated interest" is stated interest that is
unconditionally payable in cash or property (other than debt instruments of
the issuer) at least annually in an amount equal to the product of the
outstanding principal amount of the debt instrument and a single fixed rate
of

91
<PAGE>

interest (adjusted to account appropriately for any differing lengths of
intervals between payments). Interest payments on the Old Notes are treated
as qualified stated interest and the stated redemption price in the case of
an Old Note equals its stated principal amount. BancAmerica Securities, Inc.
has advised the Company that the first price at which it sold a substantial
amount of the Old Notes was 96.9% of their principal amount. Based on that
price, the Company believes that the Old Notes have original issue discount,
and the New Notes will be treated as having the same amount of original issue
discount.

Because the New Notes have original issue discount, United States Holders
will have to include original issue discount in income before the receipt of
cash attributable to such income. The amount of original issue discount
includible in income by a United States Holder of a New Note is the sum of
the daily portions of original issue discount with respect to the New Note
for each day during the taxable year or portion of the taxable year in which
it holds such New Note ("accrued original issue discount"). The daily
portion is determined by allocating to each day in any "accrual period" a pro
rata portion of the original issue discount allocable to that accrual period.
The amount of original issue discount allocable to an accrual period is the
excess of (a) the product of the New Note's adjusted issue price at the
beginning of such accrual period and its yield to maturity (determined on the
basis of compounding at the close of each accrual period and adjusted for the
length of such period) over (b) the sum of the interest payments payable on
the New Note during the accrual period. Under Treasury regulations
applicable to original issue discount obligations (the "OID Regulations"),
the "accrual period" may be of any length and may vary in length over the
term of the Note, provided that each accrual period is no longer than one
year and each scheduled payment of principal or interest occurs either on the
final day or on the first day of an accrual period. The "adjusted issue
price" of the New Note at the start of any accrual period is the sum of the
issue price of such New Note (which is the same as the issue price of the Old
Note) plus the accrued original issue discount for each prior accrual period.
The amount of original issue discount includible in income is adjusted for
any United States Holder which acquires a New Note at a premium over its
adjusted issue price (an "acquisition premium"), but at an amount less than
or equal to the sum of all amounts payable on the instrument after the
acquisition date (other than payments of qualified stated interest).

Under the foregoing rules, United States Holders of New Notes,
including holders who use the cash method of accounting, will have to include in
income increasingly greater amounts of original issue discount in successive
accrual periods and in advance of any payment of cash related thereto.

The amount of original issue discount accrued on the New Notes held of
record by persons other than corporations and other exempt Noteholders is
required to be reported to such persons and to the Internal Revenue Service (the
"IRS").

AMORTIZABLE PREMIUM

A United States Holder that purchases a New Note for an amount in excess of
its stated redemption price at maturity will be considered to have purchased the
New Note at a "premium." A United States Holder generally may elect to amortize
the premium on the constant yield to maturity method. The amount amortized in
any year will be treated as a reduction of the United States Holder's interest
income from the New Note. The premium on a New Note held by a United States
Holder that does not make such an election will decrease the gain or increase
the loss otherwise recognized on disposition or retirement of the New Note. The
election to amortize the premium on a constant yield to maturity method once
made applies to all debt obligations held or subsequently acquired by the
electing Noteholder on or after the first day of the first taxable year to which
the election applies and may not be revoked without the consent of the IRS.

MARKET DISCOUNT

A United States Holder that purchases a New Note at a market discount (as
described below) generally will be required to treat any principal payments on,
or any gain on the disposition or maturity of, such New Note as ordinary income
to the extent of the accrued market discount (not previously included in income)
at the time of such payment or disposition. Generally, if a New Note with
market discount is disposed of in certain non-taxable transactions, the market
discount will be transferred to the property received in exchange for the Note.
However, under certain limited circumstances, the market discount will be
includible as ordinary income as if such Note had been sold at its fair market
value. Market discount is generally the amount by

92
<PAGE>

which the New Note's principal amount exceeds the purchaser's basis in the Note
immediately after acquisition. In the case of any New Note having original
issue discount, market discount is the amount by which the New Note's "revised
issue price" (defined as the sum of the issue price of the Note and the
aggregate amount of the original issue discount includible in the gross income
of all previous Noteholders, determined without regard to any adjustment for a
previous Noteholder's acquisition premium) exceeds the purchaser's basis in the
Note immediately after acquisition. A New Note is not treated as purchased at a
market discount, however, if the market discount is less than 1/4 of 1 percent
of the principal amount of the New Note multiplied by the number of complete
years to maturity from the date when the Noteholder acquired the New Note.
Market discount on a New Note will accrue, at the election of the Noteholder,
either ratably or at a constant yield to maturity. The holder may elect to
include market discount in income currently as it accrues. This election, once
made, applies to all market discount obligations acquired on or after the first
taxable year to which the election applies, and may not be revoked without the
consent of the IRS. A Noteholder may be required to defer, until the maturity
of the Note, or in certain circumstances, its earlier disposition, the deduction
for all or a portion of the interest expense attributable to debt incurred or
continued to purchase or carry a Note with market discount unless an election to
include the market discount on a current basis is made.

ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT

Under the OID Regulations, a United States Holder may elect to treat all
interest on any New Note as original issue discount and calculate the amount
includible in gross income under the constant yield method described above. For
the purpose of this election, interest includes stated interest, short-term
discount, original issue discount, de minimis original issue discount, market
discount, de minimis market discount and unstated interest, as adjusted by any
amortizable bond premium or acquisition premium. If a United States Holder
makes this election for a New Note with market discount or amortizable bond
premium, the election is treated as an election under the market discount or
amortizable bond premium provisions, as the case may be. The election is to be
made for the taxable year in which the United States Holder acquired the Note,
and may not be revoked without the consent of the IRS. United States Holders
should consult with their own tax advisors about this election.

BACKUP WITHHOLDING AND INFORMATION REPORTING

In general, information reporting requirements will apply to payments of
principal and interest on a New Note and the proceeds of the sale of a New Note
before Maturity within the United States to, and to the accrual of original
issue discount on a New Note with respect to, non-corporate United States
Holders. A 31% "backup withholding" tax will apply to such payments and to
payments with respect to original issue discount if the United States Holder
fails to provide an accurate taxpayer identification number or to report all
interest and dividends required to be shown on its federal income tax returns.
The amount of original issue discount required to be reported by the Company may
not be equal to the amount of original issue discount required to be reported as
taxable income by a United States Holder of Discount Notes.

UNITED STATES ALIEN HOLDERS

As used herein, a "United States Alien" is a person or entity that, for
United States federal income tax purposes, is not a United States Holder.

PAYMENTS TO UNITED STATES ALIENS

Under current United States federal income and estate tax law, (i) payments
of principal and interest on a New Note by the Company or any paying agent to a
Noteholder that is a United States Alien will not be subject to withholding of
United States federal income tax, provided that, such interest is not
effectively connected with the conduct of a trade or business within the United
States by such United States Alien and the Noteholder (1) does not actually or
constructively own 10% or more of the combined voting power of all classes of
stock of the Company, (2) is not a controlled foreign corporation related to the
Company through

<PAGE>

stock ownership and (3) provides a statement, under penalties of perjury (such
as Form W-8), to the Company that the holder is a United States Alien and
provides its name and address; (ii) a Noteholder that is a United States Alien
will not be subject to United States federal income tax on gain realized on the
sale, exchange or redemption of such Note, unless (1) the gain is effectively
connected with the conduct of a trade or business within the United States by
the United States Alien, or (2) in the case of a United States Alien who is a
nonresident alien individual and holds the New Note as a capital asset, such
holder is present in the United States for 183 or more days in the taxable year
and certain other requirements are met, and (iii) a New Note will not be subject
to United States federal estate tax as a result of the death of a Noteholder who
is not a citizen or resident of the United States at the time of death, provided
that such Noteholder did not at the time of death actually or constructively own
10% or more of the combined voting power of all classes of stock of the Company
and, at the time of such Noteholder's death, payments of interest on such Note
would not have been effectively connected with the conduct by such Noteholder of
a trade or business in the United States. A United States Alien that is
engaged in a trade or business in the United States generally will be subject
to tax in the same manner as a United States Holder with respect to the
income or gain derived from the New Notes (and may be subject to the branch
profits tax) if income or gain from the Notes is effectively connected with
the United States trade or business.

United States information reporting requirements and backup withholding tax
will not apply to payments on a New Note made outside the United States by the
Company or any paying agent (acting in its capacity as such) to a Noteholder
that is a United States Alien provided that a statement described in (i)(3)
above has been received and neither the Company nor its paying agent has actual
knowledge that the payee is not a United States Alien.

Information reporting requirements and backup withholding tax will not
apply to any payment of the proceeds of the sale of a New Note effected outside
the United States by a foreign office of a "broker" (as defined in applicable
Treasury regulations), provided that such broker (1) is a United States Alien,
(2) derives less than 50% of its gross income for certain periods from the
conduct of a trade or business in the United States and (3) is not a controlled
foreign corporation as to the United States (a person described in (1), (2) and
(3) being hereinafter referred to as a "foreign controlled person"). Payment of
the proceeds of the sale of a New Note effected outside the United States by a
foreign office of any broker that is not a foreign controlled person will not be
subject to backup withholding tax, but will be subject to information reporting
requirements unless such broker has documentary evidence in its records that the
beneficial owner is a United States Alien and certain other conditions are met,
or the beneficial owner otherwise establishes an exemption.

<PAGE>

PLAN OF DISTRIBUTION

This Prospectus, as it may be amended or supplemented from time to time, may
be used by a Broker-Dealer (a "Participating Broker-Dealer") in connection
with the resale of the New Notes received in exchange for the Old Notes where
such Old Notes were acquired for its own account as a result of market-making
activities or other trading activities. Each such Participating
Broker-Dealer that participates in the Exchange Offer that receives the New
Notes for its own account pursuant to the Exchange Offer must acknowledge
that it will deliver a Prospectus in connection with any resale of such New
Notes. The Company has agreed that for a period of one year after the date
when the Registration Statement becomes effective, it will make this
Prospectus, as amended or supplemented, available to any Participating
Broker-Dealer for use in connection with any such resale.

The Company will not receive any proceeds from any sale of New Notes by
Participating Broker-Dealers. New Notes received by Participating Broker-Dealers
for their own account pursuant to the Exchange Offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Notes or a
combination of such methods of resale, at market prices prevailing at the
time of resale, at prices related to such prevailing market prices or
negotiated prices. Any such resale may be made directly to purchasers or to
or through brokers or dealers who may receive compensation in the form of
commissions or concessions from any Participating Broker-Dealer and/or the
purchasers of any such New Notes. Any Participating Broker-Dealer that
resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a
distribution of such New Notes may be deemed to be an "underwriter" within
the meaning of the Securities Act and any profit on any such resale of New
Notes and any commissions or concessions received by any such persons may be
deemed to be underwriting compensation under the Securities Act. The Letter
of Transmittal states that by acknowledging that it will deliver and by
delivering a Prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.

For a period of one year after the Expiration Date, the Company will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any Participating Broker-Dealer that requests such documents
in the Letter of Transmittal.

This Prospectus has been prepared for use in connection with the Exchange Offer
and may be used by BancAmerica Securities, Inc. in connection with the offers
and sales related to market-making transactions in the New Notes. BancAmerica
Securities, Inc. may act as a principal or an agent in such transactions. Such
sales will be made at prices related to prevailing market prices at the time of
sale. The Company will not receive any of the proceeds of such sales.
BancAmerica Securities, Inc. has no obligation to make a market in the New Notes
and may discontinue its market-making activities at any time without notice, at
its sole discretion.
LEGAL MATTERS

Certain legal matters with regard to the validity of the New Notes will be
passed upon for the Company by Milbank, Tweed, Hadley & McCloy, Los Angeles,
California.

EXPERTS

The consolidated financial statements included in this Prospectus and
included elsewhere in the Registration Statement have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are included herein in reliance upon the authority of said
firm as experts in giving said report.

95
<PAGE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGE
----

Report of Independent Public Accountants . . . . . . . . . . . . . . . F-2
Consolidated Balance Sheets. . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Operations. . . . . . . . . . . . . . . . . F-4
Consolidated Statements of Stockholders' Equity. . . . . . . . . . . . F-5
Consolidated Statements of Cash Flows. . . . . . . . . . . . . . . . . F-6
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . F-7

F-1
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of Station Casinos, Inc.:

We have audited the accompanying consolidated balance sheets of Station Casinos,
Inc. (a Nevada corporation) and subsidiaries as of March 31, 1997 and 1996, and
the related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended March 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Station Casinos, Inc. and
subsidiaries as of March 31, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended March 31,
1997, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Las Vegas, Nevada
April 23, 1997 (except for Note 5, as
to which the date is June 27, 1997)

F-2
<PAGE>

STATION CASINOS, INC.
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
MARCH 31,
---------
1997 1996
---- ----
(AMOUNTS IN THOUSANDS,
EXCEPT SHARE DATA)
<S> <C> <C>
ASSETS
Current assets:

Cash and cash equivalents . . . . . . . . . . . . . . . . $ 42,522 $ 114,868
Accounts and notes receivable, net. . . . . . . . . . . . 7,852 5,151
Inventories . . . . . . . . . . . . . . . . . . . . . . . 3,473 2,299
Prepaid gaming taxes. . . . . . . . . . . . . . . . . . . 4,291 3,726
Prepaid expenses and other. . . . . . . . . . . . . . . . 11,231 7,395
---------- ----------
Total current assets . . . . . . . . . . . . . . . . . 69,369 133,439

Property and equipment, net. . . . . . . . . . . . . . . . . 1,069,052 616,211
Land held for development. . . . . . . . . . . . . . . . . . 26,354 28,934
Other assets, net. . . . . . . . . . . . . . . . . . . . . . 69,343 48,730
---------- ----------
Total assets . . . . . . . . . . . . . . . . . . . . . $1,234,118 $ 827,314
---------- ----------
---------- ----------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current portion of long-term debt . . . . . . . . . . . . $ 18,807 $ 23,256
Accounts payable. . . . . . . . . . . . . . . . . . . . . 21,106 11,091
Accrued payroll and related . . . . . . . . . . . . . . . 13,460 11,519
Construction contracts payable. . . . . . . . . . . . . . 94,835 27,879
Accrued interest payable. . . . . . . . . . . . . . . . . 10,625 6,875
Accrued expenses and other current liabilities. . . . . . 26,433 16,706
---------- ----------
Total current liabilities. . . . . . . . . . . . . . . 185,266 97,326
---------- ----------

Long-term debt, less current portion . . . . . . . . . . . . 742,156 441,742
Deferred income taxes, net . . . . . . . . . . . . . . . . . 7,848 9,776
---------- ----------
Total liabilities. . . . . . . . . . . . . . . . . . . 935,270 548,844
---------- ----------

Commitments and contingencies (Note 6)

Stockholders' equity:
Preferred stock, par value $.01; authorized 5,000,000
shares; 2,070,000 and 1,800,000 convertible preferred
shares issued and outstanding. . . . . . . . . . . . . 103,500 90,000
Common stock, par value $.01; authorized 90,000,000
shares; 35,318,057 and 35,303,346 shares issued
and outstanding..... . . . . . . . . . . . . . . . . . 353 353
Additional paid-in capital. . . . . . . . . . . . . . . . 167,397 167,623
Deferred compensation - restricted stock. . . . . . . . . (1,225) (1,811)
Retained earnings . . . . . . . . . . . . . . . . . . . . 28,823 22,305
---------- ----------
Total stockholders' equity . . . . . . . . . . . . . . 298,848 278,470
---------- ----------
Total liabilities and stockholders' equity . . . . . . $1,234,118 $ 827,314
---------- ----------
---------- ----------
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

F-3
<PAGE>

STATION CASINOS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED MARCH 31,
-----------------------------
1997 1996 1995
---- ---- ----
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Operating revenues:

Casino . . . . . . . . . . . . . . . . . . . . . . . . . $450,013 $358,495 $210,534
Food and beverage. . . . . . . . . . . . . . . . . . . . 92,220 73,057 43,208
Room . . . . . . . . . . . . . . . . . . . . . . . . . . 27,420 23,614 17,690
Other. . . . . . . . . . . . . . . . . . . . . . . . . . 48,957 39,099 36,561
---------- ---------- ----------
Gross revenues. . . . . . . . . . . . . . . . . . . . 618,610 494,265 307,993
Promotional allowances . . . . . . . . . . . . . . . . . (35,095) (27,408) (17,715)
---------- ---------- ----------
Net revenues. . . . . . . . . . . . . . . . . . . . . 583,515 466,857 290,278
---------- ---------- ----------

Operating costs and expenses:

Casino . . . . . . . . . . . . . . . . . . . . . . . . . 203,857 150,805 92,812
Food and beverage. . . . . . . . . . . . . . . . . . . . 68,994 57,659 34,045
Room . . . . . . . . . . . . . . . . . . . . . . . . . . 10,318 9,147 7,014
Other. . . . . . . . . . . . . . . . . . . . . . . . . . 23,927 24,902 27,270
Selling, general and administrative. . . . . . . . . . . 120,285 97,466 60,810
Corporate expense. . . . . . . . . . . . . . . . . . . . 18,284 15,979 13,141
Restructuring charge . . . . . . . . . . . . . . . . . . 2,016 - -
Development expenses . . . . . . . . . . . . . . . . . . 1,302 3,960 7,200
Depreciation and amortization. . . . . . . . . . . . . . 44,589 35,039 22,220
Preopening expenses. . . . . . . . . . . . . . . . . . . 31,820 2,436 19,378
---------- ---------- ----------
525,392 397,393 283,890
---------- ---------- ----------

Operating income . . . . . . . . . . . . . . . . . . . . . . 58,123 69,464 6,388

Other income (expense):
Interest expense, net. . . . . . . . . . . . . . . . . . (36,698) (30,563) (19,967)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . (47) 1,150 2,160
---------- ---------- ----------
(36,745) (29,413) (17,807)
---------- ---------- ----------
Income (loss) before income taxes. . . . . . . . . . . . . . 21,378 40,051 (11,419)
Income tax (provision) benefit . . . . . . . . . . . . . . . (7,615) (14,579) 3,477
---------- ---------- ----------
Net income (loss). . . . . . . . . . . . . . . . . . . . . . 13,763 25,472 (7,942)
Preferred stock dividends. . . . . . . . . . . . . . . . . . (7,245) (53) -
---------- ---------- ----------
Net income (loss) applicable to common stock . . . . . . . . $6,518 $25,419 $(7,942)
---------- ---------- ----------
---------- ---------- ----------
Earnings (loss) per common share . . . . . . . . . . . . . . $0.18 $0.75 $(0.26)
---------- ---------- ----------
---------- ---------- ----------
Weighted average common shares outstanding . . . . . . . . . 35,316,077 33,917,646 30,112,851
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

F-4
<PAGE>

STATION CASINOS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
PREFERRED RETAINED
ADDITIONAL COMPENSATION - EARNINGS TOTAL
PREFERRED COMMON PAID - IN RESTRICTED (ACCUMULATED STOCKHOLDERS'
STOCK STOCK CAPITAL STOCK DEFICIT) EQUITY
--------- ------ ---------- -------------- ------------ -------------
(amounts in thousands)
<S> <C> <C> <C> <C> <C> <C>
Balances, March 31, 1994 . . . . . . . . $- $300 $90,663 $- $4,828 $95,791
Restricted stock grant (Note 9). . . . . - 1 2,929 (2,930) - -
Amortization of deferred
compensation. . . . . . . . . . . . . - - - 37 - 37
Net loss . . . . . . . . . . . . . . . . - - - - (7,942) (7,942)
---------- ---------- ---------- ---------- ---------- ----------
Balances, March 31, 1995 . . . . . . . . - 301 93,592 (2,893) (3,114) 87,886
Issuance of common
stock (Note 7). . . . . . . . . . . . - 52 77,309 - - 77,361
Issuance of preferred
stock (Note 7). . . . . . . . . . . . 90,000 - (3,278) - - 86,722
Amortization of deferred
compensation. . . . . . . . . . . . . - - - 1,082 - 1,082
Preferred stock dividends. . . . . . . . - - - - (53) (53)
Net income . . . . . . . . . . . . . . . - - - - 25,472 25,472
---------- ---------- ---------- ---------- ---------- ----------
Balances March 31, 1996. . . . . . . . . 90,000 353 167,623 (1,811) 22,305 278,470
Issuance of preferred
stock (Note 7). . . . . . . . . . . . 13,500 - (405) - - 13,095
Exercise of stock options. . . . . . . . - - 179 - - 179
Amortization of deferred
compensation. . . . . . . . . . . . . - - - 586 - 586
Preferred stock dividends. . . . . . . . - - - - (7,245) (7,245)
Net income . . . . . . . . . . . . . . . - - - - 13,763 13,763
---------- ---------- ---------- ---------- ---------- ----------
Balances March 31, 1997. . . . . . . . . $103,500 $353 $167,397 $(1,225) $28,823 $298,848
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

F-5
<PAGE>

STATION CASINOS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED MARCH 31,
-----------------------------
1997 1996 1995
---- ---- ----
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:

Net income (loss). . . . . . . . . . . . . . . . . . . . . . $ 13,763 $ 25,472 $ (7,942)
---------- ---------- ----------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization. . . . . . . . . . . . . . 44,589 35,039 22,220
Amortization of debt discount and issuance costs . . . . 5,279 3,141 1,211
Preopening expenses. . . . . . . . . . . . . . . . . . . 31,820 2,436 19,378
(Decrease) increase in deferred income taxes . . . . . . (3,752) 8,995 (5,449)
Changes in assets and liabilities:
Increase in accounts and notes receivable, net . . . . (1,151) (522) (955)
Increase in inventories and prepaid expenses
and other. . . . . . . . . . . . . . . . . . . . . . (3,751) (2,428) (3,152)
(Decrease) increase in accounts payable. . . . . . . . 10,015 (2,710) 10,547
Increase in accrued expenses and other current
liabilities. . . . . . . . . . . . . . . . . . . . . 13,723 4,822 12,041
Other, net . . . . . . . . . . . . . . . . . . . . . . . 1,268 3,708 595
---------- ---------- ----------
Total adjustments . . . . . . . . . . . . . . . . 98,040 52,481 56,436
---------- ---------- ----------
Net cash provided by operating activities . . . . 111,803 77,953 48,494
---------- ---------- ----------

Cash flows from investing activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . (505,735) (279,340) (141,165)
Proceeds from sale of land, property and equipment . . . . 8,900 6,578 12,483
Land held for development. . . . . . . . . . . . . . . . . (36) (5,018) (5,507)
Other long-term assets . . . . . . . . . . . . . . . . . . (15,772) (1,638) (2,489)
Refund on land held for development. . . . . . . . . . . . - - 9,500
Increase (decrease) in construction contracts payable. . . 66,956 21,460 (10,337)
Preopening expenses. . . . . . . . . . . . . . . . . . . . (31,820) (2,436) (19,378)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . (1,501) (6,541) (692)
---------- ---------- ----------
Net cash used in investing activities . . . . . . (479,008) (266,935) (157,585)
---------- ---------- ----------

Cash flows from financing activities:
Borrowings (payments) under bank facility, net . . . . . . 277,000 (65,000) 37,000
Borrowings under Sunset loan agreement . . . . . . . . . . 46,000 - -
Proceeds from notes payable. . . . . . . . . . . . . . . . 2,250 42,438 13,757
Principal payments on notes payable. . . . . . . . . . . . (30,444) (34,958) (8,195)
Proceeds from the issuance of common stock . . . . . . . . - 78,246 -
Proceeds from the issuance of senior subordinated. . . . . - 191,292 72,091
Proceeds from the issuance of preferred stock. . . . . . . 13,095 87,300 -
Distributions paid to stockholders . . . . . . . . . . . . - - (4,014)
Dividends paid on preferred stock. . . . . . . . . . . . . (6,985) - -
Debt issuance costs and other, net . . . . . . . . . . . . (6,057) (12,429) (746)
---------- ---------- ----------
Net cash provided by financing activities . . . . 294,859 286,889 109,893
---------- ---------- ----------

Cash and cash equivalents:
(Decrease) increase in cash and cash equivalents . . . . . (72,346) 97,907 802
Balance, beginning of year . . . . . . . . . . . . . . . . 114,868 16,961 16,159
---------- ---------- ----------
Balance, end of year . . . . . . . . . . . . . . . . . . . $ 42,522 $ 114,868 $ 16,961

---------- ---------- ----------
---------- ---------- ----------
Supplemental cash flow disclosures:
Cash paid for interest, net of amounts capitalized . . . . $ 28,577 $ 27,817 $ 17,021
Cash paid for income taxes, net. . . . . . . . . . . . . . $ 9,250 $ 8,668 $ 1,303
Property and equipment purchases financed by debt. . . . . $ 361 $ 28,405 $ 22,719
Assets sold for note receivable. . . . . . . . . . . . . . $ 1,550 $ - $ -
</TABLE>

The accompanying notes are an integral part of these consolidated statements.

F-6
<PAGE>

STATION CASINOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

BASIS OF PRESENTATION AND ORGANIZATION

Station Casinos, Inc. (the "Company"), a Nevada Corporation, is an
established multi-jurisdictional gaming enterprise that currently owns and
operates three hotel/casino properties in Las Vegas, Nevada, a gaming and
entertainment complex in St. Charles, Missouri and a gaming and entertainment
complex in Kansas City, Missouri. The Company also owns and provides slot route
management services in Southern Nevada and Louisiana. Additionally, the Company
is constructing a new hotel/casino property in Las Vegas.

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries, Palace Station Hotel & Casino, Inc. ("Palace
Station"), Boulder Station, Inc. ("Boulder Station"), Texas Station, Inc.
("Texas Station"), Sunset Station, Inc. ("Sunset Station"), St. Charles
Riverfront Station, Inc. ("Station Casino St. Charles"), Kansas City Station
Corporation ("Station Casino Kansas City"), and Southwest Gaming Services, Inc.
("SGSI"). The Company owns a 50% interest in Town Center Amusements, Inc.
d.b.a. Barley's Casino & Brewing Company. The Company accounts for this
investment using the equity method of accounting. All significant intercompany
balances and transactions have been eliminated.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from those estimates.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include investments purchased with an original
maturity of 90 days or less.

INVENTORIES

Inventories are stated at the lower of cost or market; cost being
determined on a first-in, first-out basis.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation and amortization
are computed using the straight-line method over the estimated useful lives of
the assets or the terms of the capitalized lease, whichever is less. Costs of
major improvements are capitalized, while costs of normal repairs and
maintenance are charged to expense as incurred.

CAPITALIZATION OF INTEREST

The Company capitalizes interest costs associated with debt incurred in
connection with major construction projects. Interest capitalization ceases once
the project is complete. When no debt is specifically identified as being
incurred in connection with such construction projects, the Company capitalizes
interest on amounts expended on the project at the Company's average cost of
borrowed money. Interest capitalized for the fiscal years ended March 31, 1997,
1996 and 1995 was approximately $21.1 million, $6.1 million and $6.0 million,
respectively.

DEBT ISSUANCE COSTS

Debt issuance costs incurred in connection with the issuance of long-term
debt are capitalized and amortized to interest expense over the terms of the
related debt agreements.

F-7
<PAGE>

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
(CONTINUED)

DEVELOPMENT ACTIVITIES

The Company expenses all internal salaries and related expenses with
respect to development activities. Other development costs, including legal,
lobbying, and consulting are expensed, until such time

as the jurisdiction has approved gaming and the Company has a specific site
identified. Costs incurred subsequent to these criteria being met are
capitalized. At March 31, 1997 and 1996, the Company had capitalized costs of
$0.7 million and $1.3 million, respectively, related to various development
projects. These costs are included in other assets, net in the accompanying
consolidated balance sheets.

PREOPENING EXPENSES

Prior to the opening of a facility, all operating expenses, including
incremental salaries and wages, related thereto are capitalized as preopening
expenses. At March 31, 1997, $2.4 million of preopening expenses related to a
new hotel/casino under construction known as Sunset Station had been capitalized
and are included in other assets, net in the accompanying consolidated balance
sheets. The Company expenses preopening expenses upon the opening of the related
facility. During the fiscal year ended March 31, 1995, the Company incurred
preopening expenses of $7.5 million and $11.9 million related to Boulder Station
and Station Casino St. Charles, respectively. During the fiscal year ended
March 31, 1996, the Company incurred preopening expenses of $2.4 million related
to new projects for Texas Station and Barley's Casino & Brewing Company and
expansion projects at Boulder Station and Station Casino St. Charles. During
the fiscal year ended March 31, 1997, the Company incurred preopening expenses
of $31.8 million substantially related to the opening of Station Casino Kansas
City.

REVENUES AND PROMOTIONAL ALLOWANCES

In accordance with industry practice, the Company recognizes as casino
revenues the net win from gaming activities, which is the difference between
gaming wins and losses. All other revenues are recognized as the service is
provided. Revenues include the retail value of accommodations and food and
beverage provided on a complimentary basis to customers. The estimated
departmental costs of providing such promotional allowances are included in
casino costs and expenses and consist of the following (amounts in thousands):

FOR THE YEARS ENDED MARCH 31,
1997 1996 1995
---- ---- ----
Food and beverage. . $ 27,418 $ 23,483 $ 14,276
Room . . . . . . . . 1,439 1,203 874
Other. . . . . . . . 1,263 653 313
--------- --------- ---------
Total . . . . . $ 30,120 $ 25,339 $ 15,463
--------- --------- ---------
--------- --------- ---------

EARNINGS (LOSS) PER COMMON SHARE

Earnings (loss) per common share is computed by dividing net income (loss)
applicable to common stock by the weighted average common shares outstanding
during the period. Earnings per share assuming full dilution is not presented
because the exercise of stock options and the conversion of the convertible
preferred stock does not have a dilutive effect on the per share amounts.

The Financial Accounting Standards Board has issued Statement on Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share," which is effective
for fiscal years ending after December 15, 1997. This statement replaces
primary earnings per share ("EPS") with basic EPS. No dilution for potentially
dilutive securities is included in basic EPS. This statement also requires when
applying the treasury stock method for diluted EPS to compute dilution for
options and warrants, to use average share price for the period, rather than the
more dilutive greater of the average share price or end-of-period share price.
The Company will adopt SFAS No. 128 in the fiscal year ending March 31, 1998.
Management believes the adoption of SFAS No. 128 will have no impact on the
Company's previously reported earnings per share.

F-8
<PAGE>

2. ACCOUNTS AND NOTES RECEIVABLE

Components of accounts and notes receivable are as follows (amounts in
thousands):

MARCH 31,
1997 1996
-------- ---------
Casino. . . . . . . . . . $ 3,698 $ 2,569
Hotel . . . . . . . . . . 1,331 1,144
Other . . . . . . . . . . 3,876 2,082
-------- ---------
8,905 5,795
Allowance for doubtful accounts (1,053) (644)
-------- ---------
Accounts and notes receivable, net $ 7,852 $ 5,151
-------- ---------
-------- ---------

3. PROPERTY AND EQUIPMENT

Property and equipment consists of the following as of March 31, 1997 and
1996 (amounts in thousands):

<TABLE>
<CAPTION>
Estimated Life March 31,
(years) 1997 1996
-------------- ---------- ----------
<S> <C> <C> <C>
Land. . . . . . . . . . . . . . . . . . . . . . . . . . -- $ 17,114 $ 16,962
Land leases acquired. . . . . . . . . . . . . . . . . . 48-52 4,395 4,395
Buildings and leasehold improvements. . . . . . . . . . 31-45 554,294 285,558
Boats and barges. . . . . . . . . . . . . . . . . . . . 20-45 123,774 81,463
Furniture, fixtures and equipment . . . . . . . . . . . 3-7 192,546 163,580
Construction in progress. . . . . . . . . . . . . . . . -- 283,792 165,513
---------- ----------
1,175,915 717,471
Accumulated depreciation and amortization . . . . . . . (106,863) (101,260)
---------- ----------
Property and equipment, net. . . . . . . . . . . . . $1,069,052 $ 616,211
---------- ----------
---------- ----------
</TABLE>

At March 31, 1997 and 1996, substantially all property and equipment of
the Company is pledged as collateral for long-term debt.

4. LAND HELD FOR DEVELOPMENT

The Company has acquired several parcels of land in various jurisdictions
as part of the Company's development activities. The Company's decision whether
to proceed with any new gaming opportunity is dependent upon future economic and
regulatory factors, the availability of financing and competitive and strategic
considerations. As many of these considerations are beyond the Company's
control, no assurances can be made that the Company will be able to obtain
appropriate licensing or be able to secure additional, acceptable financing in
order to proceed with any particular project. At March 31, 1997 and 1996, $22.6
million and $22.7 million, respectively, of land had been acquired for potential
gaming projects in jurisdictions where gaming has been approved. In addition, at
March 31, 1997 and 1996, $3.7 million and $6.2 million, respectively, of land
had been acquired in certain jurisdictions where gaming has not yet been
approved. No assurances can be made that these jurisdictions will approve gaming
in the future.

The Company has entered into various purchase agreements whereby the
Company has the option to acquire or lease land for development of potential new
gaming projects totaling $31.3 million and $34.2 million at March 31, 1997 and
1996, respectively. In consideration for these options, the Company has paid or
placed in escrow $6.0 million and $2.4 million at March 31, 1997 and 1996,
respectively. Should the Company not exercise its option to acquire or lease the
land, it would forfeit all amounts paid or placed in escrow as of March 31,
1997. These option payments are included in other assets, net in the
accompanying consolidated balance sheets.

F-9
<PAGE>

5. LONG-TERM DEBT

Long-term debt consists of the following (amounts in thousands):

<TABLE>
<CAPTION>
March 31, March 31,
1997 1996
---------- ----------
<S> <C> <C>
STATION CASINOS, INC. (EXCLUDING SUNSET STATION):
Reducing revolving credit facility, secured by
substantially all of the assets of Palace Station,
Boulder Station, Texas Station, Station Casino
St. Charles and Station Casino Kansas City,
$368 million limit at March 31, 1997, reducing
quarterly by varying amounts until September 2000
when the remaining principal balance is due,
interest at a margin above the bank's prime rate
or the Eurodollar Rate (7.89% at March 31, 1997). . . . . . . . . . . . $ 277,000 $ --
9 5/8% senior subordinated notes, payable interest
only semi-annually, principal due June 1, 2003,
net of unamortized discount of $6.8 million at
March 31, 1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186,248 185,531
10 1/8% senior subordinated notes, payable interest
only semi-annually, principal due March 15, 2006,
net of unamortized discount of $1.2 million at
March 31, 1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196,818 196,737
Notes payable to banks and others, collateralized by
slot machines and related equipment, monthly
installments including interest ranging from 7.47%
to 7.94%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,952 24,726
Capital lease obligations, collateralized by furniture
and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,703 12,171
Other long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,242 45,833
---------- ----------
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 714,963 464,998

SUNSET STATION, INC.:
$110 million Sunset Station first mortgage construction/term
loan agreement, secured by substantially all of the assets
of Sunset Station, interest at a margin of 375 basis
points above the Eurodollar Rate (9.37% at March 31, 1997),
due September 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . 46,000 -
---------- ----------
Total long-term debt. . . . . . . . . . . . . . . . . . . . . . . . 760,963 464,998
Current portion of long-term debt. . . . . . . . . . . . . . . . . . . . . (18,807) (23,256)
---------- ----------
Total long-term debt, less current portion. . . . . . . . . . . . . $ 742,156 $ 441,742
---------- ----------
---------- ----------
</TABLE>

In June 1993, the Company completed an offering at par of $110 million in 9
5/8% senior subordinated notes due in June 2003. In May 1994, the Company
completed an offering of $83 million in senior subordinated notes that rank PARI
PASSU with the existing $110 million senior subordinated notes, and have
identical maturities and covenants as the original issue. The $83 million senior
subordinated notes have a coupon rate of 9 5/8%and were priced to yield 11.5% to
maturity. The discount on the $83 million senior subordinated notes has been
recorded as a reduction to long-term debt in the accompanying consolidated
balance sheets.

In March 1996, the Company completed an offering of $198 million of senior
subordinated notes due in March 2006, that rank PARI PASSU with the existing
$193 million of senior subordinated notes. The $198 million senior subordinated
notes have a coupon rate of 10 1/8% and were priced to yield 10.24% to maturity.
The discount on the $198 million senior subordinated notes has been recorded as
a reduction to long-term debt in the accompanying consolidated balance sheets.

In April 1997, the Company completed an offering of $150 million of
senior subordinated notes due in April 2007, that rank PARI PASSU with the
Company's existing senior subordinated notes. The $150 million senior
subordinated notes have a coupon rate of 9 3/4% and were priced to yield 10.37%
to maturity. The discount on the $150 million senior subordinated notes will be
recorded as a reduction to long-term debt. Proceeds from the offering were used
to pay down amounts outstanding under the reducing revolving credit facility.

F-10
<PAGE>

5. LONG-TERM DEBT (CONTINUED)

The indentures governing the Company's senior subordinated notes ("the
Indentures") contain certain customary financial and other covenants, which
among other things, govern the Company and certain of its subsidiaries ability
to incur indebtedness (except, as specifically allowed) unless after giving
effect thereto, a 2.0 to 1.0 pro forma Consolidated Coverage Ratio (as defined
in the Indentures) has been met. As of March 31, 1997, the Company's
Consolidated Coverage Ratio was 2.66 to 1.00.

On July 5, 1995, the Company obtained a $275 million reducing revolving
credit facility. On March 25, 1996, the Company amended and restated this
bank facility, providing for borrowings up to an aggregate principal amount
of $400 million. On March 21 and June 27, 1997, the Company obtained certain
amendments to the reducing revolving bank credit facility in order to enhance
its borrowing capacity (the "Bank Facility"). The Bank Facility is secured by
substantially all the assets of Palace Station, Boulder Station, Texas
Station, Station Casino St. Charles and Station Casino Kansas City
(collectively, the "Borrowers"). The Company and SGSI guarantee the
borrowings under the Bank Facility (collectively the "Guarantors"). The Bank
Facility matures on September 30, 2000 and reduces quarterly by varying
amounts (including $8 million for the fiscal quarter ending on June 30, 1997
and $10 million for each quarter ending September 30, 1997, December 31, 1997
and March 31, 1998). Borrowings under the Bank Facility bear interest at a
margin above the bank's prime rate or LIBOR, as selected by the Company. The
margin above such rates, and the fee on the unfunded portions of the Bank
Facility, will vary quarterly based on the combined Borrower's and the
Company's consolidated ratio of funded debt to earnings before interest,
taxes, depreciation and amortization ("EBITDA").

The Bank Facility contains certain financial and other covenants. These
include a maximum funded debt to EBITDA ratio for the Borrowers combined of 3.00
to 1.00 for each fiscal quarter through June 30, 1997, 2.75 to 1.00 for each
fiscal quarter through June 30, 1998, and 2.50 to 1.00 for each fiscal quarter
thereafter, a minimum fixed charge coverage ratio for the preceding four
quarters for the Borrowers combined of 1.35 to 1.00 for periods March 31, 1996
through June 30, 1998, and 1.50 to 1.00 for periods thereafter, a limitation on
indebtedness, and limitations on capital expenditures. As of March 31, 1997,
the Borrowers funded debt to EBITDA ratio was 1.97 to 1.00 and the fixed charge
coverage ratio for the fiscal year ended March 31, 1997 was 2.54 to 1.00. A
tranche of the Bank Facility contains a minimum tangible net worth requirement
for Palace Station (as defined) and certain restrictions on distributions of
cash from Palace Station to the Company. As of March 31, 1997, Palace Station's
tangible net worth exceeded the requirement by approximately $7 million. These
covenants limit Palace Station's ability to make payments to the Company, a
significant source of anticipated cash for the Company.

In addition, the Bank Facility has financial covenants relating to the
Company. These include prohibitions on dividends on or redemptions of the
Company's common stock, restrictions on repayment of any subordinated debt,
limitations on indebtedness beyond existing indebtedness, the Company's
senior subordinated notes and up to $25 million of purchase money
indebtedness, minimum consolidated net worth requirements for the Company of
$165 million plus post October 1, 1995 preopening expenses, 95% of post
October 1, 1995 net income (not reduced by net losses) and 100% of net equity
offering proceeds, and limitations on capital expenditures. As of March 31,
1997, the Company's consolidated net worth exceeded the requirement by
approximately $20 million. The Bank Facility also includes a maximum funded
debt to EBITDA (adjusted for preopening expenses) ratio including annualized
EBITDA (adjusted for preopening expenses) for any new venture, as defined,
open less than a year for the Company on a consolidated basis of 5.00 to 1.00
for the fiscal quarter ended March 31, 1997, 5.75 to 1.00 for the fiscal
quarter ending June 30, 1997, 5.85 to 1.00 for the fiscal quarter ending
September 30, 1997, 5.75 to 1.00 for each fiscal quarter through March 31,
1998, 5.00 to 1.00 for the fiscal quarter ending June 30, 1998, 4.75 to 1.00
for the fiscal quarter ending September 30, 1998, 4.50 to 1.00 for the fiscal
quarter ending December 31, 1998, 4.25 to 1.00 for each fiscal quarter
through June 30, 1999, 4.00 to 1.00 for the fiscal quarter ending September
30, 1999 and 3.75 to 1.00 thereafter. As of March 31, 1997, the Company's
funded debt to EBITDA ratio was 4.54 to 1.00. Such consolidated calculations
for the Company do not include Sunset Station (see below). In addition, the
Bank Facility prohibits the Company from holding cash and cash equivalents in
excess of the sum of the amounts necessary to make the next scheduled
interest or dividend payments on the Company's senior subordinated notes and
the Convertible Preferred Stock (see Note 7), the amounts necessary to fund
casino bankroll in the ordinary course of business, and $2,000,000. The
Guarantors waive certain defenses and rights including rights of subrogation
and reimbursement. The Bank Facility contains customary events of default
and remedies and is cross-defaulted to the Company's senior subordinated
notes and the Change

F-11
<PAGE>

5. LONG-TERM DEBT (CONTINUED)

of Control Triggering Event as defined in the Indentured debt to EBITDA ratio
was 4.54 to 1.00. Such consolidated calculations for the Company do not
include.

On September 25, 1996, Sunset Station, a wholly-owned subsidiary of the
Company, entered into a Construction/Term Loan Agreement (the "Sunset Loan
Agreement") with Bank of America National Trust and Savings Association, Bank of
Scotland, Societe Generale and each of the other lenders party to such
agreement, pursuant to which Sunset Station received a commitment for $110
million to finance the remaining development and construction costs of Sunset
Station. The Company also entered into an operating lease for certain
furniture, fixtures and equipment with a cost of $40 million to be subleased to
Sunset Station as part of the Sunset Station Project (See Note 6).

The Sunset Loan Agreement includes a first mortgage term note in the amount
of $110 million (the "Sunset Note") which is non-recourse to the Company, except
as to certain construction matters pursuant to a completion guarantee dated as
of September 25, 1996, executed by the Company on behalf of Sunset Station and
except that the Company has pledged all of the stock of Sunset Station as
security for the Sunset Loan Agreement. The Sunset Note is to reduce $1.8
million for each fiscal quarter ending March 1998 through December 1998, $2.3
million for each fiscal quarter ending March 1999 through December 1999, and
$2.0 million for the fiscal quarters ending March 2000 and June 2000 and matures
in September 2000. In addition, the Sunset Note is subject to prepayment
subsequent to July 1998 by an amount equal to a specified percentage of Excess
Cash Flow, as defined. The Sunset Note carries an interest rate of 375 basis
points above the Eurodollar Rate (as defined in the Sunset Loan Agreement). The
Sunset Note is secured by substantially all of the assets of Sunset Station,
including a deed of trust with respect to the real property on which Sunset
Station is being constructed, a portion of which is subject to a lease from the
Company to Sunset Station, and the remainder of which property is owned by
Sunset Station and a security agreement as to all tangible and intangible
personal property including Sunset Station's rights under an operating lease for
certain furniture, fixtures and equipment to be used by Sunset Station.

The Sunset Loan Agreement contains certain customary financial and other
covenants (related exclusively to Sunset Station) including a minimum fixed
charge coverage ratio as of the last day of any quarter after the opening of
Sunset Station of not less than 1.10 to 1.00, a maximum senior funded debt to
EBITDA (adjusted for certain cash contributions or advances by the Company)
ratio after opening of 4.50 to 1.00 for the first full quarter, reducing by 0.25
on certain quarters thereafter to 3.25 to 1.00 for the tenth quarter and each
quarter thereafter, and a minimum net worth as of any quarter end after opening
of not less than $52 million plus 80% of net income (not reduced by net losses)
for each quarter after opening, plus 100% of certain additional equity
contributions by the Company and Supplemental Loans, as defined. In addition,
the agreement places restrictions on indebtedness and guarantees, dividends,
stock redemptions, mergers, acquisitions, sale of assets or sale of stock in
subsidiaries and limitations on capital expenditures.

In addition, the Company has provided a funding commitment to Sunset
Station of up to an additional $25 million pursuant to a supplemental loan
agreement (the "Supplemental Loan Agreement"). The Sunset Loan Agreement
requires Sunset Station to draw amounts under the Supplemental Loan Agreement in
the event of the failure of certain financial covenants under the Sunset Loan
Agreement. Loans under this funding commitment may be drawn down beginning on
the last day of the first full calendar quarter ending after Sunset Station
opens for business in the amount of up to $10 million during the first year
after such date, up to $10 million during the second year after such date and up
to $5 million during the third year after such date. The Supplemental Loan
Agreement also provides for an additional, separate funding commitment up to $40
million in connection with a purchase option for certain furniture, fixtures and
equipment under the Sunset Operating Lease. Sunset Station will pay interest at
a rate per annum equal to the three-month Eurodollar Rate, the interest being
payable solely in the form of commensurate additions to the principal of the
Supplemental Loans. The Supplemental Loan Agreement expires in September 2001.
The funding commitments under the Supplemental Loan Agreement are subject to
limitations imposed by the indentures governing the Company's existing senior
subordinated notes and the Bank Facility.

In order to manage the interest rate risk associated with the Sunset Note,
Sunset Station entered into an interest rate swap agreement with Bank of America
National Trust and Savings Association. This

F-12
<PAGE>

5. LONG-TERM DEBT (CONTINUED)

agreement swaps the variable rate interest pursuant to the Sunset Note to a
fixed rate of 9.58% on $35 million notional amount as of January 1997 increasing
to $60 million at March 1997, $90 million at June 1997, $100 million at
September 1997 and then decreasing to $95 million at June 1998. The agreement
expires in December 1998. The difference paid or received pursuant to the swap
agreement is accrued as interest rates change and recognized as an adjustment to
interest expense on the Sunset Note. Sunset Station is exposed to credit risk
in the event of non-performance by the counterparty to the agreement. The
Company believes the risk of non-performance by the counterparty is minimal. As
of March 31, 1997, the market value of this interest rate swap was $1.0 million.

The estimated fair value of the Company's long-term debt at March 31, 1997
was approximately $755.6 million, compared to its book value of approximately
$761.0 million. The estimated fair value amounts were based on quoted market
prices on or about March 31, 1997 for the Company's debt securities that are
publicly traded. For debt securities that are not publicly traded, fair value
was estimated based on the quoted market prices for similar issues or the
current rates offered to the Company for debt having the same remaining
maturities.

Scheduled maturities of long-term debt are as follows (amounts in
thousands):

FISCAL YEAR ENDING MARCH 31,
1998. . . . . . . . . . . . . . . . $ 18,807
1999. . . . . . . . . . . . . . . . 12,948
2000. . . . . . . . . . . . . . . . 11,141
2001. . . . . . . . . . . . . . . . 333,373
2002. . . . . . . . . . . . . . . . 1,288
Thereafter. . . . . . . . . . . . . 383,406
----------
Total. . . . . . . . . . . . . $ 760,963
----------
----------

6. COMMITMENTS AND CONTINGENCIES

STATION CASINO ST. CHARLES

In September 1994, Station Casino St. Charles entered into an agreement
for property acquisitions with the City of St. Charles, Missouri which allows
for the acquisition by the Company of property within a designated 107-acre
Redevelopment Project Area, a portion of which is adjacent to Station Casino St.
Charles. This land is being acquired for the construction of a mixed use
development which may include retail space, a hotel, office space, convention
space or restaurants. The Company has a right to terminate the agreement if all
related acquisition costs exceed $13.7 million. As of March 31, 1997, the
Company has incurred $3.4 million of acquisition costs included in property and
equipment, net in the accompanying consolidated balance sheets.

BOULDER STATION LEASE

The Company entered into a ground lease for 27 acres of land on which
Boulder Station is located. The Company leases this land from a trust pursuant
to a long-term ground lease. The trustee of this trust is Bank of America
NT&SA, the beneficiary of which is KB Enterprises, an affiliated company owned
by Frank J. Fertitta, Jr. and Victoria K. Fertitta (the "Related Lessor"), the
parents of Frank J. Fertitta III, Chairman of the Board and Chief Executive
Officer of the Company. The lease has a term of 65 years with monthly payments
of $125,000 through June 1998. In June 1998, and every ten years thereafter, the
rent will be adjusted to the product of the fair market value of the land and
the greater of (i) the then prevailing annual rate of return for comparably
situated property or (ii) 8% per year. The rent will be further adjusted in June
2003, and every ten years thereafter by a cost of living factor. In no event
will the rent for any period be less than the immediately prior period. Pursuant
to the ground lease, the Company has an option, exercisable at five-year
intervals beginning in June 1998, to purchase the land at fair market value.
The Company's leasehold interest in the property is subject to a lien to secure
borrowings under the Bank Facility.

F-13
<PAGE>

6. COMMITMENTS AND CONTINGENCIES (CONTINUED)

TEXAS STATION LEASE

The Company entered into a ground lease for 47 acres of land on which Texas
Station is located. The Company leases this land from a trust pursuant to a
long-term ground lease. The trustee of this trust is Bank of America NT&SA,
the beneficiary of which is Texas Gambling Hall & Hotel, Inc. an affiliate
company of the Related Lessor. The lease has a term of 65 years with monthly
rental payments of $150,000 through July 2000. In July 2000, and every ten
years thereafter, the rent will be adjusted to the product of the fair market
value of the land and the greater of (i) the then prevailing annual rate of
return being realized for owners of comparable land in Clark County or (ii) 8%
per year. The rent will be further adjusted by a cost of living factor after
the first ten years and every ten years thereafter. In no event will the rent
for any period be less than the immediately prior period. Pursuant to the
ground lease, the Company will have an option, exercisable at five-year
intervals beginning in May 2000, to purchase the land at fair market value. The
Company's leasehold interest in the property is subject to a lien to secure
borrowings under the Bank Facility.

SUNSET STATION LEASE

In June 1994, the Company entered into a lease agreement for approximately
47.5 acres of land in the Southeast area of Las Vegas on which Sunset Station is
being developed. The lease has a term of 65 years with monthly rental payments
of $120,000, adjusted on each subsequent five-year anniversary by a cost of
living factor. On the seventh anniversary of the lease, the Company has an
option to purchase this land for $23.8 million. Additionally, on the seventh
anniversary of the lease, the lessor has an option to sell this land to the
Company for $21.8 million.

STATION CASINO KANSAS CITY LEASE

The Company has entered into a joint venture which owns the land on which
Station Casino Kansas City is located. At March 31, 1997, $3.5 million related
to this investment is included in other assets, net in the accompanying
consolidated balance sheets.

In April 1994, Station Casino Kansas City entered into an agreement with
the joint venture to lease this land. The agreement requires monthly payments
of $85,000 through March 31, 1997 and $90,000 through the remainder of the lease
term. The lease expires March 31, 2006, with an option to extend the lease for
up to eight renewal periods of ten years each, plus one additional seven year
period. Commencing April 1, 1998 and every anniversary thereafter, the rent
shall be adjusted by a cost of living factor. In connection with the joint
venture agreement, the Company received an option providing for the right to
acquire the joint venture partner's interest in this joint venture. The Company
has the option to acquire this interest at any time after April 1, 2002 through
April 1, 2011 for $11.7 million, however, commencing April 1, 1998 the purchase
price will be adjusted by a cost of living factor of not more than 5% or less
than 2% per annum. At March 31, 1997, $2.6 million paid by the Company in
consideration for this option is included in other assets, net in the
accompanying consolidated balance sheets.

SOUTHERN FLORIDA

In October 1994, the Company entered into an agreement to form a limited
partnership with the existing operator of a pari-mutuel facility in Southern
Florida. In the event casino gaming is approved by the voters of Florida by
October 2000 and in the event the site is licensed by the state, the Company
will be obligated to make capital contributions to the partnership totaling $35
million, reduced by credits for amounts previously contributed to any Florida
gaming referendum campaign.

F-14
<PAGE>

6. COMMITMENTS AND CONTINGENCIES (CONTINUED)

OPERATING LEASES

The Company leases several parcels of land and equipment used in operations
at Palace Station, Boulder Station, Texas Station, Station Casino St. Charles
and Station Casino Kansas City and for land on which Sunset Station is being
developed. Leases on various parcels ranging from 13 acres to 171 acres have
terms expiring between March 2006 and July 2060. Future minimum lease payments
required under these operating leases and other noncancelable operating leases
are as follows for the fiscal years ending March 31, (amounts in thousands):

FUTURE MINIMUM LEASE PAYMENTS

1998. . . . . . . . . . . . . . . . $ 6,423
1999. . . . . . . . . . . . . . . . 6,296
2000. . . . . . . . . . . . . . . . 5,932
2001. . . . . . . . . . . . . . . . 5,932
2002. . . . . . . . . . . . . . . . 5,932
Thereafter. . . . . . . . . . . . . 280,479
----------
Total. . . . . . . . . . . . . $ 310,994
----------
----------

Rent expense totaled approximately $5.4 million, $6.5 million and $4.9
million for the years ended March 31, 1997, 1996 and 1995, respectively. Rents
of $2.2 million and $2.1 million were capitalized in connection with the
construction of Station Casino Kansas City and Sunset Station for the fiscal
years ended March 31, 1997 and 1996, respectively.

During fiscal 1995, the Company sold approximately $13.0 million of
equipment and leased it back under lease agreements ranging from three to seven
years. The transactions produced gains of approximately $665,000 which have been
deferred and are being amortized against lease expense over the remaining lease
terms.

EQUIPMENT LEASE

In connection with the Sunset Loan Agreement, the Company entered into an
operating lease for furniture, fixtures and equipment (the "Equipment") with a
cost of $40 million, dated as of September 25, 1996 (the "Sunset Operating
Lease") with First Security Trust Company of Nevada. The Sunset Operating Lease
expires in October 2000 and carries a lease rate of 225 basis points above the
Eurodollar Rate. The Company has entered into a sublease with Sunset Station
for the Equipment pursuant to an operating lease with financial terms
substantially similar to the Sunset Operating Lease. In the event that Sunset
Station elects to purchase the Equipment, the Company has provided a funding
commitment up to the amount necessary for such purchase pursuant to the
Supplemental Loan Agreement (subject to the limitations on funding contained in
the Supplemental Loan Agreement) (See Note 5). In connection with the Sunset
Operating Lease, the Company also entered into a participation agreement, dated
as of September 25, 1996 (the "Participation Agreement") with the trustee, as
lessor under the Sunset Operating Lease, and holders of beneficial interests in
the Lessor Trust (the "Holders"). Pursuant to the Participation Agreement, the
Holders will advance funds to the trustee for the purchase by the trustee of, or
to reimburse the Company for, the purchase of the Equipment, which will then be
leased to the Company, and in turn subleased to Sunset Station. Pursuant to the
Participation Agreement, the Company also agreed to indemnify the Lessor and the
Holders against certain liabilities.

LEGAL MATTERS

The Company is a litigant in legal matters arising in the normal course of
business. In the opinion of management, all pending legal matters are either
adequately covered by insurance or, if not insured, will not have a material
adverse effect on the financial position or the results of operations of the
Company.

F-15
<PAGE>

7. STOCKHOLDER'S EQUITY

In July 1995, the Company completed a public offering of 5,175,000 shares
of common stock at $16 per share generating net proceeds of approximately $78.2
million, before deducting $0.8 million of offering costs paid by the Company.
The proceeds from this offering were primarily used to acquire the assets of
Texas Station located in North Las Vegas, which commenced operations July 12,
1995. The seller of the assets is a wholly-owned subsidiary of a trust of which
the Related Lessor is the sole trustee (the "Seller"). The purchase price of
such assets was an amount equal to the Seller's out-of-pocket costs incurred in
connection with the financing, development and construction of the hotel/casino
through the closing date. At closing, the Company paid $62.8 million to the
Seller and assumed various liabilities and contracts to complete construction of
the facility. The total cost of the property was approximately $84.9 million.
The land on which the Texas Station facility is situated is being leased to the
Company by the Seller pursuant to a long-term ground lease (See Note 6).

In March 1996, the Company completed a public offering of 1,800,000 shares
of convertible preferred stock (the "Convertible Preferred Stock") at $50.00 per
share generating net proceeds of approximately $87.3 million, before deducting
$0.6 million of offering costs paid by the Company. In April 1996, the
underwriters exercised their option to purchase an additional 270,000 shares of
the Convertible Preferred Stock generating net proceeds to the Company of
approximately $13.1 million. The Convertible Preferred Stock is convertible at
an initial conversion rate of 3.2573 shares of common stock for each share of
Convertible Preferred Stock. The Convertible Preferred Stock is redeemable, at
the option of the Company in whole or in part, for shares of the Company's
common stock at any time after March 15, 1999, initially at a redemption price
of $52.45 per share and thereafter at prices decreasing annually to $50.00 per
share of Convertible Preferred Stock on and after March 15, 2006, plus accrued
and unpaid dividends. The common shares to be issued is determined by dividing
the redemption price by the lower of the average daily closing price for the
Company's common stock for the preceding 20 trading days or the closing price of
the Company's common stock on the first business day preceding the date of the
redemption notice. Any fractional shares would be paid in cash. Dividends on
the Convertible Preferred Stock of $3.50 per share annually, accrue and are
cumulative from the date of issuance. The Convertible Preferred Stock has a
liquidation preference of $50.00 per share, plus accrued and unpaid dividends.

8. RELATED PARTIES

The Company has employed McNabb/McNabb/DeSoto/Salter & Co. ("MMDS") to
provide advertising and marketing research services. Certain stockholders of the
Company own a 50% interest in MMDS. During the fiscal years ended March 31,
1997, 1996 and 1995 the Company paid MMDS $27.2 million, $17.4 million and
$12.7 million respectively, for advertising, market research and other costs
related to these activities. In management's opinion, these transactions were
conducted with terms as fair to the Company as could have been obtained from
unaffiliated companies. In April 1997, the Company purchased the assets of
MMDS for approximately $0.8 million.

9. BENEFIT PLANS

STOCK COMPENSATION PROGRAM

The Company has adopted a Stock Compensation Program (the "Program")
which includes (i) an Incentive Stock Option Plan for the grant of incentive
stock options, (ii) a Compensatory Stock Option Plan providing for the grant
of non-qualified stock options, and (iii) a Restricted Shares Plan providing
for the grant of restricted shares of common stock. Officers, key employees,
directors (whether employee directors or non-employee directors) and
independent contractors or agents of the Company and its subsidiaries are
eligible to participate in the program. However, only employees of the
Company and its subsidiaries are eligible to receive incentive stock options.

A maximum of 6,307,000 shares of common stock have been reserved for
issuance under the Program. Options are granted at the current market price at
the date of grant. The plan provides for a variety

F-16
<PAGE>

9. BENEFIT PLANS (CONTINUED)

of vesting schedules, ranging from immediate to twenty percent a year for five
years, to be determined at the time of grant. All options have an exercise
period of ten years from the date of grant.

The Program will terminate ten years from the date of adoption, unless
terminated earlier by the Board of Directors, and no options or restricted
shares may be granted under the Program after such date. Summarized information
for the Program is as follows:

<TABLE>
<CAPTION>
1997 1996 1995
------------------------ ------------------------- ------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding Beginning of the Year 2,697,012 $ 16.24 2,372,100 $ 19.05 1,943,725 $ 20.09
Granted 2,160,822 $ 14.01 1,593,305 $ 13.42 541,750 $ 15.50
Exercised (14,711) $ 12.16 (46) $ 12.00 - $ -
Canceled (410,941) $ 15.70 (1,268,347) $ 17.95 (113,375) $ 19.89
--------- ---------- ---------
Outstanding End of the Year 4,432,182 $ 15.22 2,697,012 $ 16.24 2,372,100 $ 19.05
--------- ---------- ---------
--------- ---------- ---------
Restricted Stock Grants - - 170,500
--------- ---------- ---------
--------- ---------- ---------
Exercisable at End of Year 1,408,893 $ 16.50 993,032 $ 16.67 721,200 $ 20.06
--------- ---------- ---------
--------- ---------- ---------
Options Available for Grant 1,689,561 649,942 479,910
--------- ---------- ---------
--------- ---------- ---------
</TABLE>

The following table summarizes information about the options outstanding at
March 31, 1997:

<TABLE>
<CAPTION>
Options Outstanding Options Exerciseable
----------------------------------------- --------------------------
Weighted
Number Average Weighted Number Weighted
Range of Outstanding Remaining Average Exercisable Average
Exercise at Contractual Exercise at Exercise
Prices March 31, 1997 Life Price March 31, 1997 Price
------------------------------------------------------------ --------------------------
<S> <C> <C> <C> <C> <C>
$ 9.38 - $ 9.88 228,000 9.9 $ 9.50 - $ -
$11.63 - $13.75 890,081 7.3 $ 12.07 549,284 $ 12.04
$14.38 - $15.00 2,149,101 8.9 $ 14.59 100,709 $ 14.44
$18.00 - $20.00 1,075,000 6.3 $ 19.72 695,900 $ 19.83
$22.00 - $22.00 90,000 2.8 $ 22.00 63,000 $ 22.00
--------- -- -------- --------- --------
4,432,182 7.9 $ 15.22 1,408,893 $ 16.50
--------- -- -------- --------- --------
--------- -- -------- --------- --------
</TABLE>

Restricted stock grants in the amount of 170,500 shares were issued during
the fiscal year ended March 31, 1995. The effect of these grants is to increase
the issued and outstanding shares of the Company's common stock and decrease the
number of shares available for grant in the plan. Deferred compensation is
recorded for the restricted stock grants equal to the market value of the
Company's common stock on the date of grant. The deferred compensation is
amortized over the period the restricted stock vests and recorded as
compensation expense in selling, general, and administrative expense in the
accompanying consolidated statements of operations.

The Company applies APB Opinion No. 25 and related interpretations in
accounting for the Program. Accordingly, compensation expense recognized was
different than what would have been otherwise recognized under the fair value
based method defined in SFAS No. 123, "Accounting for Stock-Based

F-17
<PAGE>

9. BENEFIT PLANS (CONTINUED)

Compensation". Had compensation expense for the plans been determined in
accordance with SFAS No. 123, the effect on the Company's net income
applicable to common stock and earnings per common share would have been as
follows (amounts in thousands, except per share data):

YEAR ENDED MARCH 31,
1997 1996
---- ----

Net income applicable to common stock:
As reported. . . . . . . . . . . . . $6,518 $25,419
Proforma . . . . . . . . . . . . . . $3,640 $23,562

Earnings per common share:
As reported. . . . . . . . . . . . . $0.18 $0.75
Proforma . . . . . . . . . . . . . . $0.10 $0.69

The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing method with the following assumptions: (i) no
dividends, (ii) expected volatility for both years of 45.5%, (iii) risk free
interest rate of 6.46% for 1997 and 6.04% for 1996, and (iv) the expected
average life of 3.92 years for 1997 and 3.05 years for 1996. The weighted
average fair value of options granted in 1997 and 1996 were $5.64 and $4.91,
respectively.

Because the SFAS No. 123 method of accounting has not been applied to
options granted prior to April 1, 1995, the resulting pro forma net income may
not be representative of that to be expected in future years.

In May 1995, the Board of Directors of the Company authorized the
repricing of 1,156,900 options with option prices ranging from of $13.00 to
$20.00. Options held by certain members of the Company's Board of Directors,
including the Chairman and Chief Executive Officer of the Company were not
repriced. The effect of the repricing of all the subject options was the
cancellation of 1,116,500 options and the reissuance of 872,680 options
("replacement options") with a price of $12.00 (market value at date of the
repricing) which are included in granted and canceled options in the table
above. The number of replacement options was determined, based upon a
valuation model, so that the value of the replacement options was equivalent
to the value of the options originally granted.

401(k) PLANS

The Company has a defined contribution 401(k) plan, which covers all
employees who meet certain age and length of service requirements and allows an
employer contribution up to 25 percent of the first four percent of each
participating employee's compensation. Plan participants can elect to defer
before tax compensation through payroll deductions. These deferrals are
regulated under Section 401(k) of the Internal Revenue Code. The Company's
matching contribution was $442,000, $293,000, and $203,000 for the fiscal years
ended March 31, 1997, 1996 and 1995, respectively.

10. EXECUTIVE COMPENSATION PLANS

The Company has employment agreements with certain of its executive
officers. These contracts provide for, among other things, an annual base
salary with annual adjustments and an annual cash bonus equal to at least 5
percent of the executive's base salary, and supplemental long-term disability
and supplemental life insurance benefits in excess of the Company's normal
coverage for employees. The Company elected to self-insure with respect to the
long-term disability benefits. In addition, the Company has adopted a
Supplemental Executive Retirement Plan for its Chief Executive Officer and a
Supplemental Management Retirement Plan for certain key executives as selected
by the Human Resources Committee of the Company's Board of Directors. Other
executive plans include a Deferred Compensation Plan and a Long-Term Stay-On
Performance Incentive Plan. The expenses related to these plans are included in
corporate expenses in the accompanying consolidated statements of operations.

F-18
<PAGE>

11. RESTRUCTURING CHARGE

In March 1997, the Company introduced a plan designed to reduce costs and
improve efficiency of operations. This plan resulted in a one-time charge to
earnings in the fourth quarter of fiscal 1997 totaling $2,016,000, primarily
related to employee severance payments.

12. INCOME TAXES

The Company files a consolidated federal income tax return. The provision
(benefit) for income taxes consists of the following (amounts in thousands):

<TABLE>
<CAPTION>
MARCH 31,
-----------------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Current:
Federal . . . . . . . . . . . . . . . . $ 7,708 $ 4,784 $ 721
State . . . . . . . . . . . . . . . . . (1,834) 374 (1,053)
---------- ---------- ----------
5,874 5,158 (332)

Deferred. . . . . . . . . . . . . . . . 1,741 9,421 (3,145)
---------- ---------- ----------
Total income taxes. . . . . . . . . . . $ 7,615 $14,579 $ (3,477)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

The income tax provision (benefit) differs from that computed at the
federal statutory corporate tax rate as follows:

<TABLE>
<CAPTION>
MARCH 31,
-------------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Federal statutory rate. . . . . . . . . 35.0% 35.0% (35.0%)
State income taxes, net of
federal benefit . . . . . . . . . . . (5.5) 0.6 (6.0)
Meals and entertainment . . . . . . . . 0.2 0.6 4.1
Other, net. . . . . . . . . . . . . . . 5.9 0.2 6.5
----- ----- -----
Effective tax rate. . . . . . . . . . . 35.6% 36.4% (30.4%)
----- ----- -----
----- ----- -----
</TABLE>

F-19
<PAGE>

12. INCOME TAXES (CONTINUED)

The tax effects of significant temporary differences representing net
deferred tax assets and liabilities are as follows (amounts in thousands):

<TABLE>
<CAPTION>
MARCH 31,
1997 1996
---- ----
<S> <C> <C>
Deferred tax assets:
Current:
Accrued vacation, bonuses and group insurance . . . . . $ 2,981 $ 2,119
Prepaid gaming taxes. . . . . . . . . . . . . . . . . . (1,341) (1,177)
Other . . . . . . . . . . . . . . . . . . . . . . . . . 2,261 1,135
---------- ----------
Total current . . . . . . . . . . . . . . . . . . . . . 3,901 2,077
---------- ----------
Long-term:
Preopening and other costs, net of amortization . . . . 15,077 4,485
State deferred taxes. . . . . . . . . . . . . . . . . . 1,907 462
Alternative minimum tax credits . . . . . . . . . . . . 9,000 4,600
---------- ----------
Total long-term . . . . . . . . . . . . . . . . . . . . 25,984 9,547
---------- ----------

Total deferred tax assets . . . . . . . . . . . . . . . 29,885 11,624
---------- ----------

Deferred tax liabilities:
Long-term:
Temporary differences related to property
and equipment . . . . . . . . . . . . . . . . . . . . (32,583) (18,201)
Other . . . . . . . . . . . . . . . . . . . . . . . . . (1,249) (1,122)
---------- ----------
Total deferred tax liabilities. . . . . . . . . . . . . (33,832) (19,323)
---------- ----------
Net . . . . . . . . . . . . . . . . . . . . . . . . . . $ (3,947) $ (7,699)
---------- ----------
---------- ----------
</TABLE>

The excess of the alternative minimum tax over the regular Federal income
tax is a tax credit which can be carried forward indefinitely to reduce future
regular Federal income tax liabilities. The Company did not record a valuation
allowance at March 31, 1997 relating to recorded tax benefits because all
benefits are likely to be realized.

F-20
<PAGE>

13. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
NET
INCOME INCOME EARNINGS
(LOSS) (LOSS) (LOSS)
OPERATING BEFORE APPLICABLE PER
NET INCOME INCOME TO COMMON COMMON
REVENUES (LOSS) TAXES STOCK SHARE
-------- --------- ------ ---------- --------
(amounts in thousands, except per common share amounts)
<S> <C> <C> <C> <C> <C>
YEAR ENDED MARCH 31, 1997
First quarter. . . . . . . . . . . . . . . . $ 135,440 $ 22,813 $ 14,581 $ 7,648 $ 0.22
Second quarter . . . . . . . . . . . . . . . $ 138,034 $ 23,809 $ 15,847 $ 8,307 $ 0.24
Third quarter. . . . . . . . . . . . . . . . $ 133,767 $ 21,536 $ 13,789 $ 6,944 $ 0.20
Fourth quarter . . . . . . . . . . . . . . . $ 176,274 $ (10,035) $ (22,839) $ (16,381) $ (0.46)
YEAR ENDED MARCH 31, 1996
First quarter. . . . . . . . . . . . . . . . $ 94,145 $ 13,043 $ 5,530 $ 3,511 $ 0.12
Second quarter . . . . . . . . . . . . . . . $ 119,850 $ 17,666 $ 11,459 $ 7,257 $ 0.21
Third quarter. . . . . . . . . . . . . . . . $ 122,929 $ 18,969 $ 11,509 $ 7,360 $ 0.21
Fourth quarter . . . . . . . . . . . . . . . $ 129,933 $ 19,786 $ 11,553 $ 7,291 $ 0.21
YEAR ENDED MARCH 31, 1995
First quarter. . . . . . . . . . . . . . . . $ 47,672 $ (8,361) $ (11,055) $ (7,399) $ (0.25)
Second quarter . . . . . . . . . . . . . . . $ 62,384 $ (6,962) $ (11,428) $ (7,379) $ (0.25)
Third quarter. . . . . . . . . . . . . . . . $ 83,641 $ 6,295 $ 807 $ 483 $ 0.02
Fourth quarter . . . . . . . . . . . . . . . $ 96,581 $ 15,416 $ 10,257 $ 6,353 $ 0.22
</TABLE>

F-21
<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATES AS OF WHICH
INFORMATION IS GIVEN IN THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION.

TABLE OF CONTENTS
PAGE
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . .
Selected Consolidated Financial Data . . . . . . . . . . . . . . . . . . . . .
Management's Discussion and
Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . .
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Regulation and Licensing . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Description of Certain Indebtedness and
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Description of the New Notes . . . . . . . . . . . . . . . . . . . . . . . . .
Certain U.S. Federal Income Tax
Considerations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . .
Index to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . .

STATION CASINOS, INC.

$150,000,000

9 3/4% SENIOR
SUBORDINATED NOTES
DUE 2007

----------

PROSPECTUS
August 8, 1997

----------

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 78.751 of Chapter 78 of the Nevada Revised Statutes and the
Company's Articles of Incorporation and Bylaws contain provisions for
indemnification of officers and directors of the Company and in certain cases
employees and other persons. The Bylaws require the Company to indemnify such
persons to the full extent permitted by Nevada law. Each such person will be
indemnified in any proceeding if such person acted in good faith and in a manner
which such person reasonably believed to be in, or not opposed to, the best
interests of the Company. Indemnification would cover expenses, including
attorney's fees, judgments, fines and amounts paid in settlement.

The Company's Bylaws also provide that the Company's Board of Directors may
cause the Company to purchase and maintain insurance on behalf of any present or
past director or officer insuring against any liability asserted against such
person incurred in the capacity of director or officer or arising out of such
status, whether or not the Company would have the power to indemnify such
person. The Company maintains directors' and officers' liability insurance.

The Company has entered into an indemnification agreement (the "Indemnification
Agreement") with each director and certain officers, employees and agents of the
Company. Each Indemnification Agreement provides for, among other things:
(i)indemnification to the fullest extent permitted by law against any and all
expenses, judgments, fines, penalties and amounts paid in settlement of any
claim against any indemnified party (the "Indemnitee") unless it is determined,
as provided in the Indemnification Agreement, that indemnification is not
permitted under laws and (ii) prompt advancement of expenses to any Indemnitee
in connection with his or her defense against any claim.

In addition, the Underwriting Agreement provides for indemnification by the
Underwriters of the Registrant, its directors and officers against certain
liabilities, including liabilities under the Securities Act.

ITEM 21. EXHIBITS AND FINANCIAL SCHEDULE TABLES

(a) Exhibits:

A list of exhibits included as part of this registration statement is set
forth in the Exhibit Index that immediately precedes such exhibits and is
incorporated herein by reference.

(b) Financial Statement Schedules:

All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission have been omitted because
they are not required, are inapplicable or the required information has already
been provided elsewhere in the registration statement

ITEM 22. UNDERTAKINGS

(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d)of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d)of the Securities
Exchange Act of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

A-1

<PAGE>

The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.

(b) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one day of receipt of such request,
and to send the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents filed subsequent
to the effective date of the registration statement through the date of
responding to the request.

(c) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved herein, that was not subject of and included in
the registration statement when it became effective.

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Frank J.
Fertitta III, Glenn C. Christenson and Scott M. Nielsen, and each of them, his
or her true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for him or her and in his or her name, place and
stead, in any and all capacities to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and any registration
statement of the Company to be filed after the date hereof pursuant to Rule
462(b) under the Securities Act of 1933, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, and to take such actions in, and file with the appropriate
authorities in, whatever states said attorneys-in-fact and agents, and each of
them, shall determine, such applications, statements, consents, and other
documents, as may be necessary or expedient to register securities of the
Company for sale, granting unto said attorneys-in-fact and agents full power and
authority to do so and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agents or any of them, or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof and the
registrant hereby confers like authority on its behalf. This Registration
Statement and Power of Attorney, pursuant to the requirement of the Securities
Act of 1933, as amended, have been signed below by the following persons in the
capacities and on the dates indicated.

A-2

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Amendment No. 1 to Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Las Vegas, State of Nevada, on this 8th day of August, 1997.

STATION CASINOS, INC.

By: /s/ GLENN C. CHRISTENSON
-------------------------
Name: Glenn C. Christenson
Title: Executive Vice President,
Chief Financial Officer
and Treasurer

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

* Chairman of the Board, President August 8, 1997
------------------------- and Chief Executive Officer
Frank J. Fertitta III (Principal Executive Officer)

/s/ Glenn C. Christenson Executive Vice President, Chief August 8, 1997
------------------------- Financial Officer, Chief
Glenn C. Christenson Administrative Officer, Treasurer
and Director (Principal Financial
and Accounting Officer)

* Executive Vice President, Chief August 8, 1997
------------------------- Operating Officer and Director
Blake L. Sartini

*
------------------------- Director August 8, 1997
Lorenzo J. Fertitta

*
------------------------- Director August 8, 1997
Delise F. Sartini

*
------------------------- Director August 8, 1997
R. Hal Dean

*
------------------------- Director August 8, 1997
Lowell H. Lebermann, Jr.

___________________

* By: Glenn C. Christenson, attorney-in-fact

A-3

<PAGE>

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1. Financial Statements (including related notes to Consolidated
Financial Statements) filed in partII of this report are listed below:

Report of Independent Public Accountants

Consolidated Balance Sheets as of March 31, 1997 and 1996

Years Ended March 31, 1997, 1996 and 1995:

Consolidated Statements of Operations

Consolidated Statements of Stockholders' Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

(a) 2. None

(a) 3. Exhibits

Exhibit
Number Description
- ------ -----------
2.1 Agreement and Plan of Reorganization dated as of February 1, 1993
among Frank J. Fertitta, Jr., as Trustee of the Frank J. Fertitta and
Victoria K. Fertitta Revocable Family Trust dated June 17, 1989, Frank
J. Fertitta III, Blake L. Sartini, Delise F. Sartini and Lorenzo J.
Fertitta. (Incorporated herein by reference to Registration Statement
No. 33-59302)

3.1 Amended and Restated Articles of Incorporation of the Registrant.
(Incorporated herein by reference to Registration Statement No.
33-76156)

3.2 Restated Bylaws of the Registrant. (Incorporated herein by reference
to Registration Statement No. 33-76156)

4.1 Form of Subordinated Note of the Registrant (1997 Issue)
(Incorporated herein by reference to the Company's Form 8-K dated
April 3, 1997)

4.2 Form of Subordinated Note of the Registrant (1996 Issue).
(Incorporated herein by reference to the Company's Form 8-K dated
March 25, 1996)

4.3 Form of Subordinated Note of the Registrant (1994 Issue) (Incorporated
herein by reference to Registration Statement No. 33-76156)

4.4 Form of Subordinated Note of the Registrant (1993 Issue) (Incorporated
herein by reference to Registration Statement No. 33-59302)

4.5 Indenture dated as of April 3, 1997 between Registrant and First
Union National Bank as Trustee (Incorporated by reference to the
Company's Form 8-K dated April 3, 1997)

4.6 Indenture dated as of March 29, 1996 between the Registrant and First
Union National Bank, as Trustee. (Incorporated herein by reference to
the Company's Form 8-K dated March 25, 1996)

4.7 Indenture dated as of May 11, 1994 between the Registrant and First
Union National Bank (f.k.a. First Fidelity Bank, National Association)
as Trustee. (Incorporated herein by reference to the Company's Annual
Report on Form 10-K for the period ended March 31, 1994)

4.8 First Supplemental Indenture dated as of March 25, 1996 between
Registrant and First Union National Bank, (f.k.a. First Fidelity Bank,
National Association), as Trustee with respect to the Indenture dated
as of May 11, 1994. (Incorporated herein by reference to the
Company's Form 8-K dated March 25, 1996)

A-4

<PAGE>

4.9 Indenture dated as of June 2, 1993 between the Registrant and First
Union National Bank (f.k.a. First Fidelity Bank, National Association)
as Trustee. (Incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q for the period ended June 30, 1993)

4.10 First Supplemental Indenture dated as of March 25, 1996 between
Registrant and First Union National Bank, (f.k.a. First Fidelity Bank,
National Association), as Trustee with respect to the Indenture dated
as of June 2, 1993. (Incorporated herein by reference to the
Company's Form 8-K dated March 25, 1996)

4.11 Amended and Restated Reducing Revolving Loan Agreement dated as of
March 19, 1996 among Palace Station, Inc., Boulder Station, Inc.,
Texas Station, Inc., St. Charles Riverfront Station, Inc. and Kansas
City Station Corporation and Bank of America National Trust and
Savings Association, Bank of Scotland and Societe Generale and each of
the banks that are party to the Bank Facility (the "Bank Facility").
(Incorporated herein by reference to the Company's Form 8-K dated
March 25, 1996)

4.12 Parent Guaranty dated as of March 19, 1996 executed by Station
Casinos, Inc. (Incorporated herein by reference to the Company's Form
8-K dated March 25, 1996)

4.13 Certificate of Resolutions of Convertible Preferred Stock of the
Registrant. (Incorporated herein by reference to the Company's Form
8-K dated March 25, 1996)

4.14 Form of Convertible Preferred Stock of the Registrant. (Incorporated
herein by reference to the Company's Form 8-K dated March 25, 1996)

4.15 General Continuing Guaranty dated as of June 1, 1993 executed by
Station Casinos, Inc. (Incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q for the period ended June 30,
1993)

4.16 Registration Rights Agreement, dated April 3, 1997 (the
"Registration Rights Agreement") (Incorporated by reference to the
Company's Form 8-K dated April 3, 1997)

4.17 Amendment to Registration Rights Agreement, dated May 27, 1997

4.18 Amendment No.1 to the Bank Facility, dated May 17, 1996

4.19 Waiver and Amendment to the Bank Facility dated September 11, 1996

4.20 Amendment No.3 to the Bank Facility, dated January 21, 1997

4.21 Amendment No.4 to the Bank Facility, dated March 21, 1997

4.22 Amendment No.5 to the Bank Facility, dated May 20, 1997

4.23 Amendment No.6 to the Bank Facility, dated June 27, 1997

5.1 Opinion of Milbank, Tweed, Hadley & McCloy

10.1 Lease dated as of December 17, 1974 between Teddy Rich Enterprises and
Townefood, Inc. (Incorporated herein by reference to Registration
Statement No. 33-59302)

10.2 Lease dated as of May 8, 1973 between Teddy Rich Enterprises and
Mini-Price Motor Inn., including Addendum dated May 8, 1973; Lease
Addendum dated June 10, 1974 amending lease dated May 8, 1973 between
Teddy Rich Enterprises and Mini-Price Motor Inn, Inc. (Incorporated
herein by reference to Registration Statement No. 33-59302).

10.3 Lease dated as of February 16, 1976 between Richfield Development Co.
and Mini-Price Motor Inn. (Incorporated herein by reference to
Registration Statement No. 33-59302)

10.4 Lease dated as of September 6, 1977 between Richard Tam and Mini-Price
Motor Inn Joint Venture (Parcel B1). (Incorporated herein by
reference to Registration Statement No. 33-59302)

10.5 Lease dated as of September 6, 1977 between Richard Tam and Mini-Price
Motor Inn Joint Venture (Parcel B2). (Incorporated herein by
reference to Registration Statement No. 33-59302)

10.6 Employment Agreement between Frank J. Fertitta III and the Registrant
dated as of May 1, 1993. (Incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q for the period ended June 30,
1993)

10.7 Amendment to the Employment Agreement between Frank J. Fertitta III
and the Registrant dated as of November 30, 1994. (Incorporated
herein by reference to the Company's Quarterly Report on Form 10-Q for
the period ended December 31, 1994)

A-5
<PAGE>

10.8 Employment Agreement between Glenn C. Christenson and the Registrant
dated as of May 1, 1993. (Incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q for the period ended June 30,
1993)

10.9 Amendment to the Employment Agreement between Glenn C. Christenson and
the Registrant dated as of November 30, 1994. (Incorporated herein
by reference to the Company's Quarterly Report on Form 10-Q for the
period ended December 31, 1994)

10.10 Employment Agreement between Scott M. Nielson and the Registrant dated
as of May 1, 1995. (Incorporated herein by reference to the Company's
Report on Form 8-K dated July 5, 1995)

10.11 Employment Agreement between Blake L. Sartini and the Registrant dated
as of November 30, 1994. (Incorporated herein by reference to the
Company's Report on Form 8-K dated July 5, 1995)

10.12 Stock Compensation Program of the Registrant. (Incorporated herein by
reference to the Company's Quarterly Report on Form 10-Q for the
period ended June 30, 1993)

10.13 Amendment dated as of August 22, 1995 to the Stock Compensation
Program. (Incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q for the period ended September 30, 1995)

10.14 Supplemental Executive Retirement Plan of the Registrant dated as of
November 30, 1994. (Incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q for the period ended December 31, 1994)

10.15 Supplemental Management Retirement Plan of the Registrant dated as of
November 30, 1994. (Incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q for the period ended December 31, 1994)

10.16 Long-Term Stay-On Performance Incentive Plan between the Registrant
and Joseph J. Canfora, Glenn C. Christenson, Scott M. Nielson and
Blake L. Sartini. (Incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q for the period ended December 31, 1994)

10.17 Amended and Restated Deferred Compensation Plan of the Registrant
effective as of November 30, 1994. (Incorporated herein by reference
to the Company's Quarterly Report on Form 10-Q for the period ended
December 31, 1994)

10.18 Special Long-Term Disability Plan of the Registrant dated as of
November 30, 1994. (Incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q for the period ended December 31, 1994)

10.19 Ground Lease between Boulder Station, Inc. and KB Enterprises dated as
of June 1, 1993. (Incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q for the period ended June 30, 1993)

10.20 Option to Lease or Purchase dated as of June 1, 1993 between Boulder
Station, Inc. and KB Enterprises. (Incorporated herein by reference
to the Company's Quarterly Report on Form 10-Q for the period ended
June 30, 1993)

10.21 Option to Acquire Interest Under Purchase Contract dated as of June 1,
1993 between Boulder Station, Inc. and KB Enterprises. (Incorporated
herein by reference to the Company's Quarterly Report on Form 10-Q for
the period ended June 30, 1993)

10.22 First Amendment to Ground Lease and Sublease, dated as of June 30,
1995, by and between KB Enterprises, as landlord and Boulder Station,
Inc. (Incorporated herein by reference to the Company's Form 8-K dated
July 5, 1995)

A-6

<PAGE>

10.23 Ground Lease between Registrant and Texas Gambling Hall & Hotel, Inc.
dated as of June 1, 1995. (Incorporated herein by reference to the
Company's Form 8-K dated July 5, 1995)

10.24 First Amendment to Ground Lease dated as of June 30, 1995 between
Registrant and Texas Gambling Hall & Hotel, Inc. (Incorporated herein
by reference to the Company's Form 8-K dated July 5, 1995)

10.25 Assignment, Assumption and Consent Agreement (Ground Lease) dated as
of July 6, 1995 between Registrant and Texas Station, Inc.
(Incorporated herein by reference to the Company's Form 8-K dated
July 5, 1995)

10.26 Sublease Agreement dated as of November 30, 1992 between the City of
St. Charles and St. Charles Riverfront Station, Inc. (Incorporated
herein by reference to Registrant Statement No. 33-59302)

10.27 Lease between Navillus Investment Co.; Jerome D. Mack as trustee of
the Center Trust; Peter Trust Limited Partnership; and Third
Generation Limited Partnership and Registrant. (Incorporated herein
by reference to the Company's Annual Report on Form 10-K for the
period ended March 31, 1994)

10.28 Joint Venture Agreement dated as of September 25, 1993, between First
Holdings Company and the Registrant. (Incorporated herein by
reference to the Company's Form 8-K dated July 5, 1995)

10.29 Assignment and Assumption Agreement (Joint Venture Agreement) dated as
of March 25, 1996 between the Registrant and Kansas City Station
Corporation (Incorporated herein by reference to the Company's Annual
Report on Form 10-K for the period ended March 31, 1996).

10.30 Amendment to Joint Venture Agreement dated as of November 15, 1993,
between First Holdings Company and the Registrant (Incorporated herein
by reference to the Company's Annual Report on Form 10-K for the
period ended March 31, 1996).

10.31 Second Amendment to Joint Venture Agreement, dated as of April 22,
1996, between First Holdings Company and Kansas City Station
Corporation. (Incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q for the period ended June 30, 1996)

10.32 Development Agreement dated as of April 24, 1995, between Kansas City
Station Corporation and the Port Authority of Kansas City.
(Incorporated herein by reference to the Company's Form 8-K dated July
5, 1995)

10.33 Lease Agreement, dated as of April 1, 1994 between Station/First Joint
Venture and Kansas City Station Corporation. (Incorporated herein by
reference to the Company's Form 8-K dated July 5, 1995)

10.34 First Amendment to Lease Agreement dated as of March 19, 1996 between
Station/First Joint Venture and Kansas City Station Corporation
(Incorporated herein by reference to the Company's Annual Report on
Form 10-K for the period ended March 31, 1996).

10.35 Second Amendment to Lease Agreement, dated as of April 22, 1996,
between Station/First Joint Venture and Kansas City Station
Corporation. (Incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q for the period ended June 30, 1996)

10.36 Form of Indemnification Agreement for Directors and Executive
Officers. (Incorporated herein by reference to Registration Statement
No. 33-59302)

A-7

<PAGE>

10.37 Form of Indemnification Agreement between the Registrant and Frank
Fertitta, Jr. (Incorporated herein by reference to Registration
Statement No. 33-59302)

10.38 Construction/Term Loan Agreement dated as of September 25, 1996 among
Sunset Station and Bank of America National Trust and Savings
Association, Bank of Scotland, Societe Generale and each of the other
Lenders that are party to such agreement (the "Sunset Loan
Agreement"). (Incorporated herein by reference to the Company's
Form 8-K dated October 29, 1996)

10.39 Completion Guarantee dated as of September 25, 1996, executed by the
Registrant. (Incorporated herein by reference to the Company's Form
8-K dated October 29, 1996)

10.40 Supplemental Loan Agreement dated as of September 25, 1996 between the
Registrant and Sunset Station. (Incorporated herein by reference to
the Company's Form 8-K dated October 29, 1996)

10.41 Participation Agreement dated as of September 25, 1996 among the
Registrant, as Lessee, and First Security Trust Company of Nevada, as
Lessor and Trustee, and the other Persons that are parties to such
agreement. (Incorporated herein by reference to the Company's Form 8-K
dated October 29, 1996)

10.42 Lease Agreement dated as of September 25, 1996 between First Security
Trust Company of Nevada as Trustee and Lessor and the Registrant, as
Lessee. (Incorporated herein by reference to the Company's Form 8-K
dated October 29, 1996)

10.43 Sublease Agreement dated as of September 25, 1996 between the
Registrant, as Sublessor and Sunset Station as Sublessee.
(Incorporated herein by reference to the Company's Form 8-K dated
October 29, 1996)

10.44 Sunset Station 1996 Trust Agreement dated as of September 25, 1996
between the Registrant, as Grantor, and First Security Trust Company
of Nevada, as Trustee. (Incorporated herein by reference to the
Company's Form 8-K dated October 29, 1996)

10.45 Standard Form of Agreement Between Owner and Contractor, dated as of
November 1, 1995 between Sunset Station and J.A. Tiberti Construction
Company, Inc. (Incorporated herein by reference to the Company's Form
8-K dated October 29, 1996)

10.46 Amendment No. 1 to the Sunset Loan Agreement, dated March 21, 1997

10.47 Amendment No. 2 to the Sunset Loan Agreement, dated March 21, 1997

21.1 Subsidiaries of the Registrant*

23.1 Consent of Arthur Andersen LLP

23.2 Consent of Milbank, Tweed, Hadley & McCloy (included in Exhibit 5.1)

24.1 Power of attorney (appears on signature page)

25.1 Form T-1 Statement of Eligibility and Qualification, under the Trust
Indenture Act of 1939, of First Union National Bank as Trustee.

99.1 Form of Letter of Transmittal

99.2 Form of Notice of Guaranteed Delivery

A-8

<PAGE>

FIRST AMENDMENT TO REGISTRATION RIGHTS AGREEMENT

This First Amendment (the "AMENDMENT") to the Registration Rights
Agreement dated April 3, 1997 (the "AGREEMENT") between Station Casinos, Inc., a
Nevada corporation (the "COMPANY") and BancAmerica Securities, Inc. (the
"PURCHASER") is hereby entered into as of May 27, 1997 by and between the
Company and the Purchaser. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed thereto in the Agreement.

WHEREAS, the Company and the Purchaser wish to modify certain
provisions of the Agreement;

NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1. REGISTERED EXCHANGE OFFER. Section 3(a)(i) is hereby amended by
replacing "60 days" with "90 days". Section 3(a)(ii) is hereby amended by
replacing "120 days" with "150 days".

2. SHELF REGISTRATION. Section 4(a)(x)(3) is hereby amended by
replacing "150th day" with "180th day". Section 4(a)(y) is hereby amended by
replacing "150 days" and "150-day period" with "180 days" and "180-day period",
respectively. The last paragraph of Section 4(a) is hereby amended to replace
"two years" with "two years and 30 days".

3. ENTIRE AGREEMENT. The Agreement, as amended by this Amendment,
constitutes the entire agreement between the parties pertaining to the subject
matter hereof and fully supercedes any and all prior or contemporaneous
agreements or understandings between the parties hereto pertaining to the
subject matter hereof.

4. FULL FORCE AND EFFECT. Except as expressly amended in this
Amendment, the Agreement shall remain in full force and effect.

5. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.

<PAGE>

IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first written above.

STATION CASINOS, INC. BANCAMERICA SECURITIES, INC.

By: /s/Glenn C. Christensen By: /s/Marc Dawley
---------------------------- ---------------------------------
Name: Glenn C. Christensen Name: Marc Dawley
Title: Chief Title: Senior Managing Director

<PAGE>

AMENDMENT NO. 1 TO AMENDED AND RESTATED
REDUCING REVOLVING LOAN AGREEMENT

This Amendment No. 1 to Amended and Restated Reducing Revolving Loan
Agreement (this "Amendment") dated as of May 17, 1996 is entered into with
reference to the Amended and Restated Reducing Revolving Loan Agreement dated as
of March 19, 1996 among Palace Station Hotel & Casino, Inc., Boulder Station,
Inc., Texas Station, Inc., St. Charles Riverfront Station, Inc. and Kansas City
Station Corporation (collectively, "Borrowers"), Station Casinos, Inc.
("Parent"), the Banks party thereto, Bank of Scotland and Societe Generale, as
Co-Agents, and Bank of America National Trust and Savings Association, as
Managing Agent (the "Loan Agreement"). Capitalized terms used but not defined
herein are used with the meanings set forth for those terms in the Loan
Agreement.

Borrowers, Parent and the Managing Agent, acting with the consent of
all of the Banks pursuant to Section 14.2 of the Loan Agreement, agree as
follows:

1. AMENDMENT TO SECTION 1.1. Section 1.1 of the Loan Agreement is
amended to revise the definition of "Secured Swap Agreement" by inserting the
words "or Parent (or all or any of them)" after the word "Borrowers" in the
second line thereof.

2. AMENDMENT TO SECTION 1.1. Section 1.1 of the Loan Agreement is
amended to revise the definition of "Swap Agreement" by inserting the words "or
Parent (or all or any of them)" after the word "Borrowers" in the second line
thereof.

3. DELETION OF SECTION 5.11. Section 5.11 is deleted from the Loan
Agreement.

4. AMENDMENT TO SECTION 6.7(f). Section 6.7(f) of the Loan Agreement is
amended to read in full as follows:

"(f) Indebtedness consisting of one or more Swap Agreements or
Guaranty Obligations with respect to obligations of any of Borrowers
or of Parent under one or more Swap Agreements; PROVIDED that the
aggregate notional amount of Indebtedness covered by

<PAGE>

all Secured Swap Agreements does not exceed $100,000,000."

5. AMENDMENT TO SECTION 9.18. Section 9.18 is amended by striking the
period at the end thereof and inserting in its place the following:

"; PROVIDED that for purposes of this Section 9.18, the term "Cash"
shall not include funds on deposit in bank accounts of Parent or any
Restricted Subsidiary that are not "collected balances."'

6. DELETION OF SECTION 11.2(e). Section 11.2(e) of the Loan Agreement is
deleted.

7. APPROVAL OF LEASE AMENDMENT. The Second Amendment dated April 22,
1996 to Lease Agreement dated as of April 1, 1994 between Station/First Joint
Venture, as landlord, and Kansas City Station Corporation, as tenant, is hereby
approved.

8. CONDITIONS PRECEDENT. The effectiveness of this Amendment shall be
conditioned upon the receipt by the Managing Agent of all of the following, each
properly executed by a Responsible Official of each party thereto and dated as
of the date hereof:

(a) Counterparts of this Amendment executed by all parties
hereto;

(b) Written consents of each of the Sibling Guarantors to the
execution, delivery and performance hereof, substantially in the form of
Exhibit A to this Amendment; and

(c) Written consent of all of the Banks as required under
Section 14.2 of the Loan Agreement in the form of Exhibit B to this
Amendment.

9. REPRESENTATION AND WARRANTY. Borrowers represent and warrant to the
Managing Agent and the Banks that no Default or Event of Default has occurred
and remains continuing.

<PAGE>

10. CONSENT OF PARENT. The execution of this Amendment by Parent shall
constitute its consent hereto in its capacity as guarantor under the Parent
Guaranty.

11. CONFIRMATION. In all other respects, the terms of the Loan Agreement
and the other Loan Documents are hereby confirmed.

IN WITNESS WHEREOF, Borrowers and the Managing Agent have executed
this Amendment as of the date first written above by their duly authorized
representatives.

PALACE STATION HOTEL & CASINOS, INC.
BOULDER STATION, INC.
TEXAS STATION, INC.
ST. CHARLES RIVERFRONT STATION, INC.
KANSAS CITY STATION CORPORATION

By: /s/ Glenn C. Christenson
--------------------------------
Glenn C. Christenson
Vice President and
Chief Financial Officer

STATION CASINOS, INC.

By: /s/ Glenn C. Christenson
--------------------------------
Glenn C. Christenson
Executive Vice President and
Chief Financial Officer

BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Managing Agent

By: /s/ L. Chenevert
--------------------------------
L. Chenevert, Jr.,
Vice President

<PAGE>

Exhibit A to Amendment

CONSENT OF SIBLING GUARANTORS

Reference is hereby made to that certain Amended and Restated Reducing
Revolving Loan Agreement dated as of March 19, 1996 among Palace Station Hotel &
Casino, Inc., Boulder Station, Inc., Texas Station, Inc., St. Charles Riverfront
Station, Inc. and Kansas City Station Corporation (collectively, "Borrowers"),
Station Casinos, Inc. ("Parent") the Banks party thereto, Bank of Scotland and
Societe Generale, as Co-Agents, and Bank of America National Trust and Savings
Association, as Managing Agent, (the "Loan Agreement").

Each of the undersigned hereby consents to the execution, delivery and
performance by Borrowers, Parent and the Managing Agent of Amendment No. 1 to
the Loan Agreement.

Each of the undersigned represents and warrants to the Managing Agent
and the Banks that the Subsidiary Guaranty remains in full force and effect in
accordance with its terms.

Dated: May ___, 1996

SOUTHWEST GAMING SERVICES, INC.

By: ______________________________

Title: ___________________________

SOUTHWEST SERVICES, INC.

By: _________________________________

Title: ______________________________

<PAGE>

GREEN VALLEY STATION, INC.

By: _________________________________

Title: ______________________________

<PAGE>

Exhibit B to Amendment

CONSENT OF BANK

The undersigned Bank hereby consents to the execution and delivery of
Amendment No. 1 to Amended and Restated Reducing Revolving Loan Agreement by the
Managing Agent on its behalf, substantially in the form of a draft dated on or
about April 25, 1996 presented to the undersigned Bank.

Date: May ___, 1996

_________________________________
[Name of Institution]

By ______________________________

_________________________________
[Printed Name and Title]

<PAGE>

WAIVER AND AMENDMENT

Reference is made to that certain Amended and Restated Reducing
Revolving Loan Agreement dated as of March 19, 1996 (the "Loan Agreement") among
Station Casinos, Inc. ("Parent), Palace Station Hotel & Casino, Inc., Boulder
Station, Inc., Texas Station, Inc., St. Charles Riverfront Station, Inc., Kansas
City Station Corporation, Bank of America, N.T. & S.A., as Managing Agent, and
the Banks party thereto. Capitalized terms used herein are used with the same
meanings as set forth in the Loan Agreement.

RECITALS

A. Parent proposes to finance the construction of a new Sunset
Station Hotel & Casino ("Project") to be constructed by its wholly-owned
Unrestricted New Venture Entity, Sunset Station, Inc. ("Sunset"), in Henderson,
Nevada through a series of transactions summarized as follows:

(i) Parent will lease certain equipment (the "Leased
Equipment") valued at up to $40,000,000 pursuant to an operating
lease (the "Equipment Lease") intended for security from a syndicate
of financial institutions (the "Lessors"). Parent will, in turn,
sublease the Leased Equipment to Sunset on substantially the same
terms (the "Equipment Sublease") as those contained in the Equipment
Lease. Parent's interests in the Leased Equipment and in its rights
under the Equipment Sublease will be pledged to the Lessors to support
its obligations under the Equipment Lease. The Equipment Lease does
not constitute Indebtedness under the Loan Agreement.

(ii) Sunset will borrow up to $110,000,000 of construction
financing (the "Construction Loan") from a syndicate of financial
institutions (the "Lenders") to construct the Project. The
Construction Loan will be secured by a first priority security
interest in all of Sunset's real and personal property, including the
Project. In addition, Parent will pledge to the Lenders all of the
capital stock of Sunset.

(iii) In connection with the Construction Loan, Parent will
provide a completion guaranty (the "Completion Guaranty") with respect
to the Project whereby any funds necessary to complete the Project as
planned will be provided by Parent and, if there is a delay in the
projected opening date, a daily cash contribution covering Project
expenses will be required. In addition, Parent has committed to
provide to Sunset up to $25,000,000 of supplemental

<PAGE>

subordinated loans ("Supplemental Loans") as and when requested by
Sunset provided that at the time of such request the investment limits
of Section 9.15 of the Loan Agreement would not be exceeded by making
such loans.

(iv) The real property underlying the Project is comprised
of a fee simple parcel and a leasehold parcel under a Ground Lease,
both of which were originally acquired by Parent. As part of these
transactions, the fee simple parcel will be contributed to the capital
of Sunset and the Ground Lease will be assigned to Sunset, with Parent
remaining obligated on the Ground Lease.

(v) The term "Parent Funded Debt Ratio" as defined in
Section 1.1 of the Loan Agreement provides that components of such
ratio (essentially, EBITDA and Funded Debt) "shall be calculated for
Parent on a consolidated basis EXCEPT that such calculations shall
exclude any amounts or items attributable to Unrestricted New Venture
Entities" such as Sunset. Parent believes that it is proper and
consistent with the intent of that definition that, if EBITDA of
Sunset is not to be consolidated with the EBITDA of Parent and its
other Subsidiaries, the actual rental payments made by Sunset to
Parent under the Sublease should be included in the EBITDA of Parent.

(vi) The "deconsolidating" approach taken by the Loan
Agreement with respect to the Parent Funded Debt Ratio described above
was overlooked with respect to the other financial covenant applicable
to Parent in the Loan Agreement, Section 9.11 which provides for a
minimum Parent Tangible Net Worth.

B. The foregoing contemplated financing transactions raise various
issues under the Loan Agreement, including the following:

(i) The Sublease of the Leased Equipment, the contribution
of the fee simple parcel and the assignment of the Ground Lease to
Sunset may constitute a "Disposition" by Parent within the meaning of
Section 9.2 of the Loan Agreement, for which no exception applies;

(ii) The Lease may constitute a "Lien" on the Leased
Equipment within the meaning of Section 9.8 of the Loan Agreement, for
which no exception applies;

(iii) The Completion Guaranty, while intended to be permitted
by Section 9.9(e) of the Loan Agreement, is not technically covered

<PAGE>

by the language of that Section under the current form of the Project
financing transactions;

(iv) The transactions between Parent and Sunset (including
the Completion Guaranty and Supplemental Loans) may be transactions
between Affiliates subject to Section 9.10 of the Loan Agreement, for
which no exception applies;

(v) Inclusion of the rent paid by Sunset to Parent under
the Sublease as part of EBITDA of Parent for purposes of the Parent
Funded Debt Ratio may not be permitted under a strict reading of the
definition of that term; and

(vi) Consistency in treatment of the two financial covenants
in the Loan Agreement applicable to Parent necessitates an amendment
to the definition of "Parent Tangible Net Worth."

C. On a unrelated subject, Parent has requested that permitted
Capital Expenditures for the Kansas City Project be increased by $35,000,000,
with the permitted Capital Expenditures for the St. Charles Expansion Project
being reduced by $10,000,000 and for the Texas Expansion Project by $25,000,000.

ACTION

The Required Banks, acting pursuant to Section 14.2 of the Loan
Agreement, hereby take the action described in Paragraphs 1 and 2 below and,
together with the Borrowers and Parent, take the action described in
Paragraphs 3 and 4 below:

1. WAIVE any non-compliance with Sections 9.2, 9.8, 9.9(e), 9.10 and
any other Section of the Loan Agreement that may otherwise apply with respect to
the financing transactions for the Project described in the Recitals hereto.

2. APPROVE the interpretation of the proviso to the definition of
"Parent Funded Debt Ratio" that requires the EBITDA of Sunset to be excluded
from the consolidated EBITDA of Parent and its Subsidiaries but permits the
actual rental payments made by Sunset to Parent under the Sublease to be
included in the EBITDA of Parent.

3. AMEND the definition of "Parent Tangible Net Worth" contained in
Section 1.1 of the Loan Agreement by adding at the end thereof the following:

<PAGE>

"; PROVIDED that Parent Tangible Net Worth shall be calculated on
a consolidated basis EXCEPT that such calculations shall exclude
the effect thereon of the results of operations of all
Unrestricted New Venture Entities."

4. AMEND Section 6.12 of the Loan Agreement by:

(a) striking the figures "$245,000,000" in clause (b)(i) thereof
and substituting therefor the figures "$280,000,000";

(b) striking the figures "$165,000,000" in clause (b)(ii)
thereof and substituting therefor the figures "$155,000,000"; and

5. STIPULATE that the foregoing Waiver in Paragraph 1 hereof is
limited to the specific transactions described above in the Recitals and shall
not be construed to extend to any other or further transactions.

Dated: September 11, 1996

BANK OF AMERICA NATIONAL TRUST SOCIETE GENERALE
AND SAVINGS ASSOCIATION, as
Managing Agent and a Bank

By /s/ Donald Schubert
--------------------------

By /s/ Scott Faber
- ---------------------------

BANK OF SCOTLAND WELLS FARGO BANK, N.A.

By /s/ Kathleen Stone
By /s/ Catherine Oniffrey ---------------------------
---------------------------

CIBC, INC. BANK OF AMERICA NEVADA

By /s/ Dean Decker
--------------------------- By /s/ Herb Steege
---------------------------

<PAGE>

THE FIRST NATIONAL BANK OF THE SUMITOMO BANK, LIMITED
BOSTON

By /s/ Reginald Dawes By
----------------------- -----------------------

ABN AMRO BANK, N.V., NBD BANK
SAN FRANCISCO BRANCH

/s/ Joseph Vitale By /s/ Jim Junker
By /s/ Jeffrey French -----------------------
-----------------------

THE NIPPON CREDIT BANK, LTD., THE LONG-TERM CREDIT BANK OF
LOS ANGELES AGENCY JAPAN, LTD., LOS ANGELES AGENCY

By /s/ Jay Schwartz By
----------------------- -----------------------

FIRST SECURITY BANK OF UTAH, N.A. PNC BANK, NATIONAL ASSOCIATION,
SUCCESSOR BY MERGER TO
MIDLANTIC BANK, N. A.
By
-----------------------
By /s/ Denise D. Killen
-----------------------
Denise D. Killen
Vice President

IMPERIAL BANK BANK OF HAWAII

By /s/ By /s/ Joseph Donalson
----------------------- -----------------------

<PAGE>

GIROCREDIT BANK AG DER CREDITANSTALT-BANKVEREIN, NEW
SPARKASSEN, GRAND CAYMAN YORK BRANCH
ISLAND BRANCH

/s/ John Redding By /s/
By /s/ Richard Stone --------------------------
--------------------------

CREDIT LYONNAIS LOS ANGELES CREDIT LYONNAIS CAYMAN ISLAND
BRANCH BRANCH

By /s/ Robert Ivosevich By /s/ Robert Ivosevich
-------------------------- --------------------------

PALACE STATION HOTEL & CASINO, BOULDER STATION, INC.
INC.

By: /s/ Glenn C. Christensen By: /s/ Glenn C. Christensen
-------------------------- --------------------------

TEXAS STATION, INC. ST. CHARLES RIVERFRONT STATION,
INC.

By: /s/ Glenn C. Christensen
-------------------------- By: /s/ Glenn C. Christensen
--------------------------

<PAGE>

KANSAS CITY STATION STATION CASINOS, INC.
CORPORATION

By: /s/ Glenn C. Christensen
By: /s/ Glenn C. Christensen --------------------------
--------------------------

<PAGE>

AMENDMENT NO. 3 TO AMENDED AND RESTATED
REDUCING REVOLVING LOAN AGREEMENT

This Amendment No. 3 to Amended and Restated Reducing Revolving Loan
Agreement (this "Amendment") is entered into with reference to the Amended and
Restated Reducing Revolving Loan Agreement dated as of March 19, 1996 among
Palace Station Hotel & Casino, Inc., Boulder Station, Inc., Texas Station, Inc.,
St. Charles Riverfront Station, Inc. and Kansas City Station Corporation
(collectively, "Borrowers"), Station Casinos, Inc. ("Parent"), the Banks party
thereto, Bank of Scotland and Societe Generale, as Co-Agents, and Bank of
America National Trust and Savings Association, as Managing Agent (as heretofore
amended by Amendment No. 1 dated as of May 17, 1996 and Waiver and Amendment
dated as of September 11, 1996, the "Loan Agreement"). Capitalized terms used
but not defined herein are used with the meanings set forth for those terms in
the Loan Agreement.

Borrowers, Parent and the Managing Agent, acting with the consent of
the Requisite Banks pursuant to Section 14.2 of the Loan Agreement, agree as
follows:

1. AMENDMENT TO SECTION 1.1. Section 1.1 of the Loan Agreement is
amended to revise the definition of "Annualized Adjusted EBITDA" by deleting the
period at the end thereof and adding the following at that place:

"; PROVIDED, however, that notwithstanding the foregoing
Adjusted EBITDA of the Kansas City Project for the Fiscal
Quarter ending March 31, 1997 shall be treated as Annualized
Adjusted EBITDA by (i) multiplying that Project's Adjusted
EBITDA for that Fiscal Quarter by a fraction the numerator
of which is 90 and denominator of which is the number of
days in that Fiscal Quarter which that Project has been open
for business and (ii) multiplying the result obtained by
four."

2. CONDITIONS PRECEDENT. The effectiveness of this Amendment shall
be conditioned upon the receipt by the Managing Agent of all of the following,
each properly executed by a Responsible Official of each party thereto and dated
as of the date hereof:

a. Counterparts of this Amendment executed by all parties hereto;

<PAGE>

b. Written consents of each of the Sibling Guarantors to the
execution, delivery and performance hereof, substantially in the
form of Exhibit A to this Amendment; and

c. Written consent of the Requisite Banks as required under
Section 14.2 of the Loan Agreement in the form of Exhibit B to
this Amendment.

3. REPRESENTATION AND WARRANTY. Borrowers represent and warrant to
the Managing Agent and the Banks that no Default or Event of Default has
occurred and remains continuing.

4. CONSENT OF PARENT. The execution of this Amendment by Parent
shall constitute its consent hereto in its capacity as guarantor under the
Parent Guaranty.

5. CONFIRMATION. In all other respects, the terms of the Loan
Agreement and the other Loan Documents are hereby confirmed.

IN WITNESS WHEREOF, Borrowers and the Managing Agent have executed
this Amendment as of January 21, 1997 by their duly authorized representatives.

PALACE STATION HOTEL & CASINOS, INC.
BOULDER STATION, INC.
TEXAS STATION, INC.
ST. CHARLES RIVERFRONT STATION, INC.
KANSAS CITY STATION CORPORATION

By: /s/ Glenn C. Christenson
------------------------------
Glenn C. Christenson
Vice President and
Chief Financial Officer

<PAGE>

STATION CASINOS, INC.

By: /s/ Glenn C. Christenson
-------------------------------
Glenn C. Christenson
Executive Vice President and
Chief Financial Officer

BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Managing Agent

By: /s/ Scott L. Faber
-------------------------------
Scott L. Faber
Vice President

<PAGE>

Exhibit A to Amendment

CONSENT OF SIBLING GUARANTORS

Reference is hereby made to that certain Amended and Restated Reducing
Revolving Loan Agreement dated as of March 19, 1996 among Palace Station Hotel &
Casino, Inc., Boulder Station, Inc., Texas Station, Inc., St. Charles
Riverfront, Inc. and Kansas City Station Corporation (collectively,
"Borrowers"), Station Casinos, Inc. ("Parent"), the Banks party thereto, Bank of
Scotland and Societe Generale, as Co-Agents, and Bank of America National Trust
and Savings Association, as Managing Agent, (as amended, the "Loan Agreement").

Each of the undersigned hereby consents to the execution, delivery and
performance by Borrowers, Parent and the Managing Agent of Amendment No. 3 to
the Loan Agreement.

Each of the undersigned represents and warrants to the Managing Agent
and the Banks that the Subsidiary Guaranty remains in full force and effect in
accordance with its terms.

Dated: January __, 1997

SOUTHWEST GAMING SERVICES, INC.

By: _________________________________

_________________________________
[Printed Name and Title]

SOUTHWEST SERVICES, INC.

By: _________________________________

_________________________________

<PAGE>

[Printed Name and Title]

GREEN VALLEY STATION, INC.

By: _________________________________

_________________________________
[Printed Name and Title]

<PAGE>

Exhibit B to Amendment

CONSENT OF BANK

Reference is hereby made to that certain Amended and Restated
Reducing Revolving Loan Agreement dated as of March 19, 1996 among Palace
Station Hotel & Casino, Inc., Boulder Station, Inc., Texas Station, Inc., St.
Charles Riverfront, Inc. and Kansas City Station Corporation (collectively,
"Borrowers"), Station Casinos, Inc. ("Parent"), the Banks party thereto, Bank
of Scotland and Societe Generale, as Co-Agents, and Bank of America National
Trust and Savings Association, as Managing Agent, (as amended, the "Loan
Agreement").

The undersigned Bank hereby consents to the execution and delivery
of Amendment No. 3 to Amended and Restated Reducing Revolving Loan Agreement
by the Managing Agent on its behalf, substantially in the form of a draft
dated on or about January __, 1997 presented to the undersigned Bank.

Dated: January __, 1997

_________________________________
[Name of Institution]

By: _________________________________

_________________________________
[Printed Name and Title]

<PAGE>

AMENDMENT NO. 4 TO AMENDED AND RESTATED
REDUCING REVOLVING LOAN AGREEMENT

This Amendment No. 4 to Amended and Restated Reducing Revolving Loan
Agreement (this "Amendment") is entered into with reference to the Amended and
Restated Reducing Revolving Loan Agreement dated as of March 19, 1996 among
Palace Station Hotel & Casino, Inc., Boulder Station, Inc., Texas Station, Inc.,
St. Charles Riverfront Station, Inc. and Kansas City Station Corporation
(collectively, "Borrowers"), Station Casinos, Inc. ("Parent"), the Banks party
thereto, Bank of Scotland and Societe Generale, as Co-Agents, and Bank of
America National Trust and Savings Association, as Managing Agent (as heretofore
amended by Amendment No. 1 dated as of May 17, 1996, Waiver and Amendment dated
as of September 11, 1996, and Amendment No. 3 dated as of January 21, 1997, the
"Loan Agreement"). Capitalized terms used but not defined herein are used with
the meanings set forth for those terms in the Loan Agreement.

Borrowers, Parent and the Managing Agent, acting with the consent of
the Requisite Banks pursuant to Section 14.2 of the Loan Agreement, agree as
follows:

1. SECTION 1.1 -- REVISED DEFINITIONS. Section 1.1 of the Loan
Agreement is amended to revise certain defined terms set forth therein to read
as follows:

"'APPLICABLE INCREMENTAL SPREAD' means, for each Pricing
Period, the rate (expressed in basis points per annum) set
forth below opposite the Parent Funded Debt Ratio as of the
last day of the Fiscal Quarter most recently ended prior to
the commencement of that Pricing Period:

Rate Parent Funded Debt Ratio
---- ------------------------

12.5 Equal to or greater
than 4.00 to 1.00,
but less than 4.25
to 1.00

25.0 Equal to or greater
than 4.25 to 1.00,
but less than 4.50
to 1.00

37.5 Equal to or greater
than 4.50 to 1.00,
but less than 5.00
to 1.00

<PAGE>

50.0 Equal to or greater
than 5.00 to 1.00

PROVIDED that (a) in the event that Borrowers do not deliver a
Pricing Certificate with respect to any Pricing Period prior to
the commencement of such Pricing Period, then until (but only
until) such Pricing Certificate is delivered the Parent Funded
Debt Ratio shall be deemed to be greater than 5.00 to 1.00 and
(b) if any Pricing Certificate is subsequently determined to be
in error, then the resulting change in the Applicable Incremental
Spread shall be made retroactively to the beginning of the
relevant Pricing Period."

"'BORROWERS ALLOCATED DEBT BASKET AMOUNT' means, as of any
date of determination, the SUM OF (a) $25,000,000 PLUS (b)
such amount not in excess of $25,000,000 as is specified in
a written notice from Parent to the Managing Agent, which
notice may not be withdrawn or amended without the approval
of the Managing Agent."

"EXPANSION/NEW VENTURE BASKET" means, as of any date of
determination, (a) $450,000,000 plus (b) the then applicable New
Equity Proceeds Component plus (c) $33,000,000."

"'PARENT TANGIBLE NET WORTH' means, as of any date of
determination, the sum of (a) the consolidated Stockholders'
Equity of Parent and its Subsidiaries on that date minus the
aggregate Intangible Assets of Parent and its Subsidiaries on
that date PLUS (b) the aggregate amount (not in excess of
$18,000,000) of Pre-Opening Expenses expended by Parent or any of
its Subsidiaries on New Ventures during the period commencing on
October 1, 1995 and ending on that date of determination PLUS
(c) the aggregate amount (not in excess of $30,000,000) of any
net loss sustained by Parent or any of its Subsidiaries upon a
permitted Disposition of the St. Charles Existing Vessels or a
write-down of the book value of the St. Charles Existing Vessels
as may be required by Generally Accepted Accounting Principles
(OTHER THAN ordinary course depreciation) pending such
Disposition thereof; PROVIDED that Parent Tangible Net Worth
shall be calculated on a consolidated basis EXCEPT that such

<PAGE>

calculations shall exclude the effect thereon of the results of
operations of all Unrestricted New Venture Entities."

"'SWING LINE BANK' means Bank of America National Trust and
Savings Association, acting through its Las Vegas Commercial
Banking Division."

2. SECTION 1.1 - NEW DEFINITIONS. Section 1.1 of the Loan Agreement
is further amended to add the following new defined terms at the appropriate
alphabetical places:

"'FOURTH AMENDMENT EFFECTIVE DATE' means the date upon which the
conditions set forth in Section 15 of this Amendment No. 4 are
satisfied or waived."

"'ST. CHARLES EXISTING VESSELS' means the casino barge, the
restaurant barge and the casino river boat which, as of the
Fourth Amendment Effective Date, are located at St. Charles
Riverfront Station in St. Charles, Missouri and the casino river
boat owned by St. Charles which, as of the Fourth Amendment
Effective Date, is leased to Argosy Gaming Company and located in
Lawrenceburg, Indiana."

3. SECTION 2.8. Section 2.8 of the Loan Agreement is amended by
deleting the figures "$10,000,000" in clause (i) of the first sentence of
Subsection 2.8(a) and inserting the figures "$15,000,000" at that place.

4. SECTION 6.6. Section 6.6 of the Loan Agreement is amended by
deleting the word "and" after Subsection 6.6(d), replacing the period after
Subsection 6.6(e) with "; and" and adding a new Subsection (f) as follows:

"(f) Liens consisting of, or on assets owned by other Persons
which are leased to Borrowers under, an operating lease excluded
from the definition of Indebtedness."

5. SECTION 6.9. Section 6.9 of the Loan Agreement is amended by
deleting the table therein set forth and inserting the following table at that
place:

<PAGE>

"Period Ratio
------ -----

Amendment Effective Date
through June 30, 1998 1.35 to 1.00

September 30, 1998
and thereafter 1.50 to 1.00"

6. SECTION 6.12. Section 6.12 of the Loan Agreement is amended by
deleting clauses (i) through (v) at the end of Subsection 6.12(b) and inserting
the following at that place:

"(i) the Kansas City Project, PROVIDED that the aggregate
Expansion/New Venture Capital Expenditures with respect thereto
do not exceed $311,000,000;

(ii) the St. Charles Expansion Project, PROVIDED that the
aggregate Expansion/New Venture Capital Expenditures with respect
thereto do not exceed $215,000,000; and

(iii) the St. Charles Amenities Project, PROVIDED that the
aggregate Expansion/New Venture Capital Expenditures with respect
thereto do not exceed $79,800,000."

7.
SECTION 8.2. Section 8.2 of the Loan Agreement is amended by deleting the
parenthetical in the third line thereof and inserting the following
parenthetical at that place: "(OTHER THAN an Unrestricted New Venture Entity or
an Immaterial Subsidiary)."

8. SECTION 8.5. Section 8.5 of the Loan Agreement is amended by
making the initial letter of the first word thereof lower case and inserting the
following at the beginning thereof: "At such time as the Missouri Gaming
Commission, by regulation or published announcement, permits the pledge of
capital stock of Persons holding a gaming license granted by the Missouri Gaming
Commission,".

<PAGE>

9. SECTION 9.2. Section 9.2 of the Loan Agreement is amended by
deleting the word "and" after Subsection 9.2(e), adding the word "and" after
Subsection 9.2(f) and inserting a new Subsection 9.2(g) at that place as
follows:

"Dispositions consisting of an Investment permitted by
Sections 9.15 or 9.16."

10. SECTION 9.8. Section 9.8 of the Loan Agreement is amended by
deleting the word "and" after Subsection 9.8(d), replacing the period after
Subsection 9.8(e) with "; and" and adding a new Subsection 9.8(f) as follows:

"(f) Liens consisting of, or on assets owned by other Persons
which are leased to Parent under, an operating lease excluded
from the definition of Indebtedness."

11. SECTION 9.9. Section 9.9 of the Loan Agreement is amended by (a)
deleting the figures "$200,000,000" in Subsection 9.9(c) and inserting the
figures "$350,000,000" at that place, (b) deleting Subsection 9.9(e) and
inserting at that place the following:

"(e) a Guaranty Obligation with respect to completion of
construction of the Sunset Station Project in the form attached
as an exhibit to the Construction/Term Loan Agreement dated as of
September 25, 1996 among Sunset Station, Inc., the lenders party
thereto and Bank of America NT & SA as Managing Agent;"

and (c) deleting the word "and" after Subsection 9.9(g), inserting "; and" after
Subsection 9.9(h) and adding new Subsection 9.9(i) as follows:

"(i) a Guaranty Obligation consisting of an Investment permitted
by Sections 9.15 or 9.16."

12. SECTION 9.11. Section 9.11 of the Loan Agreement is amended to
read in full as follows:

"9.11 TANGIBLE NET WORTH. Permit Parent Tangible Net Worth,
as of the last day of any Fiscal Quarter ending after the
Amendment Effective Date, to be less than the SUM OF
(a) $165,000,000, PLUS (b) an amount equal to 95% of Net Income
earned in each Fiscal Quarter ending after October 1, 1995 (with

<PAGE>

no deduction for a net loss in any such Fiscal Quarter), PLUS
(c) an amount equal to 100% of the aggregate increases in
Stockholders' Equity of Parent after the Amendment Effective Date
by reason of the issuance and sale of capital stock of Parent
(INCLUDING upon any conversion of debt securities of Parent into
such capital stock), MINUS (d) the aggregate amount expended to
date for repurchases of employee Common Stock permitted by
Section 9.5(B) and MINUS (e) preferred stock dividends paid in
Cash or Property (OTHER THAN capital stock of Parent) permitted
by Section 9.5(c).

13. SECTION 9.12. Section 9.12 of the Loan Agreement is amended by
deleting the table therein set forth and inserting the following table at that
place:

"Date or Period Ratio
-------------- -----

Amendment Effective Date
through December 31, 1996 4.75 to 1.00

March 31, 1997 5.00 to 1.00

June 30, 1997 through
December 31, 1997 5.25 to 1.00

March 31, 1998 and
June 30, 1998 5.00 to 1.00

September 30, 1998 4.75 to 1.00

December 31, 1998 4.50 to 1.00

March 31, 1999 and
June 30, 1999 4.25 to 1.00

September 30, 1999 4.00 to 1.00

December 31, 1999 and
thereafter 3.75 to 1.00"

14. SECTION 9.15. The Majority Banks hereby consent to an increase
in the New Venture Investment in the New Venture Entity that owns the Sunset
Station Project from $52,000,000 to $87,000,000.

<PAGE>

15.
CONDITIONS PRECEDENT. The effectiveness of this Amendment shall be conditioned
upon the receipt by the Managing Agent of:

a. the following documents, each properly executed by a
Responsible Official of each party thereto and dated as of
the date hereof:

(i) Counterparts of this Amendment executed by all parties
hereto;

(ii) new Swing Line Documents reflecting the amendment to
Section 2.8 executed by Borrowers in form satisfactory
to the Swing Line Bank;

(iii)Written consents of each of the Sibling Guarantors
to the execution, delivery and performance hereof,
substantially in the form of Exhibit A to this
Amendment; and

(iv) Written consent of the Requisite Banks as required
under Section 14.2 of the Loan Agreement in the form of
Exhibit B to this Amendment.

b. an amendment fee of .30% (30 basis points) TIMES the
Commitments, for the account of the Banks according to their
Pro Rata Share.

16. REPRESENTATION AND WARRANTY. Borrowers represent and warrant to
the Managing Agent and the Banks that no Default or Event of Default has
occurred and remains continuing.

17. CONSENT OF PARENT. The execution of this Amendment by Parent
shall constitute its consent hereto in its capacity as guarantor under the
Parent Guaranty.

<PAGE>

18. CONFIRMATION. In all respects, the terms of the Loan Agreement
(as amended hereby) and the other Loan Documents are hereby confirmed.

IN WITNESS WHEREOF, Borrowers and the Managing Agent have executed
this Amendment as of March 21, 1997 by their duly authorized representatives.

PALACE STATION HOTEL & CASINOS, INC.
BOULDER STATION, INC.
TEXAS STATION, INC.
ST. CHARLES RIVERFRONT STATION, INC.
KANSAS CITY STATION CORPORATION

By: /s/ Glenn C. Christenson
--------------------------------
Glenn C. Christenson
Vice President and
Chief Financial Officer

STATION CASINOS, INC.

By: /s/ Glenn C. Christenson
--------------------------------
Glenn C. Christenson
Executive Vice President and
Chief Financial Officer

BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Managing Agent

By: /s/ Scott L. Faber
--------------------------------
Scott L. Faber
Vice President

<PAGE>

Exhibit A to Amendment

CONSENT OF SIBLING GUARANTORS

Reference is hereby made to that certain Amended and Restated
Reducing Revolving Loan Agreement dated as of March 19, 1996 among Palace
Station Hotel & Casino, Inc., Boulder Station, Inc., Texas Station, Inc., St.
Charles Riverfront, Inc. and Kansas City Station Corporation (collectively,
"Borrowers"), Station Casinos, Inc. ("Parent"), the Banks party thereto, Bank
of Scotland and Societe Generale, as Co-Agents, and Bank of America National
Trust and Savings Association, as Managing Agent, (as amended, the "Loan
Agreement").

Each of the undersigned hereby consents to the execution, delivery
and performance by Borrowers, Parent and the Managing Agent of Amendment No.
4 to the Loan Agreement.

Each of the undersigned represents and warrants to the Managing
Agent and the Banks that the Subsidiary Guaranty remains in full force and
effect in accordance with its terms.

Dated: March __, 1997

SOUTHWEST GAMING SERVICES, INC.

By:
--------------------------------
Blake L. Sartini
Secretary

SOUTHWEST SERVICES, INC.

By:
--------------------------------
Blake L. Sartini
Secretary

<PAGE>

GREEN VALLEY STATION, INC.

By:
---------------------------------
Glenn C. Christenson
Vice President and Chief Financial
Officer

<PAGE>

Exhibit B to Amendment

CONSENT OF BANK

Reference is hereby made to that certain Amended and Restated Reducing
Revolving Loan Agreement dated as of March 19, 1996 among Palace Station Hotel &
Casino, Inc., Boulder Station, Inc., Texas Station, Inc., St. Charles
Riverfront, Inc. and Kansas City Station Corporation (collectively,
"Borrowers"), Station Casinos, Inc. ("Parent"), the Banks party thereto, Bank of
Scotland and Societe Generale, as Co-Agents, and Bank of America National Trust
and Savings Association, as Managing Agent, (as amended, the "Loan Agreement").

The undersigned Bank hereby consents to the execution and delivery of
Amendment No. 4 to Amended and Restated Reducing Revolving Loan Agreement by the
Managing Agent on its behalf, substantially in the form of a draft dated on or
about March 19, 1997 presented to the undersigned Bank.

Dated: March __, 1997

_________________________________
[Name of Institution]

By: _________________________________

_________________________________
[Printed Name and Title]

<PAGE>

AMENDMENT NO. 5 TO AMENDED AND RESTATED
REDUCING REVOLVING LOAN AGREEMENT

This Amendment No. 5 to Amended and Restated Reducing Revolving Loan
Agreement (this "Amendment") is entered into with reference to the Amended and
Restated Reducing Revolving Loan Agreement dated as of March 19, 1996 among
Palace Station Hotel & Casino, Inc., Boulder Station, Inc., Texas Station, Inc.,
St. Charles Riverfront Station, Inc. and Kansas City Station Corporation
(collectively, "Borrowers"), Station Casinos, Inc. ("Parent"), the Banks party
thereto, Bank of Scotland and Societe Generale, as Co-Agents, and Bank of
America National Trust and Savings Association, as Managing Agent (as heretofore
amended by Amendment No. 1 dated as of May 17, 1996, Waiver and Amendment dated
as of September 11, 1996, Amendment No. 3 dated as of January 21, 1997, and
Amendment No. 4 dated as of March 21, 1997, the "Loan Agreement"). Capitalized
terms used but not defined herein are used with the meanings set forth for those
terms in the Loan Agreement.

Borrowers, Parent and the Managing Agent, acting with the consent of
the Banks pursuant to Section 14.2 of the Loan Agreement, agree as follows:

1. SECTION 1.1 - NEW DEFINITIONS. Section 1.1 of the Loan Agreement
is further amended to add the following new defined terms at the appropriate
alphabetical places:

"'FIFTH AMENDMENT EFFECTIVE DATE' means the date upon which the
conditions set forth in Section 8 of this Amendment No. 5 are
satisfied or waived."

"'ST. CHARLES NEW VESSELS' means the two casino barges which, as
of the Fourth Amendment Effective Date, are under construction at
St. Charles Riverfront Station in St. Charles, Missouri."

2. SECTION 6.1. Section 6.1 of the Loan Agreement is amended by
deleting the word "and" before Subsection 6.1(c), inserting a comma at that
place and adding new Subsections 6.1 (d) and 6.1(e) at the end thereof as
follows:

", (d) a Disposition of one or more of the St. Charles Existing
Vessels after the St. Charles New Vessels are in service at
St. Charles Riverfront Station or such earlier date that does not

<PAGE>

result in an interruption of the business of St. Charles and
(e) a Disposition of one or more of the St. Charles New Vessels
PROVIDED that not later than the substantial completion of
construction thereof St. Charles enters into a lease or sublease
thereof which grants to St. Charles the right to occupy and use
such St. Charles New Vessel or Vessels for a lease term extending
at least through the Maturity Date."

3. SECTION 6.12. Section 6.12 of the Loan Agreement is amended by
deleting clause (ii) of Subsection (b) thereof in its entirety and substituting
therefor the following:

"(ii) the St. Charles Expansion Project, PROVIDED that the
aggregate Expansion/New Venture Capital Expenditures with respect
thereto do not exceed (A) $215,000,000 or (B) if the St. Charles
New Vessels are the subject of a Disposition permitted by Section
6.1(e) and/or 9.2(d), $215,000,000 reduced by the purchase price
paid by the Person which enters into the operating lease referred
to in Section 6.1(e) and/or 9.2(d) (whether or not such payments
occur after the incurrence of such Capital Expenditures); and"

4. SECTION 9.2. Section 9.2 of the Loan Agreement is amended by
deleting Subsection 9.2(d) and inserting the following at that place:

"(d) a Disposition of one or more of the St. Charles New Vessels
PROVIDED that such St. Charles Vessel or Vessels are concurrently
subjected to an operating lease pursuant to which (or pursuant to
a permitted sublease thereunder) St. Charles is, or will be not
later than the substantial completion of construction thereof,
granted the right to occupy and use such St. Charles New Vessel
or Vessels for a lease term extending at least through the
Maturity Date;"

5. SECTION 9.9. Section 9.9 of the Loan Agreement is amended
by deleting the word "and" after Subsection 9.9(h), inserting "; and" after
Subsection 9.9(i) and adding new Subsection 9.9(j) as follows:

<PAGE>

"(j) a Guaranty Obligation with respect to completion of
construction of the St. Charles New Vessels in favor of the
Person that enters into the operating lease referred to in
Sections 6.1(e) and/or 9.2(d)."

6. SECTION 9.15. The Banks hereby consent, to the extent required
by Sections 9.15(b) and/or 14.2(c), to the Dispositions permitted by
Sections 6.1(e) and 9.2(d).

7. SECTION 14.2. Section 14.2 of the Loan Agreement is amended by
deleting Subsection 14.2(c) and inserting the following at that place:

"(c) To release the Parent Guaranty, the Sibling Guaranty; or any
material portion of the Collateral EXCEPT as expressly provided
for in any Loan Document (PROVIDED that the Managing Agent is
authorized to release the Lien created by the Collateral
Documents on assets secured by Indebtedness permitted by Sections
6.7(d) or 6.7(e) and on assets which are the subject of a
Disposition permitted by Section 6.1);"

8.
CONDITIONS PRECEDENT. The effectiveness of this Amendment shall be conditioned
upon the receipt by the Managing Agent of:

a. the following documents, each properly executed by a
Responsible Official of each party thereto and dated as of
the date hereof:

(i) Counterparts of this Amendment executed by all parties
hereto;

(ii) Written consents of each of the Sibling Guarantors to
the execution, delivery and performance hereof,
substantially in the form of Exhibit A to this
Amendment; and

(iii) Written consent of the Banks as required under
Section 14.2 of the Loan Agreement in the form of
Exhibit B to this Amendment.

<PAGE>

b. the prior or simultaneous effectiveness of Amendment No. 4
to the Loan Agreement.

9. REPRESENTATION AND WARRANTY. Borrowers represent and warrant to
the Managing Agent and the Banks that no Default or Event of Default has
occurred and remains continuing.

10. CONSENT OF PARENT. The execution of this Amendment by Parent
shall constitute its consent hereto in its capacity as guarantor under the
Parent Guaranty.

11. CONFIRMATION. In all respects, the terms of the Loan Agreement
(as amended hereby) and the other Loan Documents are hereby confirmed.

IN WITNESS WHEREOF, Borrowers and the Managing Agent have executed
this Amendment as of March 27, 1997 by their duly authorized representatives.

PALACE STATION HOTEL & CASINOS, INC.
BOULDER STATION, INC.
TEXAS STATION, INC.
ST. CHARLES RIVERFRONT STATION, INC.
KANSAS CITY STATION CORPORATION

By: /s/ Glenn C. Christenson
----------------------------------
Glenn C. Christenson
Vice President and
Chief Financial Officer

STATION CASINOS, INC.

By: /s/ Glenn C. Christenson
----------------------------------
Glenn C. Christenson
Executive Vice President and
Chief Financial Officer

<PAGE>

BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Managing Agent

By: /s/ Scott L. Faber
----------------------------------
Scott L. Faber
Vice President

<PAGE>

Exhibit A to Amendment

CONSENT OF SIBLING GUARANTORS

Reference is hereby made to that certain Amended and Restated Reducing
Revolving Loan Agreement dated as of March 19, 1996 among Palace Station Hotel &
Casino, Inc., Boulder Station, Inc., Texas Station, Inc., St. Charles
Riverfront, Inc. and Kansas City Station Corporation (collectively,
"Borrowers"), Station Casinos, Inc. ("Parent"), the Banks party thereto, Bank of
Scotland and Societe Generale, as Co-Agents, and Bank of America National Trust
and Savings Association, as Managing Agent, (as amended, the "Loan Agreement").

Each of the undersigned hereby consents to the execution, delivery and
performance by Borrowers, Parent and the Managing Agent of Amendment No. 5 to
the Loan Agreement.

Each of the undersigned represents and warrants to the Managing Agent
and the Banks that the Subsidiary Guaranty remains in full force and effect in
accordance with its terms.

Dated: March __, 1997

SOUTHWEST GAMING SERVICES, INC.

By:
----------------------------------
Blake L. Sartini
Secretary

SOUTHWEST SERVICES, INC.

By:
----------------------------------
Blake L. Sartini
Secretary

<PAGE>

GREEN VALLEY STATION, INC.

By:
----------------------------------
Glenn C. Christenson
Vice President and Chief Financial
Officer

<PAGE>

Exhibit B to Amendment

CONSENT OF BANK

Reference is hereby made to that certain Amended and Restated Reducing
Revolving Loan Agreement dated as of March 19, 1996 among Palace Station Hotel &
Casino, Inc., Boulder Station, Inc., Texas Station, Inc., St. Charles
Riverfront, Inc. and Kansas City Station Corporation (collectively,
"Borrowers"), Station Casinos, Inc. ("Parent"), the Banks party thereto, Bank of
Scotland and Societe Generale, as Co-Agents, and Bank of America National Trust
and Savings Association, as Managing Agent, (as amended, the "Loan Agreement").

The undersigned Bank hereby consents to the execution and delivery of
Amendment No. 5 to Amended and Restated Reducing Revolving Loan Agreement by the
Managing Agent on its behalf, substantially in the form of a draft dated on or
about March 19, 1997 presented to the undersigned Bank.

Dated: March __, 1997

_________________________________
[Name of Institution]

By: _________________________________

_________________________________
[Printed Name and Title]

<PAGE>

AMENDMENT NO. 6 TO AMENDED AND RESTATED
REDUCING REVOLVING LOAN AGREEMENT

This Amendment No. 6 to Amended and Restated Reducing Revolving Loan
Agreement (this "Amendment") is entered into with reference to the Amended and
Restated Reducing Revolving Loan Agreement dated as of March 19, 1996 among
Palace Station Hotel & Casino, Inc., Boulder Station, Inc., Texas Station, Inc.,
St. Charles Riverfront Station, Inc. and Kansas City Station Corporation
(collectively, "Borrowers"), Station Casinos, Inc. ("Parent"), the Banks party
thereto, Bank of Scotland and Societe Generale, as Co-Agents, and Bank of
America National Trust and Savings Association, as Managing Agent (as heretofore
amended by Amendment No. 1 dated as of May 17, 1996, Waiver and Amendment dated
as of September 11, 1996, Amendment No. 3 dated as of January 21, 1997,
Amendment No. 4 dated as of March 21, 1997 and Amendment No. 5 dated as of May
20, 1997, the "Loan Agreement"). Capitalized terms used but not defined herein
are used with the meanings set forth for those terms in the Loan Agreement.

Borrowers, Parent and the Managing Agent, acting with the consent of
the Requisite Banks pursuant to Section 14.2 of the Loan Agreement, agree as
follows:

1. SECTION 9.12. Section 9.12 of the Loan Agreement is amended by
deleting the table therein set forth and inserting the following table at that
place:

"Date or Period Ratio
--------------- -----

Amendment Effective Date
through December 31, 1996 4.75 to 1.00

March 31, 1997 5.00 to 1.00

June 30, 1997 5.75 to 1.00

September 30, 1997 5.85 to 1.00

December 31, 1997 and
March 31, 1998 5.75 to 1.00

June 30, 1998 5.00 to 1.00

September 30, 1998 4.75 to 1.00

<PAGE>

December 31, 1998 4.50 to 1.00

March 31, 1999 and
June 30, 1999 4.25 to 1.00

September 30, 1999 4.00 to 1.00

December 31, 1999 and
thereafter 3.75 to 1.00"

2. CONDITIONS PRECEDENT. The effectiveness of this Amendment
shall be conditioned upon the receipt by the Managing Agent of the following
documents, each properly executed by a Responsible Official of each party
thereto and dated as of the date hereof:

(a) Counterparts of this Amendment executed by all parties
hereto;

(b) Written consents of each of the Sibling Guarantors to
the execution, delivery and performance hereof,
substantially in the form of Exhibit A to this
Amendment; and

(c) Written consent of the Requisite Banks as required
under Section 14.2 of the Loan Agreement in the form of
Exhibit B to this Amendment.

3. REPRESENTATION AND WARRANTY. Borrowers represent and warrant to
the Managing Agent and the Banks that no Default or Event of Default has
occurred and remains continuing.

4. CONSENT OF PARENT. The execution of this Amendment by Parent
shall constitute its consent hereto in its capacity as guarantor under the
Parent Guaranty.

<PAGE>

5. CONFIRMATION. In all respects, the terms of the Loan Agreement
(as amended hereby) and the other Loan Documents are hereby confirmed.

IN WITNESS WHEREOF, Borrowers and the Managing Agent have executed
this Amendment as of June 27, 1997 by their duly authorized representatives.

PALACE STATION HOTEL & CASINOS, INC.
BOULDER STATION, INC.
TEXAS STATION, INC.
ST. CHARLES RIVERFRONT STATION, INC.
KANSAS CITY STATION CORPORATION

By: /s/ Glenn C. Christenson
----------------------------------
Glenn C. Christenson
Vice President and
Chief Financial Officer

STATION CASINOS, INC.

By: /s/ Glenn C. Christenson
----------------------------------
Glenn C. Christenson
Executive Vice President and
Chief Financial Officer

BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Managing Agent

By: /s/ Janice Hammond
----------------------------------
Janice Hammond
Vice President

<PAGE>

Exhibit A to Amendment

CONSENT OF SIBLING GUARANTORS

Reference is hereby made to that certain Amended and Restated
Reducing Revolving Loan Agreement dated as of March 19, 1996 among Palace
Station Hotel & Casino, Inc., Boulder Station, Inc., Texas Station, Inc., St.
Charles Riverfront, Inc. and Kansas City Station Corporation (collectively,
"Borrowers"), Station Casinos, Inc. ("Parent"), the Banks party thereto, Bank
of Scotland and Societe Generale, as Co-Agents, and Bank of America National
Trust and Savings Association, as Managing Agent, (as amended, the "Loan
Agreement").

Each of the undersigned hereby consents to the execution, delivery
and performance by Borrowers, Parent and the Managing Agent of Amendment No.
6 to the Loan Agreement.

Each of the undersigned represents and warrants to the Managing
Agent and the Banks that the Subsidiary Guaranty remains in full force and
effect in accordance with its terms.

Dated: June __, 1997

SOUTHWEST GAMING SERVICES, INC.

By:
----------------------------------
Blake L. Sartini
Secretary

SOUTHWEST SERVICES, INC.

By:
----------------------------------
Blake L. Sartini
Secretary

<PAGE>

GREEN VALLEY STATION, INC.

By:
----------------------------------
Glenn C. Christenson
Vice President and Chief Financial
Officer

<PAGE>

Exhibit B to Amendment

CONSENT OF BANK

Reference is hereby made to that certain Amended and Restated
Reducing Revolving Loan Agreement dated as of March 19, 1996 among Palace
Station Hotel & Casino, Inc., Boulder Station, Inc., Texas Station, Inc., St.
Charles Riverfront, Inc. and Kansas City Station Corporation (collectively,
"Borrowers"), Station Casinos, Inc. ("Parent"), the Banks party thereto, Bank
of Scotland and Societe Generale, as Co-Agents, and Bank of America National
Trust and Savings Association, as Managing Agent, (as amended, the "Loan
Agreement").

The undersigned Bank hereby consents to the execution and delivery
of Amendment No. 6 to Amended and Restated Reducing Revolving Loan Agreement
by the Managing Agent on its behalf, substantially in the form of a draft
dated on or about June 19, 1997 presented to the undersigned Bank.

Dated: June__, 1997

_________________________________
[Name of Institution]

By: _________________________________

_________________________________
[Printed Name and Title]

<PAGE>

EXHIBIT 5.1

[Milbank, Tweed, Hadley & McCloy Letterhead]

August 8, 1997

Station Casinos, Inc.
2411 West Sahara Avenue
Las Vegas, Nevada 89102

Re: Registration Statement on Form S-4
----------------------------------

Gentlemen:

We have examined the Registration Statement on Form S-4 filed by you
with the Securities and Exchange Commission on July 2, 1997 (Registration No.
333-30685) and Amendment No.1 thereto filed on August 8, 1997 (as so amended,
the "Registration Statement"), in connection with the registration of Senior
Subordinated Notes due 2007 (the "Notes") of Station Casino, Inc. (the
"Company"). We have examined the Indenture, dated April 3, 1997 (the
"Indenture"), between the Company and First Union National Bank, as Trustee
(the "Trustee"), under which the Notes are to be issued in exchange for
Senior Subordinated Notes due 2007 of the Company which were issued under the
Indenture on April 3, 1997 (the "Old Notes"). We are familiar with the
proceedings heretofore taken by the Company in connection with the
authorization, registration and issuance of the Notes in exchange for the Old
Notes.

Subject to the proposed additional proceedings being taken as now
contemplated by us as your counsel and as contemplated by the Indenture prior
to the issuance of the Notes in exchange for the Old Notes, it is our opinion
that the Notes will, upon the issuance of the Notes in exchange for the Old
Notes in the manner referred to in the Registration Statement, constitute the
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or transfer or

<PAGE>

Station Casinos, Inc.
August 8, 1997
Page 2

similar laws affecting creditors' rights generally and except as the
enforceability of the Notes is subject to the effect of general principles of
equity including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability
of specific performance or injunctive relief, regardless of whether
considered in a proceeding in equity or at law.

We consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to our name in the Registration Statement
under "Legal Matters."

Respectfully submitted,

/s/ MILBANK, TWEED, HADLEY & McCLOY

[KJB/TO]

<PAGE>

AMENDMENT NO. 1 TO CONSTRUCTION/TERM LOAN AGREEMENT

This Amendment No. 1 to Construction/Term Loan Agreement (this
"Amendment") dated as of October 28, 1996 is entered into with reference to the
Construction/Term Loan Agreement dated as of September 25, 1996 (the "Loan
Agreement") among Sunset Station, Inc. ("Borrower"), the Lenders party thereto,
Bank of Scotland and Societe Generale, as Co-Agents, and Bank of America
National Trust and Savings Association, as Managing Agent. Capitalized terms
used but not defined herein are used with the meanings set forth for those terms
in the Loan Agreement.

Borrower and the Managing Agent, acting with the consent of all of
the Lenders pursuant to Section 12.2 of the Loan Agreement, agree as follows:

1. AMENDMENT TO SECTION 6.9. Section 6.9 of the Loan Agreement is
amended to strike the figures "$50,000,000" in clause (e) thereof and to
substitute therefor the figures "$100,000,000."

2. CONDITIONS PRECEDENT. The effectiveness of this Amendment
shall be conditioned upon the receipt by the Managing Agent of all of the
following:

(a) counterparts of this Amendment executed by the
parties hereto;

(b) written consent of Parent to the execution, delivery
and performance hereof, in the form of Exhibit A to this Amendment;
and

(c) written consent of the Requisite Lenders as required
under Section 12.2 of the Loan Agreement, in the form of Exhibit B
to this Amendment;

3. REPRESENTATION AND WARRANTY. Borrower represents and warrants
to the Managing Agent and the Lenders that no Default or Event of Default has
occurred and remains continuing.

4. CONFIRMATION. In all other respects, the terms of the Loan
Agreement and the other Loan Documents are hereby confirmed.

<PAGE>

IN WITNESS WHEREOF, Borrower and the Managing Agent have executed
this Amendment as of the date first written above by their duly authorized
representatives.

SUNSET STATION, INC.

By: /s/ Glenn C. Christenson
--------------------------------
Glenn C. Christenson
Vice President, Chief Financial
Officer and Treasurer

BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Managing Agent

By: /s/ Scott Faber
--------------------------------
Scott Faber, Vice President

<PAGE>

Exhibit A to Amendment

CONSENT OF PARENT

Reference is hereby made to that certain Construction/Term Loan
Agreement dated as of September 25, 1996 (the "Loan Agreement") among Sunset
Station, Inc. ("Borrower"), the Lenders party thereto, Bank of Scotland and
Societe Generale, as Co-Agents, and Bank of America National Trust and Savings
Association, as Managing Agent.

The undersigned hereby consents to the execution, delivery and
performance by Borrower and the Managing Agent of Amendment No. 1 to the Loan
Agreement.

The undersigned represents and warrants to the Managing Agent and
the Lenders that the Completion Guaranty remains in full force and effect in
accordance with its terms.

Dated: October __, 1996

STATION CASINOS, INC.

By:
--------------------------------

Title:
---------------------

<PAGE>

Exhibit B to Amendment

CONSENT OF LENDER

The undersigned Lender hereby consents to the execution and delivery
of Amendment No. 1 to Construction/Term Loan Agreement by the Managing Agent on
its behalf, substantially in the form of a draft dated on or about October 17,
1996 presented to the undersigned Lender.

Date: October __, 1996

_____________________________________
[Name of Institution]

By ___________________________________

______________________________________
[Printed Name and Title]

<PAGE>

AMENDMENT NO. 2 TO
CONSTRUCTION/TERM LOAN AGREEMENT

This Amendment No. 2 to Construction/Term Loan Agreement (this
"Amendment") is entered into with reference to the Construction/Term Loan
Agreement dated as of September 25, 1996 among Sunset Station, Inc. ("Borrower")
, the Lenders party thereto, Bank of Scotland and Societe Generale, as Co-
Agents, and Bank of America National Trust and Savings Association, as Managing
Agent (as heretofore amended by Amendment No. 1 dated as of October 28, 1996,
the "Loan Agreement"). Capitalized terms used but not defined herein are used
with the meanings set forth for those terms in the Loan Agreement.

Borrower and the Managing Agent, acting with the consent of the
Requisite Lenders pursuant to Section 12.2 of the Loan Agreement, agree as
follows:

1. SECTION 1.1. Section 1.1 of the Loan Agreement is amended to
revise the definition of Construction Budget therein set forth by adding the
following at the end thereof:

", as amended and restated pursuant to the revised itemized
schedule delivered by Borrower to the Managing Agent on or
about March 12, 1997."

2. SECTION 7.2. Section 7.2 of the Loan Agreement is amended by
deleting the figures "$207,000,000" in Subsection 7.2(c) and inserting the
figures "$237,000,000" at that place.

3.
CONDITIONS PRECEDENT. The effectiveness of this Amendment shall be conditioned
upon the receipt by the Managing Agent of all of the following:

a. counterparts of this Amendment executed by all parties hereto;

b. a copy of the revised Construction Budget;

c. a Certificate signed by a Senior Officer of Borrower confirming
that all expenditures on the Project in excess of $202,000,000
have been or will be funded by Cash Equity Contributions made
subsequent to the Closing Date;

<PAGE>

d. the written consent of Parent to the execution, delivery and
performance hereof, substantially in the form of Exhibit A to
this Amendment; and

e. the written consent of the Requisite Lenders as required under
Section 12.2 of the Loan Agreement in the form of Exhibit B to
this Amendment.

4. REPRESENTATION AND WARRANTY. Borrowers represent and warrant to
the Managing Agent and the Lenders that no Default or Event of Default has
occurred and remains continuing.

5. CONFIRMATION. In all other respects, the terms of the Loan
Agreement and the other Loan Documents are hereby confirmed.

IN WITNESS WHEREOF, Borrower and the Managing Agent have executed this
Amendment as of March 21, 1997 by their duly authorized representatives.

SUNSET STATION, INC.

By: /s/ Glenn C. Christenson
----------------------------------
Glenn C. Christenson
Executive Vice President and
Chief Financial Officer

BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Managing Agent

By: /s/ Scott L. Faber
----------------------------------
Scott L. Faber
Vice President

<PAGE>

Exhibit A to Amendment

CONSENT OF PARENT

Reference is hereby made to that certain Construction/Term Loan
Agreement dated as of September 25, 1996 among Sunset Station, Inc. ("Borrower")
, the Lenders party thereto, Bank of Scotland and Societe Generale, as Co-
Agents, and Bank of America National Trust and Savings Association, as Managing
Agent (the "Loan Agreement").

The undersigned, in its capacity as completion guarantor pursuant to
the Completion Guaranty (as defined in the Loan Agreement), hereby consents to
the execution, delivery and performance by Borrower and the Managing Agent of
Amendment No. 2 to the Loan Agreement.

The undersigned represents and warrants to the Managing Agent and the
Lenders that the Completion Guaranty remains in full force and effect in
accordance with its terms.

Dated: March __, 1997

STATION CASINOS, INC.

By:
----------------------------------
Glenn C. Christenson
Executive Vice President and
Chief Financial Officer

<PAGE>

Exhibit B to Amendment

CONSENT OF LENDER

The undersigned Lender hereby consents to the execution and delivery
of Amendment No. 2 to the Construction/Term Loan Agreement by the Managing Agent
on its behalf, substantially in the form of a draft dated on or about March 19,
1997 presented to the undersigned Lender.

Dated: March __, 1997

_________________________________
[Name of Institution]

By: _________________________________

_________________________________
[Printed Name and Title]

<PAGE>
EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
registration statement.

ARTHUR ANDERSEN LLP

Las Vegas, Nevada
August 7, 1997

<PAGE>

EXHIBIT 99.1

LETTER OF TRANSMITTAL

STATION CASINOS, INC.

OFFER TO EXCHANGE ITS
9 3/4% SENIOR SUBORDINATED NOTES DUE 2007
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
9 3/4% SENIOR SUBORDINATED NOTES DUE 2007

PURSUANT TO THE PROSPECTUS
DATED AUGUST 8, 1997

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON SEPTEMBER 8, 1997, UNLESS THE OFFER IS EXTENDED

THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
FIRST UNION NATIONAL BANK

BY REGISTERED OR CERTIFIED MAIL; BY OVERNIGHT COURIER; OR BY HAND:

First Union National Bank
Attention: Mike Klotz
Corporate Trust Reorg. Dept.
1525 West W.T. Harris Blvd.
Charlotte, NC 28288-1153

TO CONFIRM BY TELEPHONE OR FOR INFORMATION:
(704) 590-7408

FACSIMILE TRANSMISSIONS:
(704) 590-7628

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A
NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.

THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.

Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus (as defined below).

This Letter of Transmittal is to be completed by holders of the Old Notes
(as defined below) either if Old Notes are to be forwarded herewith or if
tenders of Old Notes are to be made by book-entry transfer to an account
maintained by First Union National Bank (the "Exchange Agent") at The Depository
Trust Company ("DTC") pursuant to the procedures set forth in "The Exchange
Offer -- Procedures for Tendering the Old Notes" in the Prospectus.

Holders of Old Notes whose certificates (the "Certificates") for such Old
Notes are not immediately available or who cannot deliver their Certificates and
all other required documents to the Exchange Agent on or prior to the Expiration
Date (as defined in the Prospectus) or who cannot complete the procedures for
book-entry transfer on a timely basis, must tender their Old Notes according to
the guaranteed delivery procedures set forth in "The Exchange Offer --
Procedures for Tendering the Old Notes" in the Prospectus.

DELIVERY OF DOCUMENTS TO THE COMPANY OR DTC DOES NOT CONSTITUTE DELIVERY TO
THE EXCHANGE AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

-1-
<PAGE>

ALL TENDERING HOLDERS COMPLETE THIS BOX

- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES TENDERED
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Please Print Name and Address of Old Notes Tendered Principal Amount of
Registered Holder Certificate (Attach Additional List of Old Notes Tendered (if Principal
(Please Fill in if Blank) Number(s)* Necessary) Amount of Old Notes Less than All)**
- ---------------------------------------------------------------------------------------------------------------------------

- ---------------------------------------------------------------------------------------------------------------------------
TOTAL AMOUNT TENDERED:
- ---------------------------------------------------------------------------------------------------------------------------
* Need not be completed by book-entry holders.
** Old Notes may be tendered in whole or in part in denominations of $1,000 and integral multiples hereof.
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------

</TABLE>
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)

/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE
THE FOLLOWING:

Name of Tendering Institution ____________________________________________
DTC Account Number _______________________________________________________
Transaction Code Number __________________________________________________

/ / CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:

Name of Registered Holder(s) _____________________________________________
Window Ticket Number (if any) ____________________________________________
Date of Execution of Notice of Guaranteed Delivery _______________________
Name of Institution Which Guaranteed Delivery ____________________________

If Guaranteed Delivery is to be made By Book-Entry Transfer:

/ / CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD NOTES
ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH ABOVE.

/ / CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD NOTES FOR ITS
OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A
"PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF
THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

Name: __________________________________________________________________________
Address: _______________________________________________________________________

-2-
<PAGE>

Ladies and Gentlemen:

The undersigned hereby tenders to Station Casinos, Inc., (the
"Company"), the above described aggregate principal amount of the Company's 9
3/4% Senior Subordinated Notes Due 2007 (the "Old Notes") in exchange for a
like aggregate principal amount of the Company's 9 3/4% Senior Subordinated
Notes Due 2007 (the "New Notes") which have been registered under the
Securities Act of 1933 (the "Securities Act"), upon the terms and subject to
the conditions set forth in the Prospectus dated August 8, 1997 (as the same
may be amended or supplemented from time to time, the "Prospectus"), receipt
of which is acknowledged, and in this Letter of Transmittal (which, together
with the Prospectus, constitute the "Exchange Offer"):

Subject to and effective upon the acceptance for exchange of all or
any portion of the Old Notes tendered herewith in accordance with the terms and
conditions of the Exchange Offer (including, if the Exchange Offer is extended
or amended, the terms and conditions of any such extension or amendment), the
undersigned hereby sells, assigns and transfers to or upon the order of the
Company all right, title and interest in and to such Old Notes as are being
tendered herewith. The undersigned hereby irrevocably constitutes and appoints
the Exchange Agent as its agent and attorney-in-fact (with full knowledge that
the Exchange Agent is also acting as agent of the Company in connection with the
Exchange Offer) with respect to the tendered Old Notes, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), subject only to the right of withdrawal described in
the Prospectus, to (i) deliver Certificates for Old Notes to the Company
together with all accompanying evidences of transfer and authenticity to, or
upon the order of, the Company, upon receipt by the Exchange Agent, as the
undersigned's agent, of the New Notes to be issued in exchange for such Old
Notes, (ii) present Certificates for such Old Notes for transfer, and to
transfer the Old Notes on the books of the Company, and (iii) receive for the
account of the Company all benefits and otherwise exercise all rights of
beneficial ownership of such Old Notes, all in accordance with the terms and
conditions of the Exchange Offer.

THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED
HAS FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE
OLD NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR EXCHANGE, THE
COMPANY WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE THERETO, FREE AND
CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES, AND THAT THE OLD
NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE CLAIMS OR PROXIES. THE
UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL DOCUMENTS
DEEMED BY THE COMPANY OR THE EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO
COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF THE OLD NOTES TENDERED HEREBY,
AND THE UNDERSIGNED WILL COMPLY WITH ITS OBLIGATIONS UNDER THE REGISTRATION
RIGHTS AGREEMENT. THE UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF
THE EXCHANGE OFFER.

The names(s) and address(es) of the registered holder(s) of the Old
Notes tendered hereby should be printed above, if they are not already set forth
above, as they appear on the Certificates representing such Old Notes. The
Certificate number(s) and the Old Notes that the undersigned wishes to tender
should be indicated in the appropriate boxes above.

If any tendered Old Notes are not exchanged pursuant to the Exchange
Offer for any reason, or if Certificates are submitted for more Old Notes than
are tendered or accepted for exchange, Certificates for such nonexchanged or
nontendered Old Notes will be returned (or, in the case of Old Notes tendered by
book-entry transfer, such Old Notes will be credited to an account maintained at
DTC), without expense to the tendering holder, promptly following the expiration
or termination of the Exchange Offer.

The undersigned understands that tenders of Old Notes pursuant to any
one of the procedures described in "The Exchange Offer -- Procedures for
Tendering the Old Notes" in the Prospectus and in the instructions hereto will,
upon the Company's acceptance for exchange of such tendered Old Notes,
constitute a binding agreement between the undersigned and the Company upon the
terms and subject to the conditions of the Exchange Offer. The undersigned
recognizes that, under certain circumstances set forth in the Prospectus, the
Company may not be required to accept for exchange any of the Old Notes tendered
hereby.

-3-
<PAGE>

Unless otherwise indicated herein in the box entitled "Special
Issuance Instructions" below, the undersigned hereby directs that the New Notes
be issued in the name(s) of the undersigned or, in the case of a book-entry
transfer of the Old Notes, that such New Notes be credited to the account
indicated above maintained at DTC. If applicable, substitute Certificates
representing the Old Notes not exchanged or not accepted for exchange will be
issued to the undersigned or, in the case of a book-entry transfer of Old Notes,
will be credited to the account indicated above maintained at DTC. Similarly,
unless otherwise indicated under "Special Delivery Instructions," please deliver
New Notes to the undersigned at the address shown below the undersigned's
signature.

BY TENDERING OLD NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE
UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (I) THE UNDERSIGNED IS NOT AN
"AFFILIATE" OF THE COMPANY, (II) ANY NEW NOTES TO BE RECEIVED BY THE UNDERSIGNED
ARE BEING ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS, (III) THE UNDERSIGNED
HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A
DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF NEW NOTES TO BE
RECEIVED IN THE EXCHANGE OFFER, AND (IV) IF THE UNDERSIGNED IS NOT A
BROKER-DEALER, THE UNDERSIGNED IS NOT ENGAGED IN, AND DOES NOT INTEND TO ENGAGE
IN, A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF SUCH NEW NOTES.
BY TENDERING OLD NOTES PURSUANT TO THE EXCHANGE OFFER AND EXECUTING THIS LETTER
OF TRANSMITTAL, A HOLDER OF OLD NOTES WHICH IS A BROKER-DEALER REPRESENTS AND
AGREES, CONSISTENT WITH CERTAIN INTERPRETIVE LETTERS ISSUED BY THE STAFF OF THE
DIVISION OF CORPORATION FINANCE OF THE SECURITIES AND EXCHANGE COMMISSION TO
THIRD PARTIES, THAT (A) SUCH OLD NOTES HELD BY THE BROKER-DEALER ARE HELD ONLY
AS A NOMINEE, OR (B) SUCH OLD NOTES WERE ACQUIRED BY SUCH BROKER-DEALER FOR ITS
OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES
AND IT WILL DELIVER THE PROSPECTUS (AS AMENDED OR SUPPLEMENTED FROM TIME TO
TIME) MEETING THE REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY
RESALE OF SUCH NEW NOTES (PROVIDED THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A
PROSPECTUS, SUCH BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN
"UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT).

THE COMPANY HAS AGREED THAT, SUBJECT TO THE PROVISIONS OF THE
REGISTRATION RIGHTS AGREEMENT, THE PROSPECTUS, AS IT MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME, MAY BE USED BY A PARTICIPATING BROKER-DEALER (AS
DEFINED BELOW) IN CONNECTION WITH RESALES OF NEW NOTES RECEIVED IN EXCHANGE FOR
OLD NOTES, WHERE SUCH OLD NOTES WERE ACQUIRED BY SUCH PARTICIPATING
BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR
OTHER TRADING ACTIVITIES, FOR A PERIOD OF ONE YEAR AFTER THE DATE WHEN THE
REGISTRATION STATEMENT BECOMES EFFECTIVE OR, IF EARLIER, WHEN ALL SUCH NEW NOTES
HAVE BEEN DISPOSED OF BY SUCH PARTICIPATING BROKER-DEALER. IN THAT REGARD, EACH
BROKER-DEALER WHO ACQUIRED OLD NOTES FOR ITS OWN ACCOUNT AS A RESULT OF
MARKET-MAKING OR OTHER TRADING ACTIVITIES (A "PARTICIPATING BROKER-DEALER"), BY
TENDERING SUCH OLD NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, AGREES THAT
UPON RECEIPT OF NOTICE FROM THE COMPANY OF THE OCCURRENCE OF ANY EVENT OR THE
DISCOVERY OF ANY FACT WHICH MAKES ANY STATEMENT CONTAINED OR INCORPORATED BY
REFERENCE IN THE PROSPECTUS UNTRUE IN ANY MATERIAL RESPECT OR WHICH CAUSES THE
PROSPECTUS TO OMIT TO STATE A MATERIAL FACT NECESSARY IN ORDER TO MAKE THE
STATEMENTS CONTAINED OR INCORPORATED BY REFERENCE THEREIN, IN LIGHT OF THE
CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING OR OF THE OCCURRENCE OF
CERTAIN OTHER EVENTS SPECIFIED IN THE REGISTRATION RIGHTS AGREEMENT, SUCH
PARTICIPATING BROKER-DEALER WILL SUSPEND THE SALE OF NEW NOTES PURSUANT TO THE
PROSPECTUS UNTIL THE COMPANY HAS AMENDED OR SUPPLEMENTED THE PROSPECTUS TO
CORRECT SUCH MISSTATEMENT OR OMISSION AND HAS FURNISHED COPIES OF THE AMENDED OR
SUPPLEMENTED PROSPECTUS TO THE PARTICIPATING BROKER-DEALER OR THE COMPANY HAS
GIVEN NOTICE THAT THE SALE OF THE NEW NOTES MAY BE RESUMED, AS THE CASE MAY BE.
IF THE COMPANY GIVES SUCH NOTICE TO SUSPEND THE SALE OF THE NEW NOTES, IT SHALL
EXTEND THE ONE YEAR PERIOD REFERRED TO ABOVE DURING WHICH PARTICIPATING
BROKER-DEALERS ARE ENTITLED TO USE THE PROSPECTUS IN CONNECTION

-4-
<PAGE>

WITH THE RESALE OF NEW NOTES BY THE NUMBER OF DAYS DURING THE PERIOD FROM AND
INCLUDING THE DATE OF THE GIVING OF SUCH NOTICE TO AND INCLUDING THE DATE ON
WHICH THE COMPANY HAS GIVEN NOTICE THAT THE SALE OF NEW NOTES MAYBE RESUMED, AS
THE CASE MAY BE.

All authority herein conferred or agreed to be conferred in this
Letter of Transmittal shall survive the death or incapacity of the undersigned
and any obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus, this tender is irrevocable.

-5-
<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

HOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON PAGE 13)
(NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)

Must be signed by registered holder(s) exactly as name(s) appear(s)
on Certificate(s) for the Old Notes hereby tendered or on a security position
listing, or by any person(s) authorized to be come the registered holder(s)
by endorsements and documents transmitted herewith (including such opinions
of counsel, certifications and other information as may be required by the
Company or the Trustee for the Old Notes to comply with the restrictions on
transfer applicable to the Old Notes). If signature is by an attorney-in-
fact, executor, administrator, trustee, guardian, officer of a corporation or
another acting in a fiduciary capacity or representing capacity, please set
forth the signer's full title. See Instruction 5.

> _________________________________________________________________________ <

> __________________________________________________________________________<
(SIGNATURE(S) OF HOLDER(S))

Date: __________________________________________________________________, 1997

Name(s) ______________________________________________________________________
_______________________________________________________________________________
(PLEASE PRINT)

Capacity (full title)_________________________________________________________

Address ______________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(INCLUDE ZIP CODE)

Area Code and Telephone Number _______________________________________________

___________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))

GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 2 AND 5)

> _________________________________________________________________________ <
(AUTHORIZED SIGNATURE)

Date:__________________________________________________________________ , 1997

Name of Firm _________________________________________________________________

Capacity (full title) ________________________________________________________
(PLEASE PRINT)

Address_______________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(INCLUDE ZIP CODE)

Area Code and Telephone Number _______________________________________________

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-6-

<PAGE>

To be completed ONLY if the New Notes are to be issued in the name of someone
other than the registered holder of the Old Notes whose name(s) appear(s) above.

Issue:
/ / Old Notes not tendered
/ / New Notes, to:

Name(s) _______________________________________________________________________
Address _______________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(INCLUDE ZIP CODE)

Area Code and Telephone Number ________________________________________________

_______________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL
SECURITY NUMBER(S))

_______________________________________________________________________________
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)

To be completed ONLY if New Notes are to be sent to someone other than the
registered holder of the Old Notes whose name(s) appear(s) above, or such
registered holder(s) at an address other than that shown above.

Send:
/ / Old Notes not tendered
/ / New Notes, to:

Name(s) _______________________________________________________________________
Address _______________________________________________________________________

_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(INCLUDE ZIP CODE)

Area Code and Telephone Number ________________________________________________

_______________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL
SECURITY NUMBER(S))
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

-7-
<PAGE>

INSTRUCTIONS

FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER

1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be completed either if
(a) Certificates are to be forwarded herewith or (b) tenders are to be made
pursuant to the procedures for tender by book-entry transfer set forth in "The
Exchange Offer----Procedures for Tendering Old Notes" in the Prospectus.
Certificates, or timely confirmation of a book-entry transfer of such Old Notes
into the Exchange Agent's account at DTC, as well as this Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at its address set forth
herein on or prior to the Expiration Date. Old Notes may be tendered in whole
or in part in the principal amount of $1,000 and integral multiples of $1,000.

Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, this Letter of
Transmittal and all other required documents to the Exchange Agent on or prior
to the Expiration Date or (iii) who cannot complete the procedures for delivery
by book-entry transfer on a timely basis, may tender their Old Notes by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedures set forth in "The Exchange Offer----Procedures
for Tendering Old Notes" in the Prospectus. Pursuant to such procedures: (i)
such tender must be made by or through an Eligible Institution (as defined
below); (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Company, must be
received by the Exchange Agent on or prior to the Expiration Date; and (iii) the
Certificates (or a book-entry confirmation (as defined in the Prospectus))
representing all tendered Old Notes, in proper form for transfer, together with
a Letter of Transmittal (or facsimile thereof)), properly completed and duly
executed, with any required signature guarantees and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
within five New York Stock Exchange, Inc. trading days after the date of
execution of such Notice of Guaranteed Delivery, all as provided in "The
Exchange Offer----Guaranteed Delivery Procedures" in the Prospectus.

The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice. For Old Notes to be
properly tendered pursuant to the guaranteed delivery procedure, the Exchange
Agent must receive a Notice of Guaranteed Delivery on or prior to the Expiration
Date. As used herein and in the Prospectus, "Eligible Institution" means a firm
or other entity identified in Rule 17Ad-15 under the Exchange Act as "an
eligible guarantor institution," including (as such terms are defined therein)
(i) a bank; (ii) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer; (iii) a credit union; (iv) a national
securities exchange, registered securities association or clearing agency; or
(v) a savings association that is a participant in a Securities Transfer
Association.

THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.

The Company will not accept any alternative, conditional or contingent
tenders. Each tendering holder, by execution of a Letter of Transmittal (or
facsimile thereof), waives any right to receive any notice of the acceptance of
such tender.

-8-
<PAGE>

2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:

(i) this Letter of Transmittal is signed by the registered holder
(which term, for purposes of this document, shall include any
participant in DTC whose name appears on a security position
listing as the owner of the Old Notes) of Old Notes tendered
herewith, unless such holder(s) has completed either the box
entitled "Special Issuance Instructions" or the box entitled
"Special Delivery Instructions" above, or

(ii) such Old Notes are tendered for the account of a firm that is
an Eligible Institution.

In all other cases, an Eligible Institution must guarantee the signature(s) on
this Letter of Transmittal. See Instruction 5.

3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Old Notes" is inadequate, the Certificate number(s) and/or the
principal amount of Old Notes and any other required information should be
listed on a separate signed schedule which is attached to this Letter of
Transmittal.

4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tender of the Old Notes will
be accepted only in the principal amount of $1,000 and integral multiples
thereof. If less than all the Old Notes evidenced by any Certificate submitted
are to be tendered, fill in the principal amount of the Old Notes which are to
be tendered in the box entitled "Principal Amount of Old Notes Tendered (if less
than all)." In such case, new Certificate(s) for the remainder of the Old Notes
that were evidenced by your old Certificate(s) will only be sent to the holder
of the Old Note, promptly after the Expiration Date. All Old Notes represented
by Certificates delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.

Except as otherwise provided herein, tenders of the Old Notes may be
withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective on or prior to that time, a written, telegraphic,
telex or facsimile transmission of such notice of withdrawal must be timely
received by the Exchange Agent at one of its addresses set forth above or in the
Prospectus on or prior to the Expiration Date. Any such notice of withdrawal
must specify the name of the person who tendered the Old Notes to be withdrawn,
the aggregate principal amount of Old Notes to be withdrawn, and (if
Certificates for Old Notes have been tendered) the name of the registered holder
of the Old Notes as set forth on the Certificate for the Old Notes, if different
from that of the person who tendered such Old Notes. If Certificates for the
Old Notes have been delivered or otherwise identified to the Exchange Agent,
then prior to the physical release of such Certificates for the Old Notes, the
tendering holder must submit the serial numbers shown on the particular
Certificates for the Old Notes to be withdrawn and the signature on the notice
of withdrawal must be guaranteed by an Eligible Institution, except in the case
of Old Notes tendered for the account of an Eligible Institution. If Old Notes
have been tendered pursuant to the procedures for book-entry transfer set forth
in "The Exchange Offer----Procedures for Tendering Old Notes," the notice of
withdrawal must specify the name and number of the account at DTC to be credited
with the withdrawal of Old Notes, in which case a notice of withdrawal will be
effective if delivered to the Exchange Agent by written, telegraphic, telex or
facsimile transmission. Withdrawals of tenders of Old Notes may not be
rescinded. Old Notes properly withdrawn will not be deemed validly tendered for
purposes of the Exchange Offer, but may be retendered at any subsequent time on
or prior to the Expiration Date by following any of the procedures described in
the Prospectus under "The Exchange Offer----Procedures for Tendering Old Notes."

All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
Neither the Company, any affiliates or assigns of the Company, the Exchange
Agent nor any

-9-
<PAGE>

other person shall be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification. Any Old Notes which have been tendered but which
are withdrawn will be returned to the holder thereof without cost to such holder
promptly after withdrawal.

5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Old
Notes tendered hereby, the signature(s) must correspond exactly with the name(s)
as written on the face of the Certificate(s) without alteration, enlargement or
any change whatsoever.

If any of the Old Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.

If any tendered Old Notes are registered in different name(s) on several
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal (or facsimiles thereof) as there are different
registrations of Certificates.

If this Letter of Transmittal or any Certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and must submit proper evidence
satisfactory to the Company, in its sole discretion, of such persons' authority
to so act.

When this Letter of Transmittal is signed by the registered owner(s) of the
Old Notes listed and transmitted hereby, no endorsement(s) of Certificate(s) or
separate bond power(s) are required unless New Notes are to be issued in the
name of a person other than the registered holder(s). Signature(s) on such
Certificate(s) or bond power(s) must be guaranteed by an Eligible Institution.

If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Old Notes listed, the Certificates must be endorsed
or accompanied by appropriate bond powers, signed exactly as the name or names
of the registered owner(s) appear(s) on the Certificates, and also must be
accompanied by such opinions of counsel, certifications and other information as
the Company or the Trustee for the Old Notes may require in accordance with the
restrictions on transfer applicable to the Old Notes. Signatures on such
Certificates or bond powers must be guaranteed by an Eligible Institution.

6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If New Notes are to be
issued in the name of a person other than the signer of this Letter of
Transmittal, or if New Notes are to be sent to someone other than the signer of
this Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed.
Certificates of Old Notes not exchanged will be returned by mail or, if tendered
by book-entry transfer, by crediting the account indicated above maintained at
DTC. See Instruction 4.

7. IRREGULARITIES. The Company will determine, in its sole discretion,
all questions as to the form of documents, validity, eligibility (including time
of receipt) and acceptance for exchange of any tender of Old Notes, which
determination shall be final and binding on all parties. The company reserves
the absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance of which, or exchange for, may, in the view of
counsel to the Company, be unlawful. The Company also reserves the absolute
right, subject to applicable law, to waive any of the conditions of the Exchange
Offer set forth in the Prospectus under "The Exchange Offer----Certain
Conditions to the Exchange Offer" or any conditions or irregularity in any
tender of Old Notes of any particular holder whether or not similar conditions
or irregularities are waived in the case of other holders. The Company's
interpretation of the terms and conditions of the Exchange Offer (including this
Letter of Transmittal and the instructions hereto) will be final and binding.
No

-10-
<PAGE>

tender of Old Notes will be deemed to have been validly made until all
irregularities with respect to such tender have been cured or waived. Neither
the Company, any affiliates or assigns of the Company, the Exchange Agent, nor
any other person shall be under any duty to give notification of any
irregularities in tenders or incur any liability for failure to give such
notification.

8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Exchange Agent at its address
and telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.

9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal
income tax law, a holder whose tendered Old Notes are accepted for exchange is
required to provide the Exchange Agent with such holder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Exchange
Agent is not provided with the correct TIN, the Internal Revenue Service (the
"IRS") may subject the holder or other payee to a $50 penalty. In addition,
payments to such holders or other payees with respect to Old Notes exchanged
pursuant to the Exchange Offer may be subject to 31% backup withholding.

The box in Part 2 of the Substitute Form W-9 may be checked in if the
tendering holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 2 is checked, the
holder or other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 2 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60 day period following the date of the Substitute Form W-9.
If the holder furnishes the Exchange Agent with its TIN within 60 days after the
date of the Substitute Form W-9, the amounts retained during the 60 day period
will be remitted to the holder and no further amounts shall be retained or
withheld from payments made to the holder thereafter. If, however, the holder
has not provided the Exchange Agent with its TIN within such 60 day period,
amounts withheld will be remitted to the IRS as backup withholding. In
addition, 31% of all payments made thereafter will be withheld and remitted to
the IRS until a correct TIN is provided.

The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the Old Notes or of the last transferee appearing on the transfers attached to,
or endorsed on, the Old Notes. If the Old Notes are registered in more than one
name or are not in the name of the actual owner, consult the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional guidance on which number to report.

Certain holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to these backup
withholding and reporting requirements. Such holders should nevertheless
complete the attached Substitute Form W-9 below, and write "exempt" on the face
thereof, to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS Form W-8,
signed under penalties of perjury, attesting to that holder's exempt status.
Please consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
holders are exempt from backup withholding.

Backup withholding is not an additional U.S. Federal income tax. Rather,
the U.S. Federal income tax liability of a person subject to backup withholding
will be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.

-11-
<PAGE>

10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s)
representing Old Notes have been lost, destroyed or stolen, the holder should
promptly notify the Exchange Agent. The holder will then be instructed as to
the steps that must be taken in order to replace the Certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost, destroyed or stolen Certificate(s) have been
followed.

11. SECURITY TRANSFER TAXES. Holders who tender their Old Notes for
exchange will not be obligated to pay any transfer taxes in connection
therewith. If, however, New Notes are to be delivered to, or are to be issued
in the name of, any person other than the registered holder of the Old Notes
tendered, or if a transfer tax is imposed for any reason other than the exchange
of Old Notes in connection with the Exchange Offer, then the amount of any such
transfer tax (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.

IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF) AND ALL OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE
EXPIRATION DATE.

-12-
<PAGE>

TO BE COMPLETED BY ALL
TENDERING SECURITYHOLDERS
(SEE INSTRUCTION 9)

PAYER'S NAME: FIRST BANK NATIONAL ASSOCIATION
<TABLE>
<CAPTION>

<S><C>
- ------------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 - PLEASE PROVIDE YOUR TIN ON THE LINE AT TIN_____________
FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW Social Security Number or
Employer Identification Number
- ------------------------------------------------------------------------------------------------------------------------------------
Department of the Treasury NAME (Please Print)
Internal Revenue Service PART 2
-----------------------------------------------
Payor's Request for
Taxpayer Identification ADDRESS Awaiting
Number (TIN) and ---------------------------------------
Certification
TIN / /
-----------------------------------------------

CITY
------------------------------------------

STATE ZIP CODE
------------------- ------------
------------------------------------------------------------------------------------------------------
Part 3 - CERTIFICATION - UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT (1) the number shown on this
form is my correct taxpayer identification number (or I am waiting for a number to be issued to me),
(2) I am not subject to backup withholding either because (i) I am exempt from backup withholding,
(ii) I have not been notified by the Internal Revenue Service ("IRS") that I am subject to backup
withholding as a result of a failure to report all interest or dividends, or (iii) the IRS has
notified me that I am not longer subject to backup withholding, and (3) any other information provided
on this form is true and correct.

SIGNATURE DATE
--------------------------------------------- ------------------------------

You must cross out item (iii) in Part (2) above if you have been notified by the IRS that you are
subject to backup withholding because of underreporting interest or dividends on your tax return and
you have not been notified by the IRS that you are no longer subject to backup withholding.
- ------------------------------------------------------------------------------------------------------------------------------------
NOTE; FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES RESULT IN BACKUP WITHHOLDING OF 31% OF ANY AMOUNTS PAID
TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTION FORM W-9 FOR ADDITIONAL DETAILS.
- ------------------------------------------------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have
mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or
Social Security Administration Office or (2) I intend to mail or deliver an application in the near future. I understand that if I
do not provide a taxpayer identification number by the time of payment, 31% of all payments made to me on account of the New Notes
shall be retained until I provide a taxpayer identification number to the Exchange Agent and that, if I do not provide my taxpayer
identification number within 60 days, such retained amounts shall be remitted to the Internal Revenue Service as backup withholding
and 31% of all reportable payments made to me thereafter will be withheld and remitted to the Internal Revenue Service until I
provide a taxpayer identification number.

Signature Date , 1997
------------------------------------------------------ ------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------

</TABLE>

-13-

<PAGE>

NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
9 3/4% SENIOR SUBORDINATED NOTES DUE 2007
OF
STATION CASINOS, INC.

This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Exchange Offer (as defined below) if (i)
certificates for the Company's (as defined below) 9 3/4% Senior Subordinated
Notes Due 2007 (the "Old Notes") are not immediately available, (ii) the Old
Notes, the Letter of Transmittal and all other required documents cannot be
delivered to First Union National Bank (the "Exchange Agent") on or prior to
the Expiration Date (as defined in the Prospectus referred to below) or (iii)
the procedures for delivery by book-entry transfer cannot be completed on a
timely basis. This Notice of Guaranteed Delivery may be delivered by hand,
overnight courier or mail, or transmitted by facsimile transmission, to the
Exchange Agent. See "The Exchange Offer-Procedures for Tendering the Notes"
in the Prospectus.

THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
FIRST UNION NATIONAL BANK

BY REGISTERED OR CERTIFIED MAIL; BY OVERNIGHT COURIER; OR BY HAND:

First Union National Bank
Attn: Mike Klotz
Corporate Trust Reorg. Dept.
1525 West W.T. Harris Blvd.
Charlotte, NC 28288-1153

TO CONFIRM BY TELEPHONE OR FOR INFORMATION:
(704) 590-7408

FACSIMILE TRANSMISSIONS:
(704) 590-7628

DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA
FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.

THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.

<PAGE>

Ladies and Gentlemen:

The undersigned hereby tenders to Station Casinos, Inc., a Nevada
corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Prospectus dated August 8, 1997 (as the same may be amended or
supplemented from time to time, the "Prospectus"), and the related Letter of
Transmittal (which together constitute the "Exchange Offer"), receipt of which
is hereby acknowledged, the aggregate principal amount of the Notes set forth
below pursuant to the guaranteed delivery procedures set forth in the Prospectus
under the caption, "The Exchange Offer -- Procedures for Tendering Old Notes."

Aggregate Principal Names(s) of Registered Holder(s)
Amount Tendered:

Certificate No(s). Address(es)
(if available): Area Code and Telephone Number(s).

If the Notes will be tendered by book-entry transfer, provide the following
information:

Signature(s):
-------------------------------------------------------------------

DTC Account Number:
-------------------------------------------------------------

Date:
---------------------------------------------------------------------------

THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED

-2-

<PAGE>

GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)

The undersigned, a firm or other entity identified in Rule 17Ad-15 under
the Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker, municipal securities dealer,
government securities broker, government securities dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association recognized program (each of the foregoing being
referred to as an "Eligible Institution"), hereby guarantees to deliver to the
Exchange Agent, at one of its addresses set forth above, either the Notes
tendered hereby in proper form for transfer, or confirmation of the book entry
transfer of such Notes to the Exchange Agent's account at The Depositary Trust
Company ("DTC"), pursuant to the procedures for book-entry transfer set forth in
the Prospectus, in either case together with one or more properly completed and
duly executed Letter(s) of Transmittal (or facsimile thereof) and any other
required documents within five business days after the date of execution of this
Notice of Guaranteed Delivery.

The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal and the Notes tendered hereby to the Exchange Agent within the time
period set forth above and that failure to do so could result in a financial
loss to the undersigned.

Name of Firm
--------------------------------------------------------------------
(Authorized Signature)
----------------------------------------------------------
(Title)

Address
-------------------------------------------------------------------------

-------------------------------------------------------------------------
(INCLUDE ZIP CODE)

Area Code and Telephone Number
--------------------------------------------------

Date:
---------------------------------

NOTE: DO NOT SEND THE NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. ACTUAL
SURRENDER OF THE NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED
BY, A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL AND
ANY OTHER REQUIRED DOCUMENTS.

-3-