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                          UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C.  20549
                                
                            FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE  ACT OF 1934 for the fiscal year ended March 31, 1997.

                               OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934 for the transition period from _____  to_____.

Commission file number 000-21640

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

              Nevada                                      88-0136443
              ------                                      ----------
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

             2411  West  Sahara  Avenue,  Las  Vegas,  Nevada 89102 
             ------------------------------------------------------
             (Address  of principal executive offices  -  Zip code)

Registrant's telephone number, including area code: (702) 367-2411
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, 
                                                            $0.01 Par Value

                                                            $3.50 Convertible 
                                                            Preferred Stock, 
                                                            $0.01  Par Value

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that  the registrant was required to file such reports), and  (2)  has
been subject to such filing requirements for the past 90 days.
 Yes    X       No  
      -----        -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405  of  Regulation  S-K  is not contained herein,  and  will  not  be
contained, to the best of registrant's knowledge, in definitive  proxy
or  information statements incorporated by reference in  Part  III  of
this Form 10-K or any amendment to the Form 10-K. [  ]

The aggregate market value of the voting stock held by non-affiliates (all
persons  other than executive officers or directors) of the registrant
as  of  May 30, 1997, based on the closing price per share as reported
on the New York Stock Exchange was $185,815,715.

As of May 31, 1997, the registrant has 35,318,057 shares of common stock
outstanding.

               DOCUMENTS INCORPORATED BY REFERENCE
                                
Portions of the Proxy Statement for the Registrants' 1997 Annual Meeting
of Stockholders to be held July 28, 1997 (which has not been filed as
of the date of this filing) are incorporated by reference into Part III.
                             
                             
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                             PART I

ITEM 1. BUSINESS

GENERAL

      Station  Casinos, Inc. (the "Company") is an established  multi-
jurisdictional gaming company that owns and operates five  distinctly-
themed  casino  properties, three 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")  and Texas Station Gambling Hall & Hotel ("Texas  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. To expand its established presence in the
Las Vegas market, the Company currently is constructing Sunset Station
Hotel  &  Casino  ("Sunset  Station"), a  Spanish/Mediterranean-themed
hotel-casino located in the Henderson/Green Valley area of Las  Vegas.
Sunset Station, which is expected to open in June 1997, will cater 
primarily  to 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 "Project Under Development
and  Expansion  of  Existing  Casino Property  -  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.

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

     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.

PROJECT UNDER DEVELOPMENT AND EXPANSION OF EXISTING CASINO PROPERTY

     SUNSET STATION

      The Company  commenced  construction  of  Sunset Station in late 
calendar  year  1995  in  order  to  capitalize on its reputation as a 
provider of a high-quality gaming experience oriented to the Las Vegas  
local and repeat visitor markets.  Sunset Station is positioned in the 
Las Vegas market as a  locals-oriented hotel and casino, strategically 
located  on  the  southeast  side  of Las Vegas in the rapidly growing 
Henderson/Green  Valley   area.   While   Sunset   Station   will   be  
distinguished   from   the   Company's   other   properties   by   its   
interior   and   exterior  Spanish/Mediterranean-style   architecture, 
management intends  to  employ  operating  strategies  consistent with 
those employed at its existing casino properties to attract and retain 
customers from both the local and repeat visitor markets.

     The Sunset Station  facility  will  feature 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  will  
include   an   approximately   80,000-square   foot  casino,  with  an  
anticipated  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 will  also  include  five full-service restaurants, themed 
to capitalize  on the  restaurants  at the Company's other properties, 
an  entertainment  lounge,  additional  bars, a  tenant buildout for a 
microbrewery, a  gift shop,  a  non-gaming  video arcade, tenant lease 
space  for  additional  restaurants,  a  high-quality  13-screen movie 
theater  complex  (which  opened  in May 1996), a child-care facility, 
an outdoor swimming  pool and an  amphitheater,  as  well  as  several  
fast-food outlets and franchises.   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.  Sunset 
Station is expected to open in June 1997.

      Patrons will enjoy convenient access to Sunset Station, which is
located  on a nearly 100-acre parcel at the intersection of Interstate
515  and  Sunset  Road. Multiple access points will 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 will  have
prominent  visibility  from  the freeway  and  the  Sunset  commercial
corridor.    In  February  1996,  a  1.2  million-square  foot  retail
shopping  development  opened directly north  of  the  Sunset  Station
property.  Management believes that this shopping development  is  the
largest retail mall  in Nevada.   In addition,  several retail  "power
centers"  are under various stages of development in the  vicinity  of
Sunset  Station  which include nationally recognized  anchor  tenants.
Sunset  Station is located approximately nine miles east  of  McCarran
International Airport and eight miles southeast of Boulder Station.


                                 3

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     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  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.  The construction of Sunset Station is being
financed  through $110 million of non-recourse debt and a $40  million
operating  lease provided by the Company. See "Management's Discussion
and  Analysis  of  Financial Condition and  Results  of  Operations  -
Description of Certain Indebtedness and Capital Stock."  At March  31,
1997, the Company had contributed $54 million of equity to the project
and  plans  to fund all of the remaining construction costs  primarily
through additional equity contributions of approximately $33 million.
All such amounts were contributed subsequent to March 31, 1997.

     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.

      As with any major construction effort, the development of Sunset
Station  involves  many  risks, including shortages  of  materials  or
skilled  labor,  unforeseen engineering, environmental  or  geological
problems,  work  stoppages,  labor  disputes,  weather  interferences,
floods and unanticipated cost increases, any of which could give  rise
to  delays  or  cost  overruns.  Construction, equipment  or  staffing
problems  or difficulties in obtaining any of the requisite  licenses,
permits,  allocations  and authorizations from regulatory  authorities
could also increase the cost or delay or prohibit the construction  of
Sunset  Station  or otherwise affect the design and  features  of  the
project.

     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").
Management  estimates that the St. Charles Expansion Project  will  be
completed by mid-summer of 1998.

     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 

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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.

     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).   Upon
completion  of  the St. Charles Expansion Project, the new  facilities
will  replace  the  existing riverboat, gaming  barge  and  restaurant
facilities.  More  than one-half of the associated construction  costs
are anticipated to be incurred by June 1997.  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  reducing
revolving  loan  agreement, 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  a  90-day  due
diligence   period,  which  expires  June  19,  1997,   with   various
termination  provisions. 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.

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.  Palace  Station,  Boulder Station,  Texas Station,   Station 
Casino Kansas City   and  Station  Casino  St.  Charles  (collectively  
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  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  

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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 MayTM, "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.

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, 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 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 

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<PAGE>

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.

     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.

     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 Sunset 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 

                                 7

<PAGE>
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.

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.

      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 

                                 8
<PAGE>

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 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.

                                 9


<PAGE>
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 and Texas Station face competition
from all other casinos and hotels in the Las Vegas area, including  to
some  degree,  from  each  other.  Sunset Station  will  face  similar
competition.   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  MayTM  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 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.

                                10

<PAGE>

     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 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.

                                11

<PAGE>
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: (i) the Nevada Gaming Control  Act
and  the  rules  and regulations promulgated thereunder (collectively,
the   ''Nevada   Act'');  and  (ii)  various  local   ordinances   and
regulations.   The  Company's gaming operations  are  subject  to  the
licensing  and  regulatory  control of the  Nevada  Gaming  Commission
(''Nevada  Commission''),  the  Nevada  State  Gaming  Control   Board
(''Nevada Board''), the City of Las Vegas, the Clark County Liquor and
Gaming Licensing Board (the ''Clark County Board''), the City of North
Las  Vegas,  the City of Henderson and certain other local  regulatory
agencies.   The Nevada Commission, the Nevada Board, the City  of  Las
Vegas,  the Clark County Board, the City of North Las Vegas, the  City
of   Henderson,  and  certain  other  local  regulatory  agencies  are
collectively referred to as the ''Nevada Gaming Authorities.''

     The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities  are  based upon declarations of public policy  which  are
concerned with, among other things: (i) the prevention of unsavory  or
unsuitable  persons from having a direct or indirect involvement  with
gaming  at  any  time or in any capacity; (ii) the  establishment  and
maintenance of responsible accounting practices and procedures;  (iii)
the maintenance of effective controls over the financial practices  of
licensees,  including  the  establishment of  minimum  procedures  for
internal  controls  and  the  safeguarding  of  assets  and  revenues,
providing reliable record keeping and requiring the filing of periodic
reports  with  the Nevada Gaming Authorities; (iv) the  prevention  of
cheating and fraudulent practices; and (v) providing a source of state
and  local  revenues through taxation and licensing fees.   Change  in
such laws, regulations and procedures could have an adverse effect  on
the Company's gaming operations.

     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.  Palace Station, Boulder
Station,  Texas Station, and Sunset Station have received licenses  to
conduct nonrestricted gaming operations.  Town Center Amusements, Inc.
("TCAI")  has been licensed to conduct nonrestricted gaming operations
at  Barley's  Casino  & Brewing Company, a micro  brewery  and  casino
located  in Southeast Las Vegas.  The Company's ownership in  TCAI  is
held  through  an intermediary company known as Green Valley  Station,
Inc.  ("GVSI") which is licensed as a member and Manager of TCAI.  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 Palace Station, Boulder Station, Texas  Station,
Sunset  Station, GVSI, and SGSI.  The Company is also  licensed  as  a
manufacturer and distributor.  Palace Station, Boulder Station,  Texas
Station,  Sunset  Station, GVSI and SGSI are each a  corporate  gaming
licensee   and   TCAI   is  a  limited  liability   company   licensee
(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.  Officers, directors and certain key
employees of the Gaming Subsidiaries must file applications  with  the
Nevada Gaming Authorities and may be required to be licensed or  found
suitable  by  the Nevada Gaming Authorities.  Officers, directors  and
key employees of the Company who are actively and directly involved in
gaming  activities of the Gaming Subsidiaries may be  required  to  be
licensed  or  found  suitable by the Nevada Gaming  Authorities.   The
Nevada  Gaming  Authorities may deny an application for licensing  for
any  cause  which they deem reasonable.  A finding of  suitability  is
comparable  to  licensing,  and both require  submission  of  detailed
personal   and   financial   information  followed   by   a   thorough
investigation.   The  applicant  for  licensing  or   a   finding   of
suitability must pay all the costs of the investigation.   Changes  in
licensed  positions must be reported to the Nevada Gaming  Authorities
and  in  addition  to  their authority to deny an  application  for  a
finding  of  suitability or licensure, the Nevada  Gaming  Authorities
have jurisdiction to disapprove a change in corporate position.

                                12

<PAGE>
     If the Nevada Gaming Authorities were to find an officer, director or
key  employee  unsuitable for licensing or unsuitable to  continue  to
have  a relationship with the Company or the Gaming Subsidiaries,  the
companies  involved  would have to sever all relationships  with  such
person.  In addition, the Nevada Commission may require the Company or
the  Gaming Subsidiaries to terminate the employment of any person who
refuses  to  file  the  appropriate applications.   Determinations  of
suitability  or questions pertaining to licensing are not  subject  to
judicial review in Nevada.

     The Company, Palace Station, Boulder Station, Texas Station, Sunset
Station,  TCAI and SGSI are required to submit detailed financial  and
operating  reports  to  the  Nevada  Commission.   Substantially   all
material  loans,  leases, sales of securities  and  similar  financing
transactions  by Palace Station, Boulder Station, Texas Station, Sunset  
Station, TCAI and  SGSI  must  be  reported to or approved by the Nevada  
Commission and/or the Nevada Board.

     If it were determined that the Nevada Act was violated by a Gaming
Subsidiary,   the   gaming  licenses  it  holds  could   be   limited,
conditioned, suspended or revoked, subject to compliance with  certain
statutory  and regulatory procedures.  In addition, the  Company,  the
Gaming  Subsidiaries  and the persons involved  could  be  subject  to
substantial fines for each separate violation of the Nevada Act at the
discretion of the Nevada Commission.  Further, a supervisor  could  be
appointed by the Nevada Commission to operate Palace Station,  Boulder
Station, Texas Station, Sunset Station, and Barley's Casino and, under
certain  circumstances,  earnings generated  during  the  supervisor's
appointment  (except for reasonable rental value of the casino)  could
be  forfeited  to  the State of Nevada.  Limitation,  conditioning  or
suspension  of the gaming licenses of the Gaming Subsidiaries  or  the
appointment  of  a  supervisor could (and  revocation  of  any  gaming
license  would)  materially  adversely  affect  the  Company's  gaming
operations.

     Any beneficial owner of the Company's voting securities, regardless of
the number of shares owned, may be required to file an application, be
investigated, and have their suitability as a beneficial owner of  the
Company's  voting securities determined if the Nevada  Commission  has
reason  to believe that such ownership would otherwise be inconsistent
with the declared policies of the state of Nevada.  The applicant must
pay   all  costs  of  investigation  incurred  by  the  Nevada  Gaming
Authorities in conducting any such investigation.

     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.  An institutional investor shall not  be
deemed  to  hold voting securities for investment purposes unless  the
voting securities were acquired and are held in the ordinary course of
business  as  an  institutional investor and not for  the  purpose  of
causing,  directly or indirectly, the election of a  majority  of  the
members  of the board of directors of the Company, any change  in  the
Company's corporate charter, bylaws, management policies or operations
of  the  Company, or any of its gaming affiliates, or any other action
which the Nevada Commission finds to be inconsistent with holding  the
Company's  voting securities for investment purposes only.  Activities
which are not deemed to be inconsistent with holding voting securities
for  investment purposes only include: (i) voting on all matters voted
on  by  stockholders;  (ii) making financial and  other  inquiries  of
management  of  the  type  normally made by  securities  analysts  for
informational  purposes and not to cause a change in  its  management,
policies or operations; and (iii) such other activities as the  Nevada
Commission may determine to be consistent with such investment intent.
If  the  beneficial  holder of voting securities  who  must  be  found
suitable  is  a  corporation, partnership or  trust,  it  must  submit
detailed  business  and  financial information  including  a  list  of
beneficial  owners.  The applicant is required to  pay  all  costs  of
investigation.

     Any person who fails or refuses to apply for a finding of suitability
or  a  license within thirty days after being ordered to do so by  the
Nevada  Commission or the Chairman of the Nevada Board, may  be  found
unsuitable.   The  same restrictions apply to a record  owner  if  the
record  owner, after request, fails to identify the beneficial  owner.
Any  stockholder  who is found unsuitable and who holds,  directly  or
indirectly,  any beneficial ownership of the common stock beyond  such
period  of time as may be prescribed by the Nevada Commission  may  be
guilty  of a criminal offense.  The Company is subject to disciplinary
action if, after it receives notice that a person is unsuitable to  be
a  stockholder or to have any other relationship with the  Company  or
the Gaming Subsidiaries, the Company (i) pays that person any dividend
or  interest  upon voting securities of the Company, (ii) allows  that
person to exercise, directly or indirectly, any voting right conferred
through securities held by that person, (iii) pay remuneration in  any
form  to that person for services  rendered or otherwise, or (iv) fails 
to  pursue  all  lawful efforts to  require such unsuitable  person  
to relinquish   his  voting  

                                13
<PAGE>
securities including,  if  necessary,   the immediate  purchase of said 
voting securities for cash at fair market value.  Additionally,  the Clark 
County Board has  the  authority  to approve all persons owning or 
controlling the stock of any corporation controlling a gaming license.

     If the Nevada Commission determines that a person is unsuitable to own
such  security,  then  pursuant  to the  Nevada  Act,  the  Registered
Corporation can be sanctioned, including the loss of its approvals, if
without  the prior approval of the Nevada Commission, it: (i) pays  to
the  unsuitable  person any dividend, interest,  or  any  distribution
whatsoever; (ii) recognizes any voting right by such unsuitable person
in  connection with such securities; (iii) pays the unsuitable  person
remuneration in any form; or (iv) makes any payment to the  unsuitable
person   by   way  of  principal,  redemption,  conversion,  exchange,
liquidation or similar transaction.

     The Nevada Commission may, in its discretion, require the holder of
any debt security of a Registered Corporation to file applications, be
investigated  and  be found suitable to own the  debt  security  of  a
Registered Corporation if the Nevada Commission has reason to  believe
that  such ownership would otherwise be inconsistent with the declared
policies  of the State of Nevada.  If the Nevada Commission determines
that a person is unsuitable to own such security, then pursuant to the
Nevada  Act,  the Registered Corporation can be sanctioned,  including
the loss of its approvals, if without the prior approval of the Nevada
Commission,  it:  (i)  pays  to the unsuitable  person  any  dividend,
interest,  or any distribution whatsoever; (ii) recognizes any  voting
right  by  such unsuitable person in connection with such  securities;
(iii)  pays  the unsuitable person remuneration in any form;  or  (iv)
makes  any  payment  to  the unsuitable person by  way  of  principal,
redemption, conversion, exchange, liquidation or similar transaction.

     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.

     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.

     Changes in control of the Company through merger, consolidation, stock
or asset acquisitions, management or consulting agreements, or any act
or  conduct by a person whereby such person obtains control,  may  not
occur  without the prior approval of the Nevada Commission.   Entities
seeking  to  acquire control of a Registered Corporation must  satisfy
the Nevada Board and the Nevada Commission that they meet a variety of
stringent  standards  prior  to assuming control  of  such  Registered
Corporation.   The  Nevada  Commission may  also  require  controlling
stockholders, officers, directors and other persons having a  material
relationship  or  involvement  with the entity  proposing  to  acquire
control,  to  be  investigated and licensed as part  of  the  approval
process relating to the transaction.

     The Nevada legislature has declared that some corporate acquisitions
opposed  by management, repurchases of voting securities and corporate
defense  tactics  affecting  Nevada corporate  gaming  licensees,  and
Registered Corporations that are affiliated with those operations, may
be  injurious to stable and productive corporate gaming.   The  Nevada
Commission  has  established a regulatory  scheme  to  ameliorate  the
potentially adverse effects of these business practices upon  Nevada's
gaming  industry  and to further Nevada's policy to:  (i)  assure  the
financial   stability   of  corporate  gaming  licensees   and   their 
affiliates;  (ii)  preserve  the  beneficial  aspects  of   conducting 
business   in  the  corporate  form;  

                                14

<PAGE>
and  (iii)  promote  a   neutral environment   for   the  orderly  
governance  of  corporate   affairs.  Approvals  are,  in certain 
circumstances, required  from  the  Nevada Commission  before  a  
Registered  Corporation  can  make  exceptional repurchases  of voting  
securities above  the  current  market  price thereof  and before a 
corporate acquisition opposed by management  can be consummated.  The 
Nevada Act also requires prior approval of a plan of recapitalization 
proposed by the Registered Corporation's Board of Directors in response  
to  a  tender  offer  made  directly  to  the Registered  Corporation's 
stockholders for the purpose  of  acquiring control of the Registered 
Corporation.

     License fees and taxes, computed in various ways depending on the type
of gaming or activity involved, are payable to the state of Nevada and
to  the  counties and cities in which the Nevada licensee's respective
operations  are conducted.  Depending upon the particular fee  or  tax
involved,  these fees and taxes are payable either monthly,  quarterly
or  annually and are based upon either: (i) a percentage of the  gross
revenues  received;  (ii) the number of gaming  devices  operated;  or
(iii) the number of table games operated.  A casino entertainment  tax
is  also paid by casino operations where entertainment is furnished in
connection with the selling of food or refreshments.  Nevada licensees
that  hold a license as an operator of a slot route, or manufacturer's
or  distributor's license also pay certain fees and taxes to the state
of Nevada.

      Any person who is licensed, required to be licensed, registered,
required  to  be  registered, or is under common  control   with  such
persons  (collectively,  ''Licensees''), and who  proposes  to  become
involved in a gaming venture outside of Nevada, is required to deposit
with  the Nevada Board, and thereafter maintain, a revolving  fund  in
the  amount  of  $10,000 to pay the expenses of investigation  by  the
Nevada  Board  of  their participation in such  foreign  gaming.   The
revolving fund is subject to increase or decrease in the discretion of
the  Nevada Commission.  Thereafter, licensees are required to  comply
with  certain  reporting  requirements  imposed  by  the  Nevada  Act.
Licensees  are  also  subject to disciplinary  action  by  the  Nevada
Commission  if  they  knowingly  violate  any  laws  of  the   foreign
jurisdiction  pertaining  to the foreign  gaming  operation,  fail  to
conduct  the foreign gaming operation in accordance with the standards
of  honesty and integrity required of Nevada gaming operations, engage
in  activities that are harmful to the state of Nevada or its  ability
to  collect  gaming taxes and fees, or employ a person in the  foreign
operation  who has been denied a license or finding of suitability  in
Nevada  on  the  grounds  of  personal  unsuitability.   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.

     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 

                                15

<PAGE>
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.

     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 


                                16

<PAGE>
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  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.  All other  riverboats  will  be
required  to  cruise.  On December 27, 1994,     Station  Casino  St.
Charles was granted a dockside gaming license for its floating  gaming
facility  by  the  Missouri Gaming Commission.   On  April  16,  1996,
Station  Casino St. Charles, subsequently received approval  from  the
Missouri  Gaming Commission to conduct its operations on its excursion
gaming riverboat on a continuously docked basis.  The U.S. Coast Guard
has  recommended  to the Missouri Gaming Commission  that  all  gaming
vessels  on the Missouri River be required to remain dockside  because
certain  characteristics of the Missouri River, including  turbulence,
lack  of  emergency response infrastructure and potential  congestion,
create  substantially  elevated  risks  for  the  operation  of  large
capacity  passenger vessels.  Dockside gaming in Missouri  may  differ
from dockside gaming in other states, such as Mississippi, because the
Missouri  Gaming  Commission has the ability  to  require  ''simulated
cruising.''   This  requirement permits customers  to  board  dockside
riverboats  only  at specific times and prohibits  boarding  during  a
certain  portion  of each simulated cruise,  which  is  presently  two
hours in length.  Dockside gaming in Missouri may not be as profitable
as dockside gaming in other states, that allow for continuous customer
ingress and egress.

      The  Company may not make a public issuance of debt or ownership
interests  without first notifying the Missouri Gaming  Commission  at
least  15 days prior to such issuance.  The Missouri Gaming Commission
may  reopen the licensing hearing of the gaming licensee prior  to  or
following  the  consummation  date  to  consider  the  effect  of  the
transaction on the gaming licensee's suitability.

     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.
                                
                                17
     
<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.

     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.

                                18

<PAGE>
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

     When used in this report and elsewhere by management from time to
time,  the words "believes," "anticipates," and "expects" and  similar
expressions  are intended to identify forward-looking statements  with
respect  to  the  financial  condition,  results  of  operations   and
expansion  projects  of  the Company and its  subsidiaries.    Certain
important  factors,  including but not limited  to,  competition  from
other  gaming operations, construction risks, licensing and  other
regulatory risks, could cause the Company's actual results  to  differ
materially  from  those  expressed in  the  Company's  forward-looking
statements.   Further  information on potential  factors  which  could
affect  the  financial condition, results of operations and  expansion
projects  of  the  Company and its subsidiaries are  included  in  the
filings  of  the Company with the Securities and Exchange  Commission,
including, but not limited to, the Company's Registration Statement on
Form  S-3  (File No. 333-1102).  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.

ITEM 2. 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.

     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.

                                19

<PAGE>

     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 amended the lease and 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.

     The Company is developing Sunset Station 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.

ITEM 3. LEGAL PROCEEDINGS

     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 


                                20



<PAGE>
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.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    There were no matters submitted to a vote of security holders during
the fourth quarter of fiscal year 1997.
                                
                                
                                
                             PART II
                                
ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

     The registrant's common stock trades on New York Stock Exchange under
the  symbol  "STN"  .  Prior to September 5, 1996,  the  common  stock
traded  on  the  Nasdaq  Stock Market under the symbol  ''STCI.''  The
following  table sets forth, for the periods indicated, the  high  and
low  closing  sale price per share of the common stock as reported  on
the  New  York  Stock  Exchange  or  the  Nasdaq  National  Market  as
applicable.

                                              High     Low
                                              ----     ---
        Fiscal Year Ending March 31, 1996
        ---------------------------------
               First Quarter                 17.50    10.38
               Second Quarter                20.00    14.88
               Third Quarter                 16.00    12.50
               Fourth Quarter                15.13     9.75
        
        Fiscal Year Ending March 31, 1997
        ---------------------------------
               First Quarter                 16.13    11.63
               Second Quarter                14.38    11.00
               Third Quarter                 12.75     9.50
               Fourth Quarter                10.63     8.13

     As  of May 31, 1997, there were 1,069 holders of record of  the
Company's common stock.

     The Company has never paid cash dividends on any shares of common
stock.  The  Company  does not intend to pay  cash  dividends  in  the
foreseeable  future  so  that  it may reinvest  its  earnings  in  the
development  of its business. The payment of dividends in  the  future
will  be  at the discretion of the Board of Directors of the  Company.
Restrictions  imposed  by  the Company's debt  instruments  and  other
agreements  limit  the  payment  of  dividends  by  the  Company.  See
''Management's  Discussion  and Analysis of  Financial  Condition  and
Results  of Operations-Description of Certain Indebtedness and Capital
Stock''.
                                
                                
                                21
  
<PAGE>
ITEM 6.   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 Annual
Report on Form 10-K.  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 Annual Report on Form 10-K.

<TABLE>

                                                                             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:

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

                                                                             
                                22
                                                                             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........................................        1,708       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)

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 (5)...........................................      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 both 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 machines represent end of period data.

(3)  Capital expenditures for the fiscal year ended March 31, 1994 included
     $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, $25.0 million related to the 
     parking garage and entertainment complex at Boulder 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 of Station Casino St. Charles
     including an elevated roadway, a parking structure and restuarant 
     facilities. Capital expenditures for the fiscal year ended March 31, 1997 
     included $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 
     development and construction of the St. Charles Expansion.

(4)  "EBITDA" consists of operating income and, in the case of Station Casino
     St. Charles, lease income of $3.1 million relating to the Casino St. 
     Charles riverboat in fiscal year 1994, plus depreciation and amortization,
     including preopening expenses and 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)  Long-term debt at March 31, 1993 includes $7.8 million of notes payable to
     affiliates, which were subsequently paid.


                                23

<PAGE>
ITEM 7.  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
financial statements and notes thereto included elsewhere in this
Annual Report on Form 10-K.

RESULTS OF OPERATIONS

     The following table highlights the results of operations for
the Company and its subsidiaries:

                                            Fiscal Year Ended March 31,
                                            --------------------------- 
                                            1997       1996        1995
                                            ----       ----        ----
     
     
     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)
     
(1)    "EBITDA" consists of operating income and, in the case
       of Station Casino St. Charles, lease  income  relating
       to the Casino St. Charles riverboat, 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.

                                24

<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 at 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.  The 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.

                                25
<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 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 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").

                                26
<PAGE>

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.   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 
                                
                                27

<PAGE>
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.

     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 
                                
                                28

<PAGE>


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 reducing revolving bank credit
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 reducing revolving bank credit 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  a offering of $150 million of senior  subordinated
notes,  the  proceeds of which were used to reduce amounts outstanding
under the bank credit 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   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.  Sunset Station is expected to open 
     in June 1997.
     

 .    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  
     
                                29
<PAGE>

     
     
     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 which is expected  to  open  in  June
     1997.

      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
reducing  revolving bank credit facility borrowings under  the  Sunset
Loan Agreement,  net proceeds from the issuance of $150 million 9 3/4%
senior  subordinated 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 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 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  reducing
revolving  bank  credit  facility and  the  senior  subordinated  note
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."

                                30
<PAGE>


DESCRIPTION OF CERTAIN INDEBTEDNESS AND CAPITAL STOCK

BANK FACILITY

     The Company's secured, reducing revolving loan agreement, as amended
on  March  21,  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.   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 $8.0 million 
for the fiscal quarter  ending June 30,  1997 and $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 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, 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, 5.25 to 1.00 for each fiscal quarter  through
December  31, 1997, 5.00 to 1.00 for each fiscal quarter through  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
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.

                                32
<PAGE>



     The Company has obtained an amendment to the Bank Facility that will
permit 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.   $186.2  million  of these notes bear interest,  payable  semi-
annually,  at a rate of 9  5/8% per year and $196.8 million  of  these
notes bear interest, payable semi-annually, at a rate of 10 1/8 %  per
year  .    In  April 1997, the Company issued $150 million of  9  3/4%
senior  subordinated  notes that rank PARI  PASSU  with  the  existing
senior  subordinated notes (collectively the "Notes").  The indentures
governing the Notes ("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
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 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
Indentures  may  significantly affect the  Company's  ability  to  pay
dividends on its capital stock.  The Indentures also give the  holders
of the Notes the right to require the Company to purchase the Notes at
101%  of  the  principal  amount of the Notes  plus  accrued  interest
thereon  upon a Change of Control and Rating Decline (each as  defined
in the 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.

     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.   As of March 31, 1997, Sunset Station  had  borrowed
$46.0  million under the Sunset Note.  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  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 

                                32
<PAGE>
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).

      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.

                                33
<PAGE>



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
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.

                                34

<PAGE>
ITEM 8.  FINANCIAL STATEMENTS

           INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 
                                                                       Page

 Report of Independent Public Accountants............................... 36
 
 Consolidated Balance Sheets............................................ 37
 
 Consolidated Statements of Operations.................................. 38
 
 Consolidated Statements of Stockholders' Equity........................ 39
 
 Consolidated Statements of Cash Flows.................................. 40
 
 Notes to Consolidated Financial Statements............................. 41




                                      35 

<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



                                36
<PAGE>

                      STATION CASINOS, INC.
                    CONSOLIDATED BALANCE SHEETS

<TABLE>
                                                                           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.

                                37

<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 expenses.............................       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) benfit....................       (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.

                                38

<PAGE>                                
                                  STATION CASINOS, INC.
                       CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>


                                                                        Deferred       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.

                                39
<PAGE>

                             STATION CASINOS, INC.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                        For the years ended March 31,  
                                                                    ------------------------------------
                                                                       1997          1996        1995
                                                                       ----          ----        ----
<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 activites
   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 payables..................................        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 notes.......            -       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...............................   S    1,550    S        -    $        -

</TABLE>
                                
The accompanying notes are an integral part of these consolidated statements.

                                40
                                
                                
<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.


                                41

<PAGE>
                      STATION CASINOS, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                
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 ALLOWNACES

     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 
                                
                                
                                42

                                
<PAGE>
                      STATION CASINOS, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                
1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
(CONTINUED)

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.

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>                                                   

                                                       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.

                                43
<PAGE>
                      
                      STATION CASINOS, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                
4.  LAND HELD FOR DEVELOPMENT (CONTINUED)

    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.

5.  LONG-TERM DEBT

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

                                                     
                                                                                 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.
                                44

<PAGE>
                      STATION CASINOS, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5.   LONG-TERM DEBT (CONTINUED)

    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.

     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,  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  

                                45

<PAGE>
                      STATION CASINOS, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5.   LONG-TERM DEBT (CONTINUED)

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,  5.25 to 1.00 for each fiscal quarter through December  31,
1997, 5.00 to 1.00 for each fiscal quarter through 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 of Control Triggering Event as 
defined in the Indentures.

     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  
                                46


<PAGE>
                      STATION CASINOS, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5.   LONG-TERM DEBT (CONTINUED)

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
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 

                                47

<PAGE>                                
                      STATION CASINOS, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6.   COMMITMENTS AND CONTINGENCIES (CONTINUED)

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.

     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 

                                48

<PAGE>
                      STATION CASINOS, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6.   COMMITMENTS AND CONTINGENCIES (CONTINUED)

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.

     OPEARTING 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).

                                49

<PAGE>                                
                      STATION CASINOS, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6.   COMMITMENTS AND CONTINGENCIES (CONTINUED)

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.

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.

                                50
<PAGE>
                      STATION CASINOS, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 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>                                            
                                            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:


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

$  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
                     =========      ===       ========    =========     ========
                                
                                51

<PAGE>
                        STATION CASINOS, INC.
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9.   BENEFIT PLANS (CONTINUED)

     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  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.
                      
                                52
<PAGE>               
                      STATION CASINOS, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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.

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):


                                                              MARCH 31,
                                                 -------------------------------
                                                    1997      1996      1995
                                                    ----      ----      ----
   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)
                                                 =========  =========  =========


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

                                                             
                                                              MARCH 31,
                                                      ------------------------
                                                       1997     1996    1995
                                                       ----     ----    ----
   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%)
                                                      ======    =====   ======
                      
                                53
<PAGE>                      
                      STATION CASINOS, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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>                                               
                                                                          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.
                                
                                54

<PAGE>
                      STATION CASINOS, INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


13.  QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>



                                                                                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>
                                
                                
                                
                                
                                55
                                
                                
<PAGE>                                
ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE
                                
          None

                            PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
          There is incorporated by reference the information appearing in
          the  section entitled "Directors and Executive Officers" in  the
          Registrant's  definitive Proxy Statement to be  filed  with  the
          Securities and Exchange Commission.

ITEM 11.  EXECUTIVE COMPENSATION
          There is incorporated by reference the information appearing in
          the   section   entitled   "Executive   Compensation"   in   the
          Registrant's  definitive Proxy Statement to be  filed  with  the
          Securities and Exchange Commission.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
          There is incorporated by reference the information appearing in
          the  section entitled "Security Ownership of Certain  Beneficial
          Owners  and  Management"  in the Registrant's  definitive  Proxy
          Statement   to  be  filed  with  the  Securities  and   Exchange
          Commission.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
          There is incorporated by reference the information appearing in
          the   sections  entitled  "Certain  Relationships  and   Related
          Transactions" in the Registrant's definitive Proxy Statement  to
          be filed with the Securities and Exchange Commission.

                                56


<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 part II 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 (1996 Issue).
          (Incorporated  herein by reference to the Company's  Form  8-K
          dated March 25, 1996)

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

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

4.4       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)

4.5       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)

4.6       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  
          
                                57

<PAGE>          
          of  May   11,   1994. (Incorporated  herein by reference to the 
          Company's  Form  8-K dated March 25, 1996)

4.7       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)

4.8       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  June   2,   1993.
          (Incorporated  herein by reference to the Company's  Form  8-K
          dated March 25, 1996)

4.9       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.   (Incorporated  herein   by
          reference to the Company's Form 8-K dated March 25, 1996)

4.10      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)

4.11      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)

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

4.13      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)

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)

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 
          
                                58
<PAGE>
          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.

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)

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)

                                59

<PAGE>
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)

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.    (Incorporated  herein  by   reference   to   the
          Company's Form 8-K dated October 29, 1996)
                                
                                60

<PAGE>


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)

21.1      Subsidiaries of the Registrant

23.1      Consent of Arthur Andersen LLP

27        Financial Data Schedule

(b) Reports on Form 8-K
    On March 27, 1997, the Registrant filed a Report on Form 8-K, dated
    March 27, 1997.  The Registrant reported under Item 5 the issuance of
    a press release which announced the sale of $150 million of senior
    subordinated notes due 2007.

(c) None.
(d) None.

                                61

<PAGE>
                               SIGNATURES
                                
    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange  Act of 1934, the Registrant has duly caused this report  to
be   signed  on  its  behalf  by  the  undersigned,  thereunto   duly
authorized.


                            STATION CASINOS, INC.

Dated:  June 3, 1997        By: /s/Frank J. Fertitta III
                              -----------------------------
                                 Frank J. Fertitta III
                                 Chairman of the Board, President and Chief
                                 Executive Officer (Principal Executive Officer)


    Pursuant to the requirements of the Securities Exchange Act of 1934,
this  report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.



   Signature                        Title                            Date


/s/ Frank J. Fertitta III    Chairman of the Board, President       June 3, 1997
-------------------------     and Chief Executive Officer             
    Frank J. Fertitta III     (Principal Executive Officer)


/s/ Glenn C. Christenson     Executive  Vice President, Chief       June 3, 1997
-------------------------     Financial Officer, Chief 
    Glenn C. Christenson      Administrative Officer, Treasurer 
                              and Director (Principal Financial 
                              and Accounting Officer)


/s/ Blake L. Sartini         Executive Vice President,              June 3, 1997
--------------------------    Chief Operating Officer and Director
    Blake L. Sartini


/s/  R. Hal Dean             Director                               June 3, 1997
--------------------------
     R. Hal Dean


/s/  Lorenzo J. Fertitta     Director                               June 3, 1997
--------------------------
     Lorenzo J. Fertitta


/s/ Lowell H. Lebermann, Jr. Director                               June 3, 1997
----------------------------
    Lowell H. Lebermann, Jr.


/s/ Delise F. Sartini        Director                               June 3, 1997
-----------------------                
    Delise F. Sartini
                          
                                62
                          
<PAGE>                          
                          EXHIBIT 21.1
                                                                     
                                                                     
              SUBSIDIARIES OF STATION CASINOS, INC.
                                
                                
Nevada Corporations

Palace Station Hotel & Casino, Inc.
Texas Station, Inc.
Boulder Station, Inc.
Sunset Station, Inc.
Southwest Gaming Services, Inc.



Missouri Corporations

Kansas City Station Corporation
St. Charles Riverfront Station, Inc.

                                                                     
                                63

<PAGE>
                          EXHIBIT 23.1
                                                                     
                                                                     
            CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
                                
                                
     As  independent  public accountants, we hereby  consent  to  the
incorporation  of  our report included in this Form  10-K,  into  the
Company's previously filed registration statements on Form  S-8 (File
No. 33-70342),  Form S-8  (File No. 33-63752)  and Form S-8 (File No. 
333-11975).



                             Arthur Andersen LLP

Las Vegas, Nevada
June 3, 1997




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