Commitments and Contingencies

Leases

Boulder Station Lease

The Company leases 27 acres of land on which a portion of Boulder Station is located under a ground lease which was assumed in the Restructuring Transactions. The Company leases this land from KB Enterprises, a company owned by the Frank J. Fertitta and Victoria K. Fertitta Revocable Family Trust (the "Related Lessor"). Frank J. Fertitta, Jr. and Victoria K. Fertitta are the parents of Frank J. Fertitta III, a member of the Company's Board of Managers, Chief Executive Officer and President and Lorenzo J. Fertitta, a member of the Company's Board of Managers. The lease has a maximum term of 65 years, ending in June 2058. The lease provides for monthly payments of $222,933 through May 2018. In June 2013 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. In no event will the rent for any period be less than the immediately preceding period. In June 2018, and every ten years thereafter, the rent will be adjusted by a cost of living factor. Pursuant to the ground lease, the Company has an option to purchase the land at fair market value, exercisable at five-year intervals with the next option in June 2013. The Company's leasehold interest in the property is subject to a lien to secure borrowings under the Credit Agreements.

Texas Station Lease

The Company has a ground lease for 47 acres of land on which Texas Station is located which was assumed in the Restructuring Transactions. The Company leases this land from Texas Gambling Hall & Hotel, Inc., a company owned by the Related Lessor. The lease has a maximum term of 65 years, ending in July 2060. The lease provides for monthly rental payments of $337,417 with scheduled adjustments on August 1, 2015 and every ten years thereafter, 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. In July 2015, and every ten years thereafter, the rent will be adjusted by a cost of living factor. In no event will the rent for any period be less than the immediately preceding period. Pursuant to the ground lease, the Company has an option to purchase the land at fair market value, exercisable at five-year intervals with the next option in May 2015. The Company's leasehold interest in the property is subject to a lien to secure borrowings under the Credit Agreements.

Wild Wild West Lease

The Company assumed STN Predecessor's lease and purchase agreement on the 19-acre parcel of land on which the Wild Wild West is located. The significant terms of the agreement include (i) a rent adjustment in July 2013 and every three years thereafter, based on the consumer price index, limited to a 12% increase and no decrease, (ii) options under which the Company may purchase the land at any time through 2019 at established fixed prices, (iii) a one-time termination option at the Company's election in 2019, and (iv) options under which the Company may purchase the land in July 2023, 2044 and 2065 for a purchase price equal to fair market value as of July 2022, 2043 and 2064, respectively. No amounts related to these purchase options have been recorded on Successor's consolidated balance sheet at December 31, 2011 or STN Predecessor's consolidated balance sheet at December 31, 2010.

Other Operating Leases

In addition to the leases described above, the Company also leases certain other buildings and equipment used in its operations, which have operating lease terms expiring through 2013.

Future minimum lease payments required under all non-cancelable operating leases are as follows (amounts in thousands):



Years ending December 31,
2012	$	8,291
2013	8,213
2014	8,232
2015	8,270
2016	8,308
Thereafter	409,933
Total	$	451,247

Rent expense is as follows (amounts in thousands):



Successor		Predecessors
Station Casinos LLC		Station Casinos, Inc.		Green Valley Ranch Gaming, LLC		Station Casinos, Inc.		Green Valley Ranch Gaming, LLC		Station Casinos, Inc.		Green Valley Ranch Gaming, LLC
Period June 17, 2011 Through December 31, 2011		Period January 1, 2011 Through June 16, 2011				Year Ended December 31, 2010				Year Ended December 31, 2009
$	4,732	$	3,462	$	—	$	9,566	$	—	$	9,659	$	—

Regulation and Taxes

In March 2008, in the matter captioned Sparks Nugget, Inc. vs. State ex rel. Department of Taxation, the Nevada Supreme Court ruled that food and non-alcoholic beverages purchased for use in complimentary meals provided to employees and patrons are not subject to Nevada use tax. We have filed refunds for the periods from April 2000 through February 2008. The amount subject to these refunds is approximately $15.6 million plus interest. Any amount refunded to us would be reduced by a contingent fee owed to a third party advisory firm. In April 2008, the Department of Taxation filed a motion for rehearing of the Supreme Court's decision, and in July 2008, the Nevada Supreme Court denied the Department of Taxation's motion for rehearing. The Department of Taxation subsequently took the position that these purchases are subject to Nevada sales tax. Accordingly, we have not recorded a receivable related to a refund for the previously paid use tax on these purchases in the accompanying consolidated balance sheets as of December 31, 2010 and December 31, 2009, respectively. However, we began claiming this exemption on sales and use tax returns for periods subsequent to February 2008 given the Nevada Supreme Court decision. The Department of Taxation has issued a $10.0 million sales tax assessment, plus interest of $8.1 million, related to these food costs. We have not accrued a liability related to this assessment because we do not believe the Department of Taxation's position has any merit, and therefore we do not believe it is probable that we will owe this tax. Recently, the Nevada Department of Taxation has asserted that gaming companies should pay sales tax on customer complimentary meals and employee meals on a prospective basis. This position stems from a recent Nevada Tax Commission decision concerning another gaming company which states that complimentary meals provided to customers are subject to sales tax at the retail value of the meal and employee meals are subject to sales tax at the cost of the meal. The other gaming company filed in Clark County District Court a petition for judicial review of the Nevada Tax Commission decision. The Company is currently evaluating whether or not to accrue tax prospectively as it disagrees with the position asserted by the Nevada Department of Taxation.

Development Activity

Native American Development

See Note 10 for information regarding commitments and contingencies related to the Company's Native American Development activities.

Land Held for Development

As of December 31, 2011, the Company had $227.9 million of land held for development consisting primarily of 11 sites that are owned or leased, which includes sites in the Las Vegas valley, northern California and in Reno, Nevada. The Company's decision whether to proceed with any new gaming or development opportunity is dependent upon future economic and regulatory factors, the availability of acceptable financing and competitive and strategic considerations. As many of these considerations are beyond the Company's control, no assurances can be made that it will be able to proceed with any particular project. See Note 8 for additional information about land held for development.