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Gaming Guru

Jeff Simpson
 

Jeff Simpson on why Michael Gaughan is glad to be running the South Point

31 October 2006

Michael Gaughan is finally back doing what he likes, running a casino.

After having liquidated his Boyd Gaming holdings in exchange for the South Coast, Gaughan told me last week that he is glad to be at the helm of the property, which he has renamed South Point.

He's already changing property signs and billboards, and he has a number of other changes up his sleeve.

One big change that will surprise slot and video poker players at his former Coast Casinos: Instead of awarding slot points based on "coin out," points will be awarded for "coin in," the way most properties do it.

Of course, machines at South Point are coinless, but basing points on coin in means that gamblers get slot points based on how much they bet, not on how much they win (coin out).

Locals kingpin Station Casinos awards points for coin in, but Gaughan's Coast Casinos properties awarded points for coin out.

"I'm a gambler," Gaughan said, explaining the Coast slot point system. "And I figured people who gamble liked to get more points when they win big."

The difference in expected return isn't that great, as most video poker machines pay out well over 90 percent, meaning that for every 10 points a "coin in" system awarded, a "coin out" system would average a payout of between nine and 10 points.

Now Gaughan's going to try the more popular method at South Point, awarding points based on how much gamblers bet.

"Maybe I was wrong before," Gaughan said. "We'll see."

Gaughan said he left Boyd with no hard feelings. In fact, he had just left Boyd Chairman Bill Boyd's office (behind the Stardust on Industrial Road) when I talked to him on Tuesday afternoon, right before he assumed ownership of South Point on Wednesday morning.

"We hugged and wished each other well," Gaughan said.

Gaughan said he wasn't cut out for the corporate world of a publicly traded company. He likes to run things his way, with a long-term outlook. Wall Street and Boyd executives were disappointed in the slower-than-expected opening results of South Coast, but Gaughan thinks he's got a handle on turning things around.

He thinks freeway access to South Point will continue to improve, with the Blue Diamond Road interchange on Interstate 15 almost finished and a new Silverado Ranch Road interchange with I-15 to be partially completed by March and finished in about one year.

Food and beverage operations have steadily improved from a poor opening. Hotel occupancy has been strong, while average room rates have been a little less than hoped for.

Gaughan thinks his presence will boost South Point's performance. "My time was divided too much," he said. "Business is getting better every day."

Gaughan's sense of humor carried over into his new corporate framework. Gaughan's holding company is called Gaughan Straight, and that entity owns Gaughan South, which owns South Point.

He said the December opening of South Coast and the April opening of Red Rock Resort have siphoned some business from other locals casinos, but said that he's not worried about the strength of the locals market, which he thinks will continue to thrive because of population growth, a robust Las Vegas economy and talented operators.

Gaughan said he's feeling very good about being back in charge - "It's nice, and I'm happy."

His one regret? Although he was able to bring more than 50 longtime Coast employees with him, he had to leave most behind.

"I couldn't take everyone, and that's sad," Gaughan said.