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Best of Benjamin Spillman
Benjamin Spillman

El Cortez owner sells stake in downtown casino

8 May 2008

LAS VEGAS, Nevada -- Longtime Las Vegas casino owner Jackie Gaughan is finally walking away from the tables.

During a process that took just a few minutes on Wednesday, the Nevada Gaming Control Board approved a request by the downtown casino owner to sell his stake in the El Cortez, Gaughan's signature property since 1963.

The vote ended an era that began before Gaughan moved to Las Vegas in 1951 and lasted nearly six decades.

In that span, Gaughan became a gambling king who owned or had a stake in an empire that included the Flamingo, Showboat, Plaza, Golden Nugget, Las Vegas Club, Gold Spike, Western Hotel and the El Cortez, the oldest continuously operating hotel-casino in the valley.

Despite the long roster of casinos, Gaughan, a Nebraska transplant, was known mainly for offering customers friendly welcomes and fair games.

Gaughan and workers at his joints remained on a first-name basis with customers even as Las Vegas grew from a cowboy gambling outpost to a destination that attracts nearly 40 million people annually.

"It is with some bittersweet sorrow, but we know it is for the best," board member Mark Clayton said before casting his vote.

Gaughan, 87, still lives in the El Cortez and greets customers nearly every day, but he didn't appear before the control board Wednesday morning.

Kenny Epstein, Gaughan's business partner since the 1950s, said the emotion and anxiety of an appearance before the board would have been too much. But the moment wasn't lost on Epstein, his son, Lawrence Epstein, El Cortez General Manager Mike Nolan and Chief Financial Officer Joe Woody.

Nolan and the elder Epstein each described Gaughan as a father figure.

"Next to my father, he is my most important mentor," Epstein said. "If we can just be a small percentage of the type of person he is, we will be (OK)."

Customers also love Gaughan.

During his reign, mostly along Fremont Street, Gaughan was well known to tourists who viewed his casinos as friendly refuges from the more garish aspects of Las Vegas.

There are stories of Gaughan doing everything from fixing busted plumbing to jump-starting customers' cars.

His casinos were never the nicest in Las Vegas. Even renowned Las Vegas cheerleader Mayor Oscar Goodman joked about there being enough smoke in the carpet of the El Cortez to cause lung disease before the casino spent $20 million on renovations.

But customers go to the El Cortez for good gambling and friendly employees, not a plush atmosphere.

"You never felt like you got screwed in his casinos," said Matt Weatherford, a longtime Las Vegas visitor and fan of Gaughan's work. "He respected the gamblers' intelligence. "Places like Harrah's and ... MGM assume the gambler is an idiot, and you can take advantage of them."

Cameron Marvel, 33, of Bismark, N.D., said what makes Gaughan's joints stand out are generous comps and the no-frills atmosphere.

Marvel cited Gaughan's funbooks with food and drink freebies -- as opposed to just discounts -- and offers of two-free nights to induce hotel guests to return as examples.

"And that's before you even have to dig into your pockets for your own bread," said Marvel, who has been making visits to Las Vegas for 11 years. "You can easily have a good time at the El Cortez for $20 or $30. Sadly, that is an impossibility on the Strip."

Gaughan, whose first casino ownership was a small stake in the bygone Boulder Club on Fremont Street, has been steadily reducing his role in the business in recent years. In 2004 he sold the Gold Spike, Western Hotel, Las Vegas Club and Plaza to Barrick Gaming for $82 million. Those casinos have changed hands again and customers and employees have said they were better off under Gaughan's steady hand.

Under the transaction approved Wednesday, shares will transfer from the John D. Gaughan Family LLC to Exber, and the Amended and Restated Irving Kenneth Epstein 1992 Living Trust Agreement. The deal makes Epstein majority shareholder of the El Cortez with nearly 57 percent ownership. Two Epstein family members will have 11 percent shares. Nolan and Woody will have about a 6 percent stake each, as well, according to attorneys who described the deal to the board.

The deal will also allow Gaughan to continue to live in the casino hotel. He will also continue on as an ambassador who still enjoys greeting customers.

Gaughan, who at about age 18 started his gambling career in Omaha, Neb., as a horse and sports bet runner before attending college, still plays poker at the El Cortez.

And management there strives to balance the demand of living up to Gaughan's legacy with modernizing the property to attract new guests.

Woody told the control board the El Cortez posted nearly 3 percent year-over-year growth during the first quarter. And since 2004 it has outperformed the downtown market as a whole, he said.

The Ogden House, a 102-room hotel that serves as an overflow for the El Cortez hotel, is now under renovation.

It will be renamed as the El Cortez Cabana Suites. El Cortez managers told the board they are spending about $6.4 million, or about $100,000 per room, on the upgrades.

"We like the history value of it," Nolan said. "But we are continuing to modernize it."