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Howard Stutz

Paragon Gaming taking on $450 million project in Vancouver

17 May 2010

VANCOUVER, British Columbia -- Diana Bennett watched her father create a Las Vegas tourism segment while building a billion-dollar casino business.

The daughter of gaming pioneer William Bennett has quietly taken that same entrepreneurial spirit to Canada with Paragon Gaming.

Paragon, a privately held company based in Las Vegas, built and operates casinos in the provinces of Alberta and British Columbia.

In March, the company won the rights to construct an estimated $450 million hotel-casino complex in Vancouver, British Columbia, which will become Western Canada's largest gaming and entertainment resort.

The development calls for two hotels and a casino attached to BC Palace, the 60,000-seat downtown Vancouver stadium and site of the opening and closing ceremonies for the recent Winter Olympic Games. The development is also within walking distance of the 18,000-seat General Motors Place, the sports arena where the National Hockey League's Vancouver Canucks play.

The project, which is expected to break ground next year and be completed in 2013, is final piece in creating an entertainment destination in downtown Vancouver to help increase tourism. A convention center was also built for the Olympic Games.

"A lot of infrastructure was created in Vancouver because of the Olympics," Bennett said. "You have the stadium and the project is close to a large retail center. It's in a great location."

Canada recently loosened visa policies with China in order to help tourism. Vancouver expects to increase its Chinese visitation by 50 percent next year, which could create a customer market for Paragon's casino.

The new development will be the only legalized gambling venue in downtown Vancouver. Paragon operates the midsized Edgewater Casino across from BC Palace, which will close once the project opens.

The casino-only Edgewater has 493 slot machines and 75 gaming tables, including a 15-table poker room. The new casino is expected to house 1,500 slot machines and 150 table games and 620 hotel rooms.

"(The Edgewater) was always viewed as temporary," Bennett said. "There were other bidders (for the Vancouver project) but we had the casino license. Others could build a hotel, but no one could offer the economic impact that we could with our plans."

Bennett learned casino operations and development as an executive with her father's Circus Circus Enterprises in 1980s and 1990s. The Vancouver project is the most ambitious venture in her company's 10-year history.

"We have a very good reputation while we've stayed under the radar," Bennett said. "Business seems to find us."

Bennett's father and a partner bought Circus Circus Las Vegas in the 1970s and began marketing the property toward families, offering reasonably priced amenities and attractions. William Bennett built the Excalibur and Luxor, creating the foundation of what would become the Mandalay Resort Group. For her father, Diana Bennett oversaw the company's casinos in Laughlin.

After operating the Sahara for her family's Gordon Gaming division, Bennett branched out her own along with long-time Circus Circus executive Scott Menke to explore casino management and development opportunities outside Southern Nevada. Larger gaming companies were consolidating smaller operations, which made competition a challenge for independent operators.

Bennett and Menke found a management deal with the Augustine Band of Cahuilla Indians in Southern California to operate a casino for the tribe in Palm Springs area. That contract led to additional leads with Indian tribes in Canada, known as the First Nations. Menke began to investigate those opportunities.

"There had been some regulatory changes in Canada that afforded the First Nations a different split of the business model," Menke said. "They wanted to build larger destination casinos, but first they had to increase their infrastructure."

The company's first development, the River Cree, is on the western edge of Edmonton, Alberta, and includes a 255-room hotel, a 62,200-square-foot casino with 600 slot machines and 40 table games, along with dining and other entertainment attractions, including two hockey rinks.

A second casino, in Whitecourt, Alberta, has 250 slot machines, 11 table games and a full service truck stop.

In Canada, Paragon employs just fewer than 2,000 workers.

Gaming revenues are shared with the provinces and First Nations.

Vancouver presents Paragon with an opportunity for a showcase resort.

British Columbia Premier Gordon Campbell was hopeful Paragon's plans for Vancouver will help recapture some of the excitement brought about by the visitation that came with the Olympics.

"This project will create literally thousands of jobs and be an important generator of tourism and economic activity for Vancouver and the entire province," Campbell said.

Some Vancouver city leaders were unhappy with the plans because the project is considered a "Las Vegas-style" resort and they were worried about the location and area density. However, BC Palace is on land owned by the province and not the city.

"I think the city holds fewer cards this time," Vancouver Councilor Geoff Meggs told The Globe and Mail newspaper.

Menke said the province is expected to share some of the gaming revenue taxes with the city.

Under the 70-year lease agreement with British Columbia, Paragon will build 620 hotel rooms, the casino, dining and other entertainment options. Menke said the company would seek financial backing for the development over the next year while obtaining building and site approval.

As part of the development, the province will remodel BC Palace at a cost of $458 million. The stadium's air-supported roof will be removed and a cable-supported retractable roof will be installed.

The stadium is home to the British Columbia Lions of the Canadian Football League and will host the Grey Cup, the CFL's version of the Super Bowl, in 2011. The stadium has also hosted concerts for U2 and other well-known performers.

The casino Paragon constructs will connect with the concourse area of BC Palace. The casino's high-limit gaming area will connect to a separate concourse for the stadium's planned luxury boxes.

"At the same time, you can enter the hotels, or restaurants or the casino and not have to face the crowds going to the stadium," Bennett said.

Menke said two other Canadian cities, Edmonton and Regina, Saskatchewan, are exploring combining a stadium and casino.

"It comes down to having the right win per unit in order to give the city and province their money," Bennett said. "Vancouver has high urban residential density."

Whether Vancouver leads to Paragon finding a project in Las Vegas remains to be seen. The company isn't actively looking. Paragon owns a small tavern in Las Vegas to keep its Nevada gaming license alive.

"There might be some sell-off here someday, and that might give us an opportunity," Bennett said. "We just don't know."