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Staging a revival in troubled times

26 September 2008

LAS VEGAS, Nevada -- Entrepreneur Jeffrey Fine knew owning a casino would be tough, and that was before the economy nosedived.

Fine bought the Silver Nugget and Opera House casinos, two nonrestricted gaming properties in the North Las Vegas redevelopment zone, in January 2007 with grand plans of expansion and growth.

But with some players shifting from customers to job applicants, Fine said he is working to weather the economic storm.

"My sense is we're working a lot harder than (the previous owners) were in the past to get the same results," said Fine, chief executive officer of Silver Nugget Gaming.

A couple of miles away, Fine family friend Seth Schorr is working to remodel and rebrand another struggling North Las Vegas property while contending with a customer base that is facing higher unemployment and decreasing wages.

"Obviously, there is a bad economy out there, so people are spending less money," said Schorr, managing partner of Ganaste Gaming, which has owned Speedway Hotel and Casino since June 1. "But as long as we're continuing every weekend to get more people, you know it's going to turn around."

Gaming revenue in North Las Vegas is down 7.8 percent through July, from $182.8 million in 2007 to $168.4 million in 2008.

Silver Nugget and Ganaste are privately held and do not publicly release revenue numbers, making it hard to gauge the downturn's effect on business.

Revenues have remained flat at the Silver Nugget but are down at the Opera House, Fine said.

Fine said the economy has forced the company to trim its payroll hours, but most of the cuts came after buyouts were offered to the staff, which is now 250 employees between both properties.

Schorr said that Speedway management has increased its efforts to lure customers through promotions, including free concerts three nights a week and drink giveaways.

The Speedway, which will rebrand itself the Lucky Club casino this winter, is off Interstate 15 at the Cheyenne Avenue exit.

"The economy has forced us to be even more value-conscious and give people even more bang for their buck," Schorr said.

The Silver Nugget, which has been a mainstay on Las Vegas Boulevard North since 1964, has undergone extensive renovations, Fine said, with the company spending "thousands here and there" when needed.

The bowling lanes have been refurbished, new carpet laid throughout the property and all 370 slot machines have been converted to ticket in-ticket out.

An agreement was recently signed with operator Leroy's Race & Sports Book to refurbish the sports book.

"We've become a little more realistic in terms of how much we can do at once," said Fine, who has discussed with city officials an expansion that would include adding a 200-room hotel, movie theaters and a parking garage.

"Even in today's market, if we were ready to do something big there's not financing to do anything," Fine said.

Fine, son of developer Mark Fine, acquired the Silver Nugget and 26 acres surrounding the property for $23.8 million. The deal included the Opera House less than a mile east.

Silver Nugget Gaming recouped a $15.8 million portion of that purchase by recently selling 12 acres to the city.

The city plans to begin construction on that land, which includes a large portion of the former recreational vehicle park that was closed earlier this year, for a new City Hall complex next year, which will help bring a new focus to the Silver Nugget.

Schorr found himself dealing with something more unexpected than a bad economy: a fire and a series of code violations.

On June 9, eight days after Ganaste completed its $18.2 million purchase of the 6.5-acre Speedway, an electrical fire forced the casino's closure. Most of the casino's infrastructure, including surveillance and data collection, were damaged.

The Speedway reopened approximately two weeks later after International Game Technology rebuilt the slot machines' servers and surveillance equipment was repaired.

The 95-room hotel also had a number of code violations dating from the previous owners that had to be addressed.

Even before the economy slowed and unemployment increased, all three properties operated in one of the most economically challenged areas of the county.

The 89030 ZIP code area, where all three properties are located, has a household median income of nearly $29,500 per year compared with $50,000 per year in the rest of the city, statistics from the city show. Nearly 58 percent of the mostly Hispanic households make less than $35,000 per year.

The Silver Nugget was "a pretty sleepy place" that didn't really cater to the surrounding community when he took over, Fine said.

Fine, who has held Latin music concerts at the property, recently signed a partnership with former boxing official Richard Steele to bring boxing back to the Silver Nugget's event center for the first time since 1994.

"We've worked hard putting on events," said Fine, who will host his first boxing card Sept. 30. "These kind of activities we've been working on are helping us perform the way we've been performing.

"I told Richard Steele when I met him, we couldn't fit soccer into the events center so boxing was the next best thing,"

Schorr said Speedway would be offering promotions even if the economy was strong because the company wants to bring a new focus.

"Whether we're in the best economy or the worst economy, I'd still be doing everything I'm doing," Schorr said. "It's just a little more."

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