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Rod Smith
 

New Owners Plan Hispanic Theme for Castaways

13 September 2004

Three local casino operators are betting they can reflag the Castaways at the head of Boulder Highway as La Joya del Sol, complete renovations and reopen it in December, one of the new owners said Friday.

At least that's the goal of MGI Group, a partnership of Randy Miller, Rich Gonzales and Rich Iannone that also owns the Longhorn casino on Boulder Highway and the Bighorn casino in North Las Vegas.

The only possible delay for the partners is in securing state gaming licences, which remains very much an open question, Gaming Control Board Chairman Dennis Neilander said.

Miller, whose partnership bought the 50-year-old landmark property from the Vestin Group, said the group has submitted its gaming license applications to the state, although Neilander said they have not been received.

Miller said the timing for reopening the Castaways as a Hispanic-themed hotel-casino depends on how long a state investigation of the new owners takes, and how long after that it takes for gaming regulators to approve the licenses.

Neilander said the individual applicants, who have gaming holdings in Southern Nevada and Louisiana, are already licensed, which should cut down on the necessary work to complete the investigation. However, he said, the actual time needed will depend on how the purchase and ownership have been structured.

Meanwhile, the sale of the Castaways to the new owners is contingent only on the licensing, and Miller said Vestin, which bought the former Showboat at a foreclosure sale in February, is letting the trio proceed with improvements even though the deal hasn't closed.

Vestin Group President Mike Shustek said he is pleased the MGI Group is moving rapidly forward.

"They're a fine management team and we have no doubt that the Castaways will be a raging success," he said.

University of Nevada, Las Vegas professor Bill Thompson, a gaming studies specialist, said if the new owners can develop a locals niche aimed at the nearby Hispanic neighborhoods, they have a good chance of building a solid customer base.

"(That's) not exploiting the area, but taking advantage of their location, which otherwise is a disadvantage. They might even try Spanish language operations -- but probably not on the casino floor, where it might not be allowed. That would work as a draw for people from California and Arizona," he said. "Casinos have flirted with Hispanic themes, but no one has ever gone full bore or used the language. That would make it special."

Miller said the reflagged hotel-casino, whose name means "Jewel of the Sun," will undergo a thorough renovation over the next 60 days to make it what they hope will be the most festive property in Las Vegas.

"It'll be a terrific place -- all new. It'll have all new (Southwest) colors, a new porte cochere, front desk and lounges," he said.

While it is undergoing a complete renovation, for an undisclosed cost, Miller said his group plans no grand announcement because it does not want to be presumptuous with the license application pending.

But he said the partnership has been working hard to obtain all necessary city permits for the renovation since agreeing to take over the former Showboat in May.

Thompson said the reopening of the Castaways is important for Las Vegas because the unused shell only detracts from the skyline.

"The chain-link fences and empty parking lots are eyesores we do not need," he said.

Miller said it isn't clear how many employees will be needed to operate the reopened property.

A spokeswoman for Culinary Local 226, which organized the property under previous owners, declined to comment.

However, when it closed, the Castaways had more than 650 employees, roughly half who were Culinary union members.

Vestin bought the bankrupt 25.9-acre property for $20.7 million on Feb. 1 at a foreclosure sale after its bankrupt former owners were unable to satisfy terms of a $22 million-plus mortgage note.

The Castaways has been closed since Jan. 29, when creditor Vestin Mortgage, acting under authority of a U.S. Bankruptcy Court order, notified VSS Enterprises it would enter the casino and collect its collateral backing a mortgage loan.

Sources close to the sale said investors in the mortgage holders, Vestin and Walnut Creek, Calif.-based Owens Financial, will be "made whole" through the transaction.

VSS reportedly borrowed $8 million from Vestin and $14 million from Owens to buy the Castaways from Harrah's Entertainment in 2000 for $23.5 million, after which it struggled to turn around the property.

Harrah's bought Showboat Inc. from its shareholders in 1998 for $550 million, principally for the brand name and to own and operate Showboat properties in Atlantic City and East Chicago that it still has rather than for the Las Vegas hotel-casino.