Sam Skolnik Gaming Guru

Gold Spike reborn as larger Lady Luck sits idle

LAS VEGAS, Nevada -- In some of Las Vegas' grittiest dive bars, stale cigarette smoke hangs in the air, fixtures are coated with '70s-era grime and the clientele often includes sex and drug peddlers.

The Gold Spike used to be something close — a dive casino.

"Before we bought the place, people were scared to come down here," said Michael Crandall, business affairs director for the Siegel Group, which purchased the property early last year.

In an impressive display in such a down economy, the ambitious Siegel Group is finishing top-to-bottom renovations at the Gold Spike and the adjacent Travel Inn. The casino's rebirth, while welcomed by Las Vegas officials, is also serving as a reminder of how difficult the recession has made their task of redeveloping the area.

The section of downtown that includes the Gold Spike remains in disrepair — in no small part because of the larger, empty casino across the street. The owners of the Lady Luck, which shut its doors in 2006, haven't so much as put shovel to ground despite numerous city incentives to rebuild.

In July of last year, CIM Group in Los Angeles, which owns the Lady Luck, signed a draft development agreement with the city. The agreement was for a mixed-use project, which included not just the renovations of the Lady Luck, but also a $291 million retail center and possibly a gaming hotel to be built on several acres surrounding the old post office across Stewart Avenue from the Lady Luck.

That building, also a former federal courthouse, is slated to become the home of the mob museum.

The delay in the project could be, in part, due to the size differences between the properties. The Gold Spike and Travel Inn combined have 170 rooms; the Lady Luck has 743 rooms in two towers.

In other words: a lesson from this recession may be that with modest goals, achievements are still possible. Overreach, and plans can be slowed by their sheer scope.

Such appears to be the case with other big redevelopment projects slated for downtown that are facing delays or might be scaled back — a new city hall, the World Jewelry Center and residential development in Symphony Park.

The Lady Luck's troubles aren't for a lack of city support.

CIM may soon be the beneficiary of the city's ongoing efforts to designate the 4.5 acres surrounding the mob museum as a Tourism Improvement District.

If the improvement district is approved, as much as $3 million annually in sales tax revenue will be put back into the project to finance a public plaza and parking garage. In return, city officials say, the deal locks CIM into making $100 million worth of improvements to the Lady Luck.

CIM also appears to have gotten a good deal on its Lady Luck purchase price of $25 million. Appraisals commissioned by the city showed the property to be worth as much as $60 million.

By comparison, the Siegel Group has received only a small amount of city assistance — about $88,000 for exterior visual improvements — for the Gold Spike and Travel Inn.

Those properties cost $21 million and $5 million respectively. According to Crandall, the Siegel Group secured most of the financing for the deal, including the additional $5 million for renovations, through a bank loan.

Crandall said he's confident they'll be able to pay it back. In the past six weeks, room occupancy rates have skyrocketed, he said, to 93 percent to 100 percent. That compares with less than 50 percent before the casino was remodeled. And the renovated rooms haven't debuted yet.

What was once a dump is now a respectable-looking mini-casino with bolstered security and new everything, from major kitchen appliances and gaming tables to the aqua/white paint schemes in the rooms.

"Everyone told us, 'You're crazy, you can't get it done,'?" Crandall said. "But that was just like medicine, helping us succeed."

Copyright © Las Vegas Sun. Inc. Republished with permission.

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