Las Vegas Sun

September 21, 2014

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Columnist Jeff Simpson: On South Coast — Poised to take its place among the valley’s top locals casinos

Jeff Simpson is business editor of the Las Vegas Sun. He can be reached at [email protected] or at (702) 259-4083.

One of the great things about the casino business is that there's more than one way to be spectacularly successful. Kirk Kerkorian and Steve Wynn created profitable companies that operate giant Las Vegas resorts, but each have gone about generating most of their casino billions on the Strip.

But that's not the only way to make a buck in the business, and a couple of longtime Las Vegas families have made their own billions in the Las Vegas locals market.

While downtown was once the place where local gamblers preferred to try their luck and grab an affordable bite, three families -- now combined in the two leading locals casino companies -- have created incredibly potent operations that are ringing the valley with ever more remarkable locals casinos.

The Boyd family -- patriarch Sam Boyd and then son Bill Boyd -- led the way, away from their own downtown operations, with their western-themed Sam's Town, the Eldorado and Joker's Wild in Henderson and the purchase of Coast Casinos.

Frank Fertitta Jr. and his sons Frank III and Lorenzo opened the Bingo Palace -- now Palace Station -- and then Boulder Station, Texas Station, Sunset Station, Green Valley Ranch Station and soon Red Rock Resort.

And Michael Gaughan, son of former downtown casino kingpin and current El Cortez owner Jackie Gaughan, opened a small Strip casino, the Barbary Coast before building the Gold Coast, Orleans and Suncoast.

When Gaughan sold his Coast Casinos to Boyd Gaming last year, the deal gave Boyd near-equal footing in Las Vegas with Station, the valley's locals powerhouse for a decade.

And now Boyd and Gaughan are preparing this week to open the South Coast, a $625 million property on South Las Vegas Boulevard that is another leap forward in the line of properties Gaughan built that dominate the locals casino market in the south-central valley.

After touring the property a couple of months ago and then checking it out again last week, it's pretty clear that the South Coast will be the same kind of money-maker as its closest sibling, the Orleans. And that's saying something, as the Orleans is the closest thing to a megaresort in the locals market.

Some question whether the property will be able to fill its 1,300 rooms after its second tower opens in half-a-year. Others wonder about the property's giant equestrian center, a first-of-its-kind arena and convention operation designed to lure the incredibly affluent horsey set.

But there's little need to worry. Gaughan knows what he's doing -- and that's one of the reasons Boyd bought his company. With the exception of the very profitable Suncoast located next to Summerlin, all of Gaughan's off-Strip properties are designed to capture value-conscious tourists and conventioneers as hotel guests. Their near-Strip locations and megaresort-quality food and gaming options appeal to tourists, and the generous slot clubs, people-oriented pit crews and great food keep local gamblers coming back.

Anyone who has spent much time at the Suncoast, Orleans and Gold Coast will recognize many of the same tried and true features at the South Coast: movie theaters, bowling alley, giant buffet and lots and lots of video poker machines.

But the South Coast has a much bigger parking garage than its siblings, and it was built with extra space already under roof to allow for a painless expansion. Its enviable location as the first casino Californians will see as they enter the valley will also be a big plus.

If the Boyd/Coast employees run it as well as their sister properties are operated, the South Coast will be a sure-fire winner.

Informed industry sources say that the 2002 Culinary worker contracts are starting to cause pain for at least a few downtown casinos. The deals required downtown's union properties to pay more money into the union health plan for every hour worked by their maids, porters and food-service workers.

Because so many downtown properties were -- and are -- struggling, the Culinary agreed to a deal with the downtown casinos that allowed them to pay $1.04 per hour less than the $3.24 hourly increase agreed to by Strip operators. But much of that increase was deferred to the end of the deal, in this year, its fourth, and the fifth, which ends in mid-2007.

"The backloading of those contracts is killing them," one source said. "They need the Culinary to cut them some slack."

D. Taylor, the Culinary's top local official, isn't offering new concessions. He said Friday that what downtown needs is new investment and new thinking.

"The workforce downtown looks around and sees all of the investment on the Strip, but there hasn't been much downtown," Taylor said, noting that he welcomes the big expansion plans being touted by Landry's Restaurants, the owners of the Golden Nugget.

"That company has come in and they clearly have big plans. We're excited about the expansion and we're excited about the growth. But they're new to the gaming industry, and they also need to know that what keeps customers coming back is not the shape of the building -- it's the workforce. I think they know that."

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