Published Tuesday, Dec. 2, 2008 | 4:08 p.m.
Updated Wednesday, Dec. 3, 2008 | 11:42 a.m.
Black Gaming is temporarily closing its Oasis casino in Mesquite in a last-ditch attempt to cut costs and fend off a potential bankruptcy.
The Oasis' hotel rooms, RV park, golf course, gun club and time share facilities will remain open as will the company's other two Mesquite hotel-casinos, the CasaBlanca Resort and Casino and the Virgin River Hotel and Casino. The suspension of gambling and food and beverage operations at the Oasis will cost some 500 people their jobs.
The company has been bleeding cash over the past year, reporting a loss of $34.4 million for the nine months ended Sept. 30 compared with a $12.1 million loss for the same period a year ago. At the same time, expenses are rising as interest comes due on more than $200 million in debt.
Black Gaming recently defaulted on a bank loan because its cash flow fell below lender requirements. The company is operating under an agreement that will give the company more time to boost its cash flow before the bank can collect on its debt.
While closing a casino seems counter-intuitive in a business where gambling floors remain primary revenue generators, Chief Executive Randy Black Sr. said the business isn't enough to offset fixed costs.
The company's casino floors cost more to operate than the hotel rooms.
Casino revenue fell 28 percent while casino expenses fell 20 percent in the third quarter from a year ago. Hotel revenue declined 9 percent while hotel expenses increased 10 percent over the same period.
Black said he made the decision "only after significant consideration and implementation of other steps to increase revenues and reduce operating costs" and was essential to preserving jobs for the majority who remain.
The Oasis is offering rooms for $24.99 Sunday through Thursday. The company will replace recent ads for the Oasis with ads for Black's two other Mesquite casinos.
Most of Black's customers are tourists driving through town or seeking a bargain getaway. He hopes to lure them to his neighboring casinos for gambling and dining.
"If you don't have rooms available you don't have customers," he said. "You've got to significantly reduce topline prices to do any sales in this market," which is tough now that Strip hotels are offering budget rates.
Fourth quarter results through November have been below expectations, with a similar outlook for December, he said.
Black's company has enough cash to run the casinos and make interest payments through the end of the year but will need more cash to keep the business going next year. He's considering either selling his casinos or otherwise restructuring the company.