Casinos still a gamble - Tuesday 12th of July 2005
Central Citys reputation as a boom-and-bust town lives on.
While a new parkway fueled a long-awaited pickup in business this year, two casinos that opened a few months ago already have run into financial trouble. Scarlets Casino filed for bankruptcy last week, disclosing it owed about $1 million to its 20 largest unsecured creditors. Another gaming parlor operated by the same company shut down its slot machines Monday.
Neither Scarlets chief executive nor its attorney could be reached for comment Friday about the bankruptcy filing. A spokesman for the states gaming division said Scarlets remains open for business.
"There have been other casinos in the past that have operated while they are under bankruptcy," said Don Burmania of the Colorado Division of Gaming.
In its court filing, Scarlets listed International Gaming Technology as its biggest creditor. The company, which designs and builds state-of-the-art slot machines, is owed almost $400,000.
Scarlets, with 500 slot machines, and a smaller 200-slot casino in the historic Teller House opened with much fanfare in February. Parent company 3C Gaming said it hoped to capitalize on the new parkway, which offers gamblers more direct access to town.
And by all accounts, the former mining town has been enjoying a resurgence in its gambling fortunes this year. Overall casino revenues leaped 75 percent in May, according to state gaming division data, after strong monthly gains ever since last falls opening of the new eight-mile parkway.
"From the road itself, we have enjoyed a comfortable increase really from day one - from the get-go," said Ross Grimes, a Central City casino owner who was actively involved in the push to build the $45 million road, which allows visitors to bypass rival Black Hawk.
But Central Citys mostly tiny casinos still face stiff competition from the bigger, modern gaming establishments in nearby Black Hawk, which continues to draw busloads of gaming enthusiasts despite the monthlong closure of a popular route into town.
"Even with the road, you still have to be real frugal with your money or you wont make it," said Terry Houk, general manager of Central Citys Doc Holliday Casino. "If they (Scarlets) cut expenses, they can probably survive."
Even with Central Citys recent gains, Black Hawk draws 10 times as much business.
"Another year without a casino opening and this town would have been broke," Houk said.
Much of the citys budget comes from the fees it charges casinos for each device they operate.
"Itll be good for everyone if Scarlets makes it work. If they dont, someone will because the opportunity is here," said Grimes, whose family owns the Easy Street and Famous Bonanza casinos.
A major project is well under way in the middle of the former mining town.
Century Casinos Inc. and Tollgate Venture LLC are pouring $40 million into a casino with 625 slot machines, table games, hotel rooms, restaurant facilities and a 500-space parking garage.
"The parkway was the actual push for us to do it," said Larry Hannappel, senior vice president of Century Casinos Inc. in Colorado Springs. "Thats still going to be a real attraction."
The city boomed during a gold rush in the 1800s, while Black Hawk developed as a mill town a mile down the road. After the prospectors left, Central City struggled for decades to survive on tourism. Most visitors came to see its historic buildings and attend the opera during the summer season.
Both towns got a boost when the state legalized limited-stakes gaming in 1990. Initially, Central Citys picturesque historic structures proved the bigger draw. But Black Hawk eventually took the lead when it built glitzy new casinos with lots of convenient parking.
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