The struggles of the Cosmopolitan of Las Vegas could give a glimpse of the future of Vegas. It was much easier to unload an unprofitable casino back when casinos were only valued in the multimillion dollar range. There were far more eligible buyers. There were far more opportunities to the seller. The Cosmopolitan is playing roulette and it has all its bets on just one number.
Now that casinos in Vegas are in the multi-billion dollar class when they get in trouble it will be much harder to find willing buyers brave enough to part with their money on losing casinos. The Cosmopolitan has never done well. It’s never made money. The Cosmo is a loser–for six years out of six years in business, it’s been losing. From day one it never turned a profit. It was a foreclosed property with the original developer going south and then the bankers took over and completed the project.
When you run a casino that big you better have experience running big casinos, because the competition around you does have that kind of experience. Usually, when a casino magnate has billions of dollars to invest, he’ll build his own casino rather than inherit someone else’s problems, unless of course he tears one down and builds a new one.
To risk nearly your entire net worth on a casino doesn’t seem likely nor make much economical sense. It’s not a wise investment. It’s like putting your entire bankroll on a single game and a single bet. Even the dumbest gambler isn’t that stupid. Billionaires don’t become billionaires by making stupid moves, they become billionaires by making brilliant moves and buying low and selling high and managing right. They are winners. There is a reason they are winners. It’s not because they make bad investments that can wipe them out. With a 4 billion-dollar value/price tag on the Cosmopolitan, Australian billionaire James Parker is only worth a little more than a couple billion more, 6.5 billion dollars to be exact. Too much leverage and putting too much into gambling and hoping could spell doom for any future owner.
The Cosmopolitan won’t clear 4 billion or even half that. If Deutsche Bank gets anywhere between 1 billion and 2 billion for the Cosmo, they’d better take their money and run, and fast. When you lose your money, learn to lose.
At stake is the future of Vegas itself and if one compares the performance of the last decade, there is nothing there to brag about–or invest in. Vegas has been a loser. Nothing indicates that is going to change except piss in the wind. Big casinos spell big trouble when things go south. The era of the multimillion-dollar casinos were much easier to handle in the day of gloom and bust than the big billion dollar casinos which are not too big to fail. Despite what some sources claim, the Vegas valley has never fully recovered from the Great Recession.
During the 20-year boom, Las Vegas was the fastest growing city in American. People won more often, were comped more and had more fun. People came back to Vegas more frequently. Slot and video machines were looser and table games were easier to win on and when you won you won more. The current management of Vegas casinos took all the fun away from the world’s number one gaming mecca. And in the end, they, and not the people who play here, will pay for it.
If Vegas returns to a recession as some indicators point to the idea that it will, or at least might, then big casinos will be extremely hard to unload, much harder than the multimillion dollar casinos were that preceded them. There comes a time when those of us who preferred the Old Vegas, and the way things were, can wink and say, “The old way was better for everybody.” The bigger the chips, the harder they fall. The bigger the chips, the louder they fall, too.
I have a feeling there are going to be some very hard and loud falls coming to the future of Las Vegas.
When those too big to fail corporations lose, there is going to be a lot of noise.
LAS VEGAS (Vegas Valley)–Jackie Gaughan, a Las Vegas legend and pioneer and the owner of the El Cortez Hotel & Casino in Downtown Las Vegas has died, Wednesday, 12 March 2014, at the age of 93.
Gaughan used to own as much as 25% of the gaming action in the downtown corridor.
Gaughan loved to play poker among other things. I’ve played Texas Hold ‘em and Seven Card Stud with him plenty of times over the years in the El Cortez poker room, a small room with a handful of tables favored by locals, particularly the elderly. Poker at this casino room required a lot of patience and skill for many of the elderly players were rocks who only played their hand when they had something. The rest of the time they folded. You learned soon enough if Rocky was in, you’d better be out for he probably had the nuts. Generally, Gaughan would wander in and play a few hands before leaving again, only to return several times a day. He was a regular at the tables, but I don’t recall him ever staying very long. He was a friendly guy and liked by most and despised by a few. Unlike many of the casino barons in town, Jackie was personable and wasn’t afraid to blend in and play with his customers. He was the boss. He always wore a suit. He will be missed by those who loved the downtown action and Old Vegas.
One of the last times I played against Jackie I wound up leaving and not coming back again for a long time. I was angry. It was before he retired, so it was before 2008 if I recall correctly. I always loved the seat directly across from the dealer. It was getting more difficult for me to see the cards and hear the dealer from other positions. For me, that was the best seat. Well, I guess Jackie liked that seat too. For I had gotten up to go to the men’s room to water the horses and I left the table with a mountain of chips that had been in front of me built during a long winning streak. I came back to find my chips with the neat stacks destroyed and pushed aside to the seat next to the one I had been sitting in–to the right of where Jackie was now sitting.
“WTF?” I said to his body guards.
“Jackie likes that seat.” The man replied.
I wasn’t too kind in my answer. I was furious. The move was against all poker ethics. I cashed in my chips and left. I didn’t really care if a multimillionaire did own the casino and the poker room in it, you don’t shove someone out of their seat that is still in the game. It took me awhile to get over it, but I finally did. I forgave him. You see, I have respect for the elderly, even if the elderly don’t always do what they are suppose to do. I chose to remember the good times rather than the bad. I remember the times I beat Jackie in hand after hand and thought it was a big deal. It wasn’t really. But when you are the new kid in town sitting at the table with a legend your head swells a little bit. Well, okay, maybe a lot. Those were the times. Simple, but good. Well, maybe not always good, but memorable.
The El Cortez was only one of many of Jackie Gaughan’s holdings, but his personal apartment was on the upper floors where he had a baron’s view of the city he dominated along with Vegas greats for decades. Many called the El Cortez “a dump” and never appreciated the casino, before or after, Jackie’s retirement. But those of us who loves the “Old Vegas” the El Cortez was among our favorites. It was a place where you could go and get a full breakfast for only 99 cent. The El Cortez, 600 East Fremont Street between 6th and 7th Street is located on the upper part of Fremont Street just before you enter the Fremont Street Experience at Fremont & Las Vegas Blvd. It’s a couple of block walk from the Fremont Street Experience and many tourist and locals alike enjoyed visiting the aging casino. It is recommended that one does not venture beyond the El Cortez at night since that is a high-crime zone. The El Cortez is one of the original gambling halls left in a town where casinos nowadays often die long before their masters.
The El Cortez is one of the few survivors that the eyes of the souls from the past have seen and enjoyed when Vegas was young, like Jackie.
Local News Reports & Links to More Information About Jackie Gaughan and the El Cortez
The Las Vegas Review-Journal: Billboard Pays Tribute to Jackie Gaughan
Wikipedia: Jackie Gaughan
Wikipedia: Jackie Gaughan’s El Cortez
El Cortez the longest continuously-running hotel and casino in Vegas (The El Cortez Website)
El Cortez DuckDuckGo Search
Jackie Gaughan DuckDuckGo Search
Las Vegas Sun News Report, History and Slide Show