Hard times for ‘Creek’ casinos

Filed under: Daily News,News | Tags:,

The gold mining boom of the 1890s created Cripple Creek and the gambling boom of the 1990s revived it. But all booms end, and unless the economy takes off, Cripple Creek’s best days might be behind it.

Despite voter approval of higher bet limits, extended gaming hours and more table games, gambling revenues in Cripple Creek have been dropping.

Casinos still line the town’s Bennett Avenue, and gamblers from Colorado Springs still make the 44-mile trek to “The Creek,” especially during the summer. But beset by competition from casinos in Blackhawk, battered by the recession and hampered by Colorado’s smoking ban, Cripple Creek has seen casinos close and visitor numbers plunge. The same can be said of Central City.

Peaking three years ago at $155 million, adjusted gross proceeds from Cripple Creek’s casinos have dropped more than 10 percent to levels last seen in 2001.

Central City has experienced even sharper declines. Last year’s gross proceeds of $64 million were $30 million less than the peak year of 1998.

In both Cripple Creek and Central City, April’s average daily adjusted gross proceeds per “device,” at $79 and $71, respectively, was far below Blackhawk’s $175.

Job figures are off, too. The casinos in these mountain towns directly employed 8,425 people as of last July.  That number was down sharply from the previous year’s total of 9,073, though some of the drop is related to a new statistical model used by the state.

Given that the odds of winning are virtually identical in every mountain casino, it’s clear that Blackhawk’s casinos are not just the busiest but presumably the most profitable.

“It’s very, very slow,” Bronco Billy’s owner Marc Murphy said last week. “We did a head count on Friday night at 9. We had about 200 (customers), and there were 100 at Wildwood.”

Built at a cost of $80 million, Wildwood is Cripple Creek’s newest casino, while Bronco Billy’s is one of the oldest. Each can accommodate hundreds of gamblers.

Because he’s been in business so long, Murphy’s debts probably aren’t as formidable as those of his competitors. That helps explain why he seems more worried about the competition than he does about his own place.

“I don’t see how they can make it with those numbers,” he said of Wildwood, “or even if they had three times as many. But they just keep on going.”

Murphy and his partner Mike Chaput have owned and operated Bronco Billy’s since the early 1990s. The casino occupies half-a-dozen adjacent buildings along Bennett. With 770 slots and video gaming, as well as three restaurants and 14 table games, it’s the city’s largest casino.

It’s not an easy business, as the vacant nearby buildings that once housed the Virgin Mule and the Imperial Hotel-Casino silently attest.

“This business is all customer service,” said Murphy, who was busy preparing tableside guacamole in the casino’s steakhouse last Saturday night. “We all have pretty much the same product, the same machines, and the same payout, so you go to the place that gives customers the best experience, and that’s what we try to be.”

Blackhawk is trying, too.

Sixteen casinos line Blackhawk’s streets, where mountainsides have been blasted away to accommodate Las Vegas-style establishments. With adjusted gross proceeds of $530 million in 2009, Blackhawk’s casinos claimed 71 percent of the mountain gaming market

Blackhawk’s newest is the Ameristar Casino-Hotel, which describes itself as “the first destination resort casino in Colorado.”

The $300 million property includes a 33-story hotel, a spa, a rooftop swimming pool and 15,000 square feet of meeting and event space. With 1,500 slots and video “devices,” 23 table games and 14 live poker tables, Ameristar is easily Colorado’s largest casino.

Springs retiree Paul Stoltz spent last weekend at the new hotel, which he described as “fabulous.”

“The hotel was pretty full,” he said, “and the 10-story parking garage next to it was full, too.”

Back in Cripple Creek, Kevin Werner, who has managed the Wildwood since it opened two years ago, had hoped that the comparatively glitzy $80 million facility would draw customers away from Blackhawk. That hasn’t happened.

“When we opened, it was a perfect storm,” Werner said. “We had $4.50 gas, we were undercapitalized, and the recession hit. We just completed another round of (debt) reorganization, so we’re in the best position we’ve been in.”

This was the second such restructuring since the 45,000-square-foot casino opened.

“We’re very fortunate that we have a good group of investors,” Werner said, “and our lenders have been very helpful. They understand that this is a long-term thing.”

But Wildwood has no hotel, so on that score at least it can’t compare with Ameristar.

“They’re single-handedly responsible for Blackhawk’s increase (in AGP),” Werner said. “I think we kept Cripple Creek from declining as much as it might have. Of course, right now if you’re not doing bad, you’re doing OK.”

Werner acknowledged money woes.

“We still operate tight,” he said. “We’re not flush with cash. We closed Maverick’s (the casino’s upscale restaurant) because we couldn’t afford it. We’ll be opening a Ruby Tuesday’s in the space this June.”

And, Werner concluded hopefully, “The Donut Mill from Woodland Park will be opening a concession in the casino. I hear that their biscuits and gravy are really outstanding.”