Friday, Feb. 20, 2004 | 11:19 a.m.
Three weeks after closing, the Castaways is generating interest from prospective buyers, including a trio of small casino owners who've toured the property and are interested in buying and reopening the 49-year-old hotel-casino.
Randy Miller, Rich Iannone and Rich Gonzales, the owners of the Bighorn casino in North Las Vegas and of the Longhorn casino on Boulder Highway, have toured the property and are deciding whether to buy and reopen it as a casino, Gonzales said.
Some industry experts have questioned the Castaways' less-than-desirable neighborhood demographics, but Gonzales said if he and his partners buy it, they'd reopen the entire hotel-casino.
"We're now doing our due diligence," he said. "We are looking at the property and considering a bid."
Asked whether the partners were ready to operate a casino much larger than the two they already operate, Gonzales said that he hoped so.
"It's so big," he said. "We were just blown away by its size."
Gonzales said that he and his partners believe the Castaways has the potential to succeed as a locals casino.
Gonzales and Miller, both former police officers, made news last month when they agreed to reopen and operate the then-closed Jaguars strip club. After the duo was granted a temporary liquor license by the Clark County Commission on Jan. 20, the club reopened under Gonzales and Miller the next day.
Gonzales said he didn't believe operating a strip club would hurt the group's chances to buy the Castaways, noting that he and Miller already have gaming licenses by virtue of their Bighorn and Longhorn ownership.
The Castaways had more than 1,300 slots and 20 table games, while the partners' Bighorn has 200 slots and three tables and the Longhorn has 250 slots and four tables.
Veteran Las Vegas casino broker David Atwell, who brokered last year's sales of the Skyline and Four Queens casinos, said the biggest stumbling block for potential owners is the Castaways' Culinary Union contract.
The contract has successorship clauses that would require a Castaways buyer to assume the union's contract, and Atwell said that fact makes prospective buyers leery.
"You have to go in there without the union if you want any chance to compete," he said. "Anyone who's looked at it has said it just can't be union."
Atwell said a former professional bowler, now a bowling entrepreneur, has expressed serious interest in buying the Castaways' bowling center as part of a joint venture with a locals casino operator who would operate the hotel and casino.
"He'd like to recapture the mystique the (former) Showboat had, and he believes the old Showboat system can work," he said of the former pro bowler he declined to name. "The flow from bowling drove that property. Bowlers drink, they gamble and they'll hang around and party. That's a good casino customer."
Castaways owner Vestin Mortgage bought the bankrupt property for $20.7 million on Feb. 1 at a foreclosure sale after its bankrupt former owners were unable to satisfy terms of a $22 million-plus mortgage note, and is now marketing the property for sale, Vestin spokesman Steve Stern said.
Vestin's Stern declined to comment when asked whether any interested parties have submitted bids on the property. It's unclear if the sale would affect the Culinary's successorship rights.
Commercial real estate consultant John Restrepo of Restrepo Consulting said the Castaways site would be a good fit for big-box retail.
"It's not a good office site, and it's too expensive for industrial (use)," Restrepo said. "But it does have some pretty good retail potential, particularly big-box, middle-income retail."
The neighborhood around the Castaways is mostly lower-middle income to middle-income, he said.
Retail outlets such as Wal-Mart, Target and Sam's Club are examples of stores that would make sense at the Castaways site, Restrepo said.
"Ideally, they'd get a major anchor like Wal-Mart or Target, then line up a Mexican grocery store and other stores that might appeal to the nearby residents," he said.
About 800 Castaways workers lost their jobs when the casino closed on Jan. 29; about half are members of Culinary Union Local 226.
Culinary Union Secretary Treasurer D. Taylor said some Castaways workers have expressed the hope that their property would be purchased and reopened as a hotel-casino.
Despite Wednesday's filing of license applications by MTR Gaming Group and Harrah's Entertainment to buy and operate the closed Binion's Horseshoe downtown, Taylor said he tells his union members that the Horseshoe situation is not the same.
"It's great that the Horseshoe looks like it will reopen, but I have to tell (Castaways workers) that I'm unclear about the future of the casino," Taylor said.
Meanwhile, Castaways gamblers who have yet to redeem the casino's chips or who have winning race or sports book tickets will probably have to wait a couple weeks to find out the former casino owners' plan to redeem them.
"The licensee (VSS Enterprises, the former Castaways owner) is in bankruptcy, and that's complicated the process, but the licensee has promised to set up a system within the next two or three weeks to redeem all chips and winning tickets," said Keith Copher, chief of the Gaming Control Board's enforcement division.
He said VSS, like all nonrestricted casino operators, maintained a bond to guarantee customer repayment.
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