In one of his earliest columns in 2015, Oliver Lovat observed that Downtown Las Vegas was undergoing a transition. In the past seven years, this has become a highly successful repositioning.
It is worth taking time to review the history of this iconic market and learn what recent developments have meant for repositioning legacy assets.
Early Pioneers
Vegas Vic may be all that is left of the original Pioneer Club on Fremont Street but it acts as a homage to the original innovators of the American gaming industry that cut their teeth in this narrow precinct.
Called ‘Old Las Vegas’ by many tourists, determining the heyday of the Fremont Street area is highly subjective. For some, it was the post-war decade, when gaming mavericks Benny Binion, Sam Boyd, Bill Bennett and Jackie Gaughan held court, working alongside Mafia guys that had relocated to Las Vegas.
Or perhaps it was the 70s, by which time many of those same executives had managed to raise capital and build their own properties. Kell Houssels Jr, Jackie Gaughan, Frank Scott, Sam Boyd and Bill Boyd all teamed up to open the Plaza in 1971, with the latter duo opening The California in 1975. Steve Wynn, who was to attain legendary status in this industry, learned his trade at the Golden Nugget. He managed the property, initially on behalf of a syndicate of investors, including Gaughan, in a run from 1973 to 2000.
Although Bob Stupak’s Glitter Gulch and the Herb Pastor’s Golden Goose added to the colored neon of the street, the final significant build of this generation of hotel-casinos was The Sundance, which opened in 1980. The Sundance was owned by Moe Dalitz, the alleged former leader of the Cleveland Mob. Dalitz’s ownership was to be short-lived, as he applied to be the licensee. Despite his elevation from gangster to community philanthropist, such tributes did not wash with the Gaming Control Board and he was unable to be licensed.
When the Mob finally retired from Las Vegas, as the Gaming Control Board effectively foreclosed on their operations, it was the father and son team – Sam and Bill Boyd – who was entrusted to operate the Fremont Hotel on the corner of Fremont and 4th, alongside the much larger Stardust. They added Main Street Station to the portfolio in 1993.
By the mid-1980s Fremont Street was almost entirely owner-managed. Jackie Gaughan’s properties bookended Fremont Street, with the El Cortez and The Western to the east, and The Plaza and Las Vegas Club to the west.
The Binion family acquired The Mint in 1988 and merged it under their Horseshoe brand. Other properties, including Fitzgerald’s, were then owned by Reno-based Phil Griffith and there were others independently operated.
By the late 1980s, The Golden Nugget aside, the area with a shadow of its former glory, with the area crime-ridden and untouched by wide-scale investment. Outside the Downtown Las Vegas (DTLV) market, there had been investment in neighboring locations, such as Mesquite and Laughlin. Meanwhile Atlantic City had surpassed Las Vegas as the US gaming capital.
The 1990s were to prove further challenging to DTLV as the Mega Resort era began on The Strip, pulling gamblers away from DTLV with newer casinos opening at an unprecedented pace.
Michael Gaughan, Station Casinos and Boyd Gaming had developed a strong suburban casino offering across the Las Vegas Valley, capturing the play of local customers that once occupied Fremont Street. These new properties were safer, cleaner, newer and larger than their DTLV predecessors. They were also very successful.
By the 1990s, many of the families that had made their names in Fremont Street had diverted resources to the liberalizing of gaming markets across the US, which were generally less competitive and could generate higher revenues unfettered by any historic footprint.
By the turn of the century, despite attempts of former Mayor Ron Lurie to drive investment Downtown, and the pedestrianization and the introduction of a video canopy over the street in 1995 led by Mayor Jan Jones, Fremont Street certainly felt neglected compared to the Strip. To many within the gaming industry, it was considered moribund.
Between 1993 and 2009, the only new property to open in DTLV was Stupak’s Stratosphere, but, technical boundaries aside, Stupak’s final roll of the dice is considered by many to be a Strip property.
When records started being collected in 1992, 30 casinos were operating in DTLV. By 2005, this number had declined to just 19.
Only those with great vision – or the slightly crazed - would have believed in the future of DTLV in the early 2000s. Luckily, such folk exist.
The Next Generation
There is much debate as to what the turning point in the fortunes of DTLV was.
Some claim it was the unveiling of the Fremont Street Experience, the opening of Neonopolis in 2002, or perhaps efforts made by the formidable Mayor Oscar Goodman to drive visitation. However, evidence points to the real trigger being the retirement of Jackie Gaughan in 2004.
The exit of Gaughan, and the sale of his real estate portfolio, enabled entry for a new generation of pioneers.
Ultimately, the longtime associate and friend of Gaughan, Kenny Epstein, acquired the El Cortez, with London-based Tamares investment group buying the remainder.
One cannot overstate the scale of risk taken by Tamares owner, Poju Zabludowicz, investing millions of dollars in vacant land and crumbling real estate. Yet he believed that DTLV’s best days were yet to come. Formative to the change was Jonathan Jossel, coming from Tamares’ London office, who brought dynamic real estate skills and was later charged with operating its casino assets. Others soon joined the revival.
There was Tony Hsieh, who had zero interest in gaming but rather saw DTLV as a perfect testing ground for his experimentation in workplace design and social innovation. And then there are Stevens brothers – Derek and Greg – from Detroit.
Fueled by a love of both gambling and sport, the pair invested in the Golden Gate casino before acquiring it whole. This was followed by investment in Fitzgerald’s, renaming it the D, and then funding Circa which opened in 2020.
Tamares provided much of the land and buildings that Hsieh and the Stevens had needed to implement their business plans. As noted, in 2005, DTLV had 19 operating casinos; however, by 2019, this had risen to 26. The performance metrics are impressive.
As Covid-19 hit Las Vegas, despite the protestations of both DTLV casino owners and Mayor Carolyn Goodman that the draconian measures were both unnecessary and unwanted, DTLV was shuttered, stalling eight consecutive years of growth.
And yet, on reopening, DTLV seemed remarkably well placed to recover, and unlike in previous decades, was significantly more diversified.
The great residential experiment of building condos on The Strip failed. Although residences were scarce, those that lived in DTLV enjoyed it. The desire for Las Vegas residents to organically demand an urban core is a curious phenomenon, anticipated by few, and Downtown became the closest thing to a true city environment it had. The younger generation, many of whom were emigres from larger cities, actively relocated to DTLV as a first choice.
Moreover, locals that had never spent their leisure time in DTLV started coming to explore the range of social activities on offer.
Rising from the ashes
This new range of business owners and concepts has been highly adept at supporting the non-gaming aspects of the district, particularly mid-week, where conventions dominate mid-week business on The Strip.
Visitation to DTLV comprises almost 40% of those living in Las Vegas, while 30% are visiting from The Strip and a further 27% are staying in DTLV.
The shortage of available real estate has led to the redevelopment of the Arts District, once a no-man’s-land in-between the two tourist centers. The increase in land values for future development has been a feature of recent years and it can only be a matter of time before there is full connectivity through the central corridor.
Lessons From the New Pioneers
So, what can we learn from the reinvention of DLTV that is useful for those that wish to re-program older or legacy properties and for the growing number of casino resorts that are in urban settings?
This new generation of pioneers has innovated by looking back as well as forward. The DTLV journey is not complete.
This isn’t a new opinion, but events attract people, and in DTLV, every event is a major event. Every sports game, every stage, every Friday and indeed every July 4th or Thanksgiving is an occasion to celebrate – with other people. Programming for nearly everything is considered and promoted.
Development of this entertainment programming is not just top-down, but bottom-up. (Ironically traditional production shows have not been successful in DTLV). People love people and DTLV has more compressed socializing than perhaps any other area in the country.
Moreover, this new generation are great promoters, inspired by the old pioneers who had their names above the door and knew their customers by name. Derek Stevens is seen as frequently on the casino floor as he is on TV. Jossel likewise has a very popular podcast.
Developing a personal connection with customers was the foundation that built DTLV and one that has been lost, as the casino business scaled up and ultimately fell into corporate ownership.
Finally, the most important lesson is placemaking.
Whether it be architectural design, respect for the past and the omnipresent references to history, if you are in DLTV, you actually feel that you are in DLTV. The legacy of the place has not been erased, rather it has been deliberately immortalized, not just in the museums and casinos, but also in restaurants and bars, hallways and guest rooms.
Together, these aspects have given confidence to owners, investors and customers to believe that when we talk about the real heyday of DTLV, we are actually living through it. Or maybe the best yet to come.
