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Question of the Day January 20, 2017


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Q:

Several years ago, the incomparable Debbie Reynolds bought a casino in Vegas, which failed. What happened that it wasn’t a success?

A:

In 1992, Debbie Reynolds bought the Paddlewheel Hotel-Casino for $2.2 million.  

The property, built in 1970 as the Royal Inn, had already been through several changes of ownership, including a stint under Michael Gaughan.

The question of how to deal with the steamboat-themed exterior design was finessed by repainting the "paddlewheel" as a reel of motion-picture film.

Anyway, at $2.2 million, you’d think Reynolds had made the steal of a lifetime. However, the Debbie Reynolds Hotel & Casino was on gloomy Convention Center Drive, hardly a hotbed of gamblers. Also, Reynolds quickly compounded the purchase price, investing $2 million in renovations and then, after taking the property public, putting as much as $8 million more into it.

There wasn’t much casino inventory to generate revenue: 184 slots and two table games. The main draw was Reynolds’ collection of Hollywood memorabilia, on display in the casino. These included Elizabeth Taylor’s tiara from Cleopatra, a perverse souvenir, since Taylor had lured Eddie Fisher from his marriage to Reynolds.

The business model was seriously flawed. Instead of applying for a Nevada gaming license, Reynolds leased the casino to slot-route operator Jackpot Enterprises. Having a casino with effectively no gambling revenue, Reynolds eventually had to go back into harness, performing five nights a week to keep the customers coming. At least she had a good showroom: Entertainment columnist John Katsilometes deemed it "one of the underrated venues in the city."

In another curious move, Reynolds’ proxy management company blew off the casino business in favor of converting the hotel to timeshares, making it one of the first Vegas casinos to get burned in the condo business. "The cost of the sale was higher than the sale," Todd Fisher, a Debbie Reynolds Hotel executive and Debbie’s son, told the Las Vegas Sun, fobbing blame off on the agents charged with marketing the condos. "They also were taking exorbitant salaries and cutting great deals for themselves."

There didn’t seem to be a department that was profitable: Even the employee dining room was running $75,000 a month in red ink. The gambling was functioning as a loss leader. By the time Fisher stepped in to sack the management company and obtain a gaming license, the casino was so deeply in debt the Nevada Gaming Control Board was loath to issue a license.

Reynolds herself lent the casino over $1 million to keep it going, but it was too little too late. In 1997, a few months after the loan and with creditors pawing at the door, Reynolds resigned from the board of directors and filed personal bankruptcy. (The casino went into Chapter 11.)

Although the property was carrying almost $10 million in debt, a bidding war broke out between Florida condo developer David Siegel and Calstar LLC. When Calstar declared itself willing to pay $15.6 million, Siegel (who would go on to buy the Westgate Las Vegas many years later) deemed the Debbie Reynolds Hotel too rich for his blood. Then Calstar got cold feet, sending the property into a bankruptcy auction.

By this time, the hotel was a ghost town, with more slot machines (25) than employees (20). It was snapped up by the World Wrestling Federation, which wanted to have a grappling-themed casino at the site, but ultimately deemed it too small for its purposes. Another sale saw it converted into the Greek Isles Hotel & Casino in 2009. Yet another change of ownership ensued when creditors seized the property and it become a Clarion hotel until 2014. It was then closed and demolished. It was simply a site where nothing could prosper.

Despite her 1997 bankruptcy, the unsinkable Reynolds recouped her fortunes, which were estimated at between $60 million and $85 million at the time of her death. In a perverse way, Reynolds got the last laugh. For all the incarnations and ownerships her casino went through, it will live on in Vegas folklore as the "Debbie Reynolds Hotel & Casino," more famous as a memory than are several surviving casinos. Las Vegas could have learned from its failed condo-casino (condsino?) business model and avoided the worst of the Great Recession, but nobody took any notice. Is that Reynolds’ ghost chuckling from the Great Beyond?


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Tomorrow's question
I have seen results from a $25,000 buy-in tournament on the strip which runs every couple of weeks with 18 to 36 entered. Since the IRS makes sure I have a W2-G for every payout of $1,200+ are the poker rooms bound by reporting requirements on these and other large cash games?
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