Question of the Day - 22 February 2018

What happened is the strict Asian concept didn’t play out according to plan.

We received this question a couple months ago, when what was happening at Lucky Dragon was still a little in flux, so we waited to address it till the situation resolved itself, which it has: A little over a year after opening, the Lucky Dragon has entered into Chapter 11 bankruptcy.

Lucky Dragon opened in November 2016 on 2.5 acres on West Sahara just west of the Strip, with a nine-story hotel tower, a small casino, and several restaurants. Designed to cater to Asian Americans and visitors from the Orient, it ran into trouble early on due to its limited market segment. Within a couple months, Lucky Dragon closed a restaurant and laid off a sizable percentage of its workforce.

The scuttlebutt was that the property was well-done and the food was fine, but the gambling and comps left much to be desired, failing to lure the target market away from their preferred casinos. In addition, the Asian market proved to be too small for such a large property. The Lucky Dragon didn’t appeal to locals, either, with mostly Asian games, only a few blackjack tables, and no craps. And the location is a bit dicey, with very little foot traffic.

The bankruptcy filing occurred less than a week before a foreclosure auction was scheduled to take place. The owners believe that “a sale through bankruptcy court is the best opportunity to preserve and maximize” the value of the hotel-casino.

Lucky Dragon faced foreclosure after it defaulted on a $90 million loan; the building contractor also claims it’s owed millions of dollars for work that was never paid for.  

Lucky Dragon’s primary lender, San Francisco-based Snow Covered Capital, lent Lucky Dragon $45 million. According to the bankruptcy documents, Lucky Dragon also raised nearly $90 million from 179 investors through the U.S.’s EB-5 visa program. Short for Employment-Based Fifth-Preference Category Immigrant Investor Visa Program, the EB-5 provides a method for eligible immigrant investors to become green-card holders by investing $1 million ($500,000 in special cases) to finance a business in the U.S. that will employ at least 10 American workers. It’s unclear at this point what will happen to those investors’ money and visas.

The hotel is still operating, but the casino and restaurants are closed.