Earlier this week Bronco Billy’s owner Full House Resorts announced plans to build a $70 million 150-room upscale hotel in Cripple Creek. If successful, it’ll be a game-changer for the historic mining town, which has not fully recovered from the Great Recession.
As currently envisaged, the new hotel would wrap around Bronco Billy’s, with an entrance on Bennett Avenue where Second Avenue connects it to Carr Avenue. That street would be closed, but none of the historic storefronts on Bennett would be altered. The hotel complex would also include a 500-space parking garage, a meeting and event space, a heated pool and the historic Imperial Hotel and Casino, which Full House has contracted to buy.
At first glance, it seems like an impossibly ambitious undertaking. From 1992 to 2007, adjusted gross proceeds of all Cripple Creek Casinos rose from $52.5 million to $154.9 million. AGP fell 9.6 percent to $140.1 million in 2008, bottomed out at $123 million in 2014 and rose modestly to $131.4 million in 2016. Significantly, that number is below the $134.6 million AGP recorded in 2000, suggesting that the regional market is at best static, at worst in continuous decline.
Full House CEO Dan Lee disagrees.
“Since 2009, Black Hawk is up 20 percent [from $508.7 to $609 million] and Cripple Creek is down 10 percent,” he said. “That’s because of the Ameristar.”
Announced in 2006, the Ameristar Casino Resort Spa complex opened in 2009. It features a 33-story luxury hotel, an enclosed rooftop swimming pool, 533 rooms, 60 suites and 15,000 square feet of meeting and event space. Lee said the Ameristar rebranded Black Hawk, transforming it from a nondescript collection of roadside casinos into a destination resort.
“Our problem in Cripple Creek is not that we don’t have enough slot machines, but that we don’t have enough people,” he said. “We have to give people more reasons to come here.”
Colorado casinos were also helped by a 2008 change in the law that raised the maximum bet from $5 to $100. The lower limit, according to Full House, made it “uneconomical for casino operators to build and operate high-quality hotels and other non-gaming amenities, as they do in other markets.”
Lee said wealthy gamblers who might otherwise go to Black Hawk or Las Vegas may now be tempted by Cripple Creek.
“Gambling is like fishing,” Lee noted. “It’s about adrenalin, about excitement. If you just want to eat fish, go buy it at the supermarket. If you want the adrenalin, the thrill, you go out and try to hook that big fish. For some people, a $5 bet doesn’t give you that thrill.”
But what about that 42-mile drive from Colorado Springs, especially the 18 miles of two-lane blacktop between Divide and Cripple Creek?
“There are two things you can do about that,” said Lee. “You can take 20 years and a billion dollars to build a nice new four-lane highway, or you can make the destination worth the drive.”
Lee shared parts of a detailed project analysis that supports his contention.
“We believe that the Colorado Front Range, and particularly the southern part of such area, has tremendous growth potential,” Lee emphasized. “The gaming spend per capita today in the region [$148] is significantly below the national average [$201] and far below other markets with similar demographics and geography.”
And if it works, it’ll be a triumph for general manager Marc Murphy, who opened Bronco Billy’s in 1991 and ran it for 25 years until selling to Full House. His modest casino has grown to be Cripple Creek’s largest, thanks to canny management and superb customer service. Still, the $70 million project seems a daunting challenge — a very big bet indeed.
Lee’s not worried.
“It’ll take three years to build — one for planning and permitting, and two for construction,” he said. “By then, there will be 50,000 more people in the region. And the size of the project isn’t a problem. When I was working for Steve Wynn and building the Bellagio [in Las Vegas], I was asked by a reporter how much it would cost and where we would get the money. I told him about $1.2 billion and I don’t know.”
Compared to Wynn’s $1.2 billion bet on the Bellagio, Lee’s $70 million wager on Cripple Creek doesn’t seem excessive — a $5 bet, not $100. Good luck, Dan!