Yesterday, Triple Crown Casinos, the parent company of three Bennett Avenue casinos in Cripple Creek, announced plans to build a 150-room hotel closely adjacent to the casinos.
Estimated to cost more than $40 million, the proposed hotel will be only a couple of blocks from another 150-room hotel being constructed by Full House Resorts Inc., the parent company of Bronco Billy’s and the recently opened Christmas Casino.
While business rivals, Triple Crown and Full House clearly agree on future strategy. Full House CEO Dan Lee told the Business Journal when announcing his company’s plans more than a year ago that residents of Colorado Springs and the Pikes Peak region are woefully underserved by the gaming industry. Compared to other cities with similar demographics, family incomes, population and access to gaming facilities, local residents spend substantially less than those of peer communities, he said.
According to Lee, that’s not because Springs residents are more virtuous, and therefore less inclined to wager. It’s because Cripple Creek offers little to visitors other than its casinos — existing hotels don’t meet the standards that today’s travelers expect. Meeting facilities are small and spartan and, with a couple of exceptions, restaurants leave much to be desired. In Lee’s estimation, Cripple Creek needed to reinvent itself as a visitor destination.
Before announcing its own hotel project, Triple Crown tried to kill Full House’s $70 million project, filing a lawsuit alleging that city elected officials had acted illegally in approving the deal. Thwarted when the suit went nowhere, Triple Crown moved on. Cripple Creek’s other major operators, Century Casinos and the Wildwood Casino, are also considering hotel projects.
Full House and Triple Crown are betting more than $100 million on a successful reinvention. Just as downtown Colorado Springs emerged from decades of underinvestment after Perry Sanders went all-in and created the Mining Exchange Hotel, it may be that Dan Lee and Full House have pulled Cripple Creek out of the doldrums.
“It just takes one big player to commit,” said Cripple Creek marketing director Steve Kitzman, “and then everyone else jumps in.”
Yet challenges await.
Coming fiscal crisis
The city’s 2018 budget document highlighted a coming fiscal crisis.
“The majority of the city’s operating revenue comes from [gaming] device fees,” the budget notes, “which fall as the number of devices in town are reduced…The device level has declined significantly over the past several years. It is projected that the city will begin 2018 with 3,592 devices. The city [has lost] 1,578 devices, or 31 percent, since the high of 5,170 devices was achieved in the third quarter of 2008 when the Wildwood Casino opened.
“To make up for the loss in device fee revenue, the city has become more and more reliant on grants from other outside agencies to be able to operate and complete infrastructure projects. The city is now at a dangerous precipice, where further reductions in the number of devices or any other revenue source, will necessitate looking at what basic services the city can continue to offer.”
Gaming taxes and device fees were projected to amount to 67 percent of the city’s general fund revenue, while projected sales and property taxes were expected to bring in 7 and 2 percent, respectively. Total projected general fund revenue of $7.7 million is slightly below projected expenses of $7.9 million.
Yet despite dire budget projections the city’s fund balances are reasonably healthy, standing at $6.4 million as of Aug. 31, 2017, with very little bonded indebtedness. This should enable the city to make any needed improvements in water delivery or water treatment services — but its major visitor-related problem is outside its borders.
Most visitors to Cripple Creek take U.S. 24 to Divide and proceed south on Highway 67, a winding 18-mile stretch of two-lane blacktop. There are only two slow-vehicle pullover lanes, one in each direction. Traffic can be slow and winter road conditions can be daunting. The entire length of the highway was repaved in 2016-17, but the Colorado Department of Transportation has neither plans nor funding to widen the road.
Give people a reason to come
“Highway 67 is not a barrier to Cripple Creek’s growth,” said Steve Kitzman. “We get 40,000 visitors in a weekend for the winter Ice Festival. If we give people a reason to come, they’ll come in big numbers. The biggest bottleneck is Woodland Park, followed by Ute Pass — but they’re improving the road, adding rockfall barriers.”
Kitzman is also confident that city infrastructure will be more than adequate to support all of the planned hotels.
“We’re replacing old water valves and lines on Bennett Avenue,” he said, “and Black Hills Energy is undergrounding and renewing power lines in the area. We have plenty of sewer and water capacity, even if all four projects go forward. Full House will have 150 to 200 rooms, depending on configuration of rooms and luxury suites, Triple Crown projects 130, and Wildwood is actually much farther along than Triple Crown. Century may add somewhere between 50 and 130 rooms.
“And remember that you don’t have to drive up here,” Kitzman added. “This morning I took the Ramblin’ Express to work. I boarded the 7 a.m. bus, and it was only a little slower than taking my car — and I’m a fast driver. I think the Gray Line may start a service, as demand increases. And remember — we’re going to make sure that there are plenty of reasons to come here!”