LAS VEGAS — It has been nearly two decades since Paul Lowden was a musician and bandleader in the casino showrooms, but he is definitely doing all right with his two casino-hotels, the historic Sahara and the not-very-historic Hacienda, which anchor both ends of the Strip.
And it is a far cry from 1982, when Lowden leveraged his assets to the hilt to buy the Sahara and play in the big leagues of casino ownership. With its staggering interest costs, the sprawling resort ran in the red for the first four years.
Now the place is suddenly mortgage-free, and Lowden says he feels "almost naked" to be so unencumbered.
With some fancy footwork on Wall Street last summer, Lowden paid off the Sahara debt and is adding a 575-room, 26-story hotel tower and a face lift for the faded casino and its two existing towers. The addition will increase the Sahara's size to the "magic" 1,500-room level, which would put it in the realm of the leading Strip hotels and generate more lucrative traffic for its casino.
The big change has been made possible with the $63-million proceeds of a securities offering last summer that was a first in the gambling industry: a publicly traded limited partnership called Sahara Casino Partners.
The soft-spoken entrepreneur, a father of two grown children who is still baby-faced at 44 and whose present wife is a local television news anchor, has had a role in some major casino history and agrees that metaphorically he "dodged a bullet" more than once along the road to his present level of prosperity.
Notably, he was a minority owner with associates who later were engulfed in two major scandals involving the skimming of untaxed gambling revenue on behalf of Mafia families in the Midwest. Casino licenses were revoked or surrendered by owners of the Stardust, Fremont and Tropicana hotel-casinos in 1979, and federal authorities obtained convictions and long prison terms against a number of mobsters accused of the skimming.
Nevertheless, Lowden managed to distance himself from those situations in time to avoid being irretrievably tainted.
Some marvel at his luck, but Lowden says there was a lot more to it. According to this born-again Christian, he saw trouble coming and deliberately chose paths that were against his financial interests at the time but proved not to be in the long run.
Those troubled times were not even on the horizon when he went to Las Vegas with $7,500 savings as a teen-age musician in the early 1960s, he says.
After joining a band that played at a Reno casino in 1961, Lowden started playing the keyboards in Las Vegas lounges. One of his earliest gigs, he recalls, was in the Fremont's Carnival Lounge, where a young Wayne Newton and his brother were performing.
Although Lowden's only training was in music--he once was accompanist to singer Ann-Margret--it turned out that he had a good head for business, and he developed a knack for successfully investing in the stock market. He recalls playing the organ with a copy of the Wall Street Journal next to him so he could study the market.
Haven for Small Bettors
Lowden credits his investments for a major assist in getting a toehold in casino ownership, along with the fact that he was earning good money, especially after becoming musical director at the Flamingo around 1970.
In 1972, Lowden was able to come up with $250,000--half of it from the Valley Bank of Nevada in Las Vegas--to buy a 15% interest in the Hacienda, where he also became entertainment director.
The Hacienda--once rather shabby but later upgraded considerably--was at the south end of the Strip, far from the nearest casino. Unlike the major establishments farther north, the Hacienda had a reputation as the stomping ground for a type of small bettor sometimes derided by locals as the Greyhound Bus set.
Lowden had recruited several local partners--a lawyer, a small casino operator and a dentist--to buy the Hacienda from the estate of the late Judith Bayley.
Lowden says one of his partners, in turn, recruited a young San Diego land developer, Allen R. Glick, who later admitted that, as the sole owner of the Stardust and Fremont hotel-casinos, he acted as a front for the underworld.
In a recent interview at his Sahara office, Lowden displayed a copy of a carefully preserved credit report on Glick from 1972.
"We did as much due diligence as we knew how to do in those days," he commented, pointing to the report's conclusion on Glick: "No suits, no judgments, no derogs (derogatory information)."
In 1975, Lowden also became a part owner of the Tropicana. In mid-1976, about two years before scandal hit the major owners there, however, he walked away. He says he didn't even wait to be paid off on $500,000 he invested there.