Out in Nevada desert, gambling runs dry

First, a casino boom in Mesquite, now a bust. It's bad for the city and hard for its residents.

January 03, 2009|Joanna Lin

MESQUITE, NEV. — Two decades ago, real estate mogul Randy Black turned this blip on the Arizona border into a boomtown when he opened the first of four casinos. Nearly 1 million visitors a year followed, and hotels, restaurants and stucco homes seemed to sprout from sand.

"It seemed to be one of those things that 'Geez, it's just going great. It's never going to end,' " said Victor Kotalion, who left Las Vegas in 1990 for this arid patch off Interstate 15.

Locals and travelers passing through have long kept Mesquite's casinos afloat. But like the spent mines that have busted many Western towns, Mesquite's source of wealth ran out. As the economy soured, tourists hoarded their cash, and the town's gross gambling revenue plummeted 11%. Visitor volume fell 7.4% last year; the average daily room rate fell 35.4%.

Last month, Black laid off 347 workers at the Oasis and shuttered much of the casino. Kotalion, a 60-year-old dealer and floor supervisor, was one of the ones let go.

"As you get older, what do you do?" Kotalion said. "There aren't a lot of options here . . . not for me. Actually, not for anybody that's in the gaming industry."

During the last 20 years, a number of states bet on gambling -- a supposedly recession-proof business. But this downturn has wiped out even conventional wisdom: In the third quarter of 2008, revenue dropped in six of the 12 states with commercial casinos, the American Gaming Assn. said.

Resorts are typically reluctant to cut staff, experts said, because training new hires costs thousands of dollars. Yet in the last year, commercial and tribal casinos have trimmed workforces in Riverside County and on the Las Vegas Strip as well as in Michigan, Oregon, Connecticut and New York.

The industry's losses can be seen vividly in Mesquite, whose reliance on gambling resembles a Rust Belt town tied to an auto plant. Job losses hurt restaurants and retailers, overwhelm social service providers and demoralize the remaining employees.

"If you have one, two, maybe three key industries, if one goes out, the whole town suffers," said William Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno. "It's like cutting one of the legs off a stool."

Before Randy Black arrived, Mesquite was barely more than a cluster of dairy farms and alfalfa fields along the Virgin River. The Oasis was the sole casino. Black envisioned the city as a rural desert destination, "halfway between where you are and where you're going."

After opening the Virgin River hotel-casino in 1990, he bought the CasaBlanca, the Oasis and the Mesquite Star (since closed), becoming Mesquite's largest employer, with up to 2,800 casino workers.

Mesquite's population soared, to nearly 20,000 last year from 1,960 in 1990. From 2002 to 2007, yearly gambling revenue climbed an average of 8.2%.

"It was too fast, too hot and heavy," Kotalion said from his home on the outskirts of the mountain-ringed town. "You could see things going bad, but there was not much you could do about it."

Over the years, Black took on $200 million in debt to expand his casino business and buy out his partners; he became owner of all but one Mesquite casino, the Eureka. Like magnates in such industries as finance and real estate, he thought business would keep booming. Then the "bubble" burst, he said.

Black mothballed the Oasis in December. Its gambling tables are shrouded in heavy plastic. The buffet, bars and lounge are empty. Dozens of unplugged slot machines sit dark. On a recent afternoon, fewer than a dozen gamblers played the remaining penny slots.

"Has it hit bottom yet? No one knows," Black said at the CasaBlanca.

If business continues to drop, Black plans more cuts; similarly, he says he'll rehire staff if demand returns. "If everybody in the planet or in Las Vegas or in the world would say, 'OK, things are better' . . . we could open [the Oasis] back up in a day."

Residents, meanwhile, are struggling. Traffic at nonprofit Virgin Valley Family Services tripled to 100 people a day. Case manager Alex Corral said about 15% of casino employees he had helped decided to leave town.

"Right now, with the Oasis shut down, it's really hard to decide if anything's going to come here," he said. "There's no money coming into town at all."

Kotalion is holding out for a casino job. He and his wife, Gail, a floor supervisor at the CasaBlanca, filed for bankruptcy five months before he was laid off. The couple has struggled to pay for medical care and to repair flood damage to their home. He's stretching unemployment checks that are at least $500 less than his former monthly income. And the Kotalions are fearful that other casinos -- including the CasaBlanca -- might close or be sold.

Still, Mayor Susan Holecheck remains sanguine about her city of new sunset-colored tract homes. "Mesquite is going to evolve," she said. "Gaming is not going to be as much of a focus, I don't think, as it was before."

The town recently built a soccer complex and softball fields, hoping to lure sporting events. A second Walgreens is on the way. The Census Bureau arrived last month to recruit as many as 150 people. But none of them can match the casinos, which employed nearly 3,000 in the spring. The next-largest employers, the Clark County School District and Wal-Mart, provided about 330 jobs each.

In fact, the town is awaiting the phased opening of another casino: The 190-acre Solstice, a high-end gambling, retail and resort complex, is slated to bring up to 1,000 jobs when Barcelona Partners fully opens it next year.

Down the street from the construction site, freshly paved roads halt at leveled dirt lots, ready for the next boom.


Times staff writer Ashley Powers in Las Vegas and researcher Robin Mayper in Los Angeles contributed to this report.

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