weather icon Mostly Cloudy

South Point owner Michael Gaughan still going strong in Las Vegas

South Point owner Michael Gaughan says his late father, Las Vegas casino pioneer Jackie Gaughan, would be baffled by his marketing strategy.

Gaughan, one of few remaining “old-school” (as industry followers call him) Las Vegas casino operators, has bought billboard space along Interstate 15 to let those arriving from California know his casino has free parking and 3:2 blackjack.

“If my father knew, he would say I am wasting my money,” Gaughan said in his office inside the 2,163-room casino seven miles from the Strip.

Once as common a feature of Strip casinos as lounge acts, free parking and blackjack with such favorable odds have been phased out as corporations like MGM Resorts International and Caesars Entertainment Corp. cement their hold of the Strip.

But single owners like Gaughan, whose family roots in Las Vegas go back to the early 1950s, are also disappearing as consolidation again grips the gaming industry.

Gaughan is one of the few remaining individual casino owners who essentially built his own sprawling Las Vegas property from scratch. Today an individual looking to build a hotel-casino the size of the South Point would need a net worth close to $1 billion, if not more.

Phil Ruffin and Alex Meruelo are the only two individual casino owners on the Strip. But Ruffin bought Treasure Island from MGM while Meruelo bought the SLS Las Vegas from an investment fund.

Derek Stevens, the majority owner of the downtown D Las Vegas and Golden Gate, is building a 777-room hotel-casino with his brother. Some consider him a close comparison to Gaughan.

But Ruffin, Meruelo and Stevens did not come from a gaming background or make their fortune in the industry.

“Michael is one of the last of the Mohicans,” said Anthony Curtis, a publisher of books on Las Vegas and the gaming industry. “His management style is a carryover from the old days.”

The South Point caters to cost-conscious gamers seeking “cheap food, good odds,” he said. The video poker slots return 99 percent, compared with about 96 or 97 percent on the Strip, according to Curtis.

“It’s the way Benny Binion did it. It’s the way Jackie did it, and it’s the way Michael grew up,” Curtis said.

Gaughan said he loses money on the nine restaurants he owns inside the South Point.

Ted Newkirk, founder of Access Vegas, a site offering gaming and tourism tips, said the South Point is among the few big resorts that still occasionally offer free admission for entertainment.

“Gaughan knows that you get them in the door with food and liquor and entertainment, and you make a few bucks when they gamble,” Newkirk said.

Omaha to Vegas

Gaughan was born in Omaha, Nebraska, into an Irish Catholic family involved in the local betting industry.

In 1951, his grandmother sent Jackie Gaughan to Las Vegas, where he promptly bought a stake in the Flamingo and later acquired El Cortez.

Michael Gaughan joined his parents in Las Vegas in 1952 when a seat opened up in the local Catholic school.

“My Catholic grandmother was not going to let me go to a Protestant school,’’ said Gaughan, whose office features a large black-and-white photograph of his grandparents on their wedding day in Omaha.

Coast Casinos

Gaughan grew up working in the industry and branched off from his father to build the Barbary Coast on the corner of Flamingo Road and Las Vegas Boulevard with partners.

He parlayed that success into building three more resorts: the Suncoast, the Gold Coast and The Orleans.

Just as he began building his fifth property, the South Coast, Gaughan and his partners sold Coast Casinos to Boyd Gaming in 2004 for $820 million in cash and shares.

Gaughan joined Boyd to run the properties it acquired, but the trappings of corporate life — with decisions passing slowly through layers of bureaucracy — didn’t suit him.

In July 2006, he parted ways with the company, buying back the South Coast in exchange for the value of his 15.8 million shares in Boyd Gaming, equivalent to nearly 18 percent of the casino operator at the time.

At that time the South Coast — later renamed the South Point — was certainly not worth 18 percent of Boyd Gaming. It had opened in December 2005 with just 660 rooms at a cost of nearly $600 million. It failed to meet Boyd Gaming’s expectations over the first six months of operations.

The exit off I-15 hadn’t been completed, making the property an inconvenient destination for visitors. Some amenities like the spa had yet to be finished.

And there was nothing around the South Point other than empty land. A taxi ride to the Strip then cost about $20 each way, reducing any savings involved in staying away from the action.

“Portions of the resort aren’t ready,” Curtis published on his site, Las Vegas Advisory, at the time. “Some amenities are still under construction, especially those that are entertainment-related. Plus, this baby is a long way out of town; at least three miles farther south than Silverton.’’

Perhaps for those reasons, it wasn’t Gaughan’s first property of choice upon his separation from Boyd.

“Boyd wanted to give me the Gold Coast. I wanted The Orleans. The compromise was the South Coast, which was also the newest,” he said.

His alternative was to sell his Boyd shares, buy land and build a new casino from scratch. But Las Vegas land prices had skyrocketed since he snapped up the South Point plot in 2001. Construction costs were also jumping. And a new property would take years to complete.

The poorly performing South Point was preferable to starting over.

Record profit

It turned out that the deal had some upsides.

The South Point was essentially debt free when Gaughan took it over. That enabled him to invest in its expansion and avoid laying off workers during the financial crisis that rocked Las Vegas beginning in 2008.

Gaughan built the second and third towers over a two-year period, bringing the property to its current room count of 2,163 by mid-2008.

Next door, real estate investors were building The Grandview at Las Vegas, a timeshare property that would grow over the years to eight towers holding 2,256 units and feeding the South Point with customers.

“They don’t have a Coke machine in the lobby,” Gaughan said. “When the timeshare is full and I am full, it’s like New Year’s Eve here.”

Local development continues

The South Point is poised to do well as the national economy improves and home construction picks up near the resort, creating a larger local customer base.

At least four condo and apartment projects have been approved over the past year with the potential to bring 1,900 units within a stone’s throw of the resort.

“Everybody thought that there was going to be a second Strip here, and now they’re selling it for houses and condos,” Gaughan said about the neighborhood.

John DeCree, an analyst at Union Gaming, said the Raiders’ plan to set up headquarters near the south end of the Strip in 2020 should also boost business at the South Point.

Nearby competitors are getting ready to capitalize on the expected growth. The Silverton, located three miles north along I-15, has announced expansion plans. The M Resort, located five miles south, has talked of building another tower.

Record earnings

The booming economy — and a 310-day bowling championship that funneled thousands of customers through the lobby — lifted the South Point to record operating earnings in 2017, Gaughan said. He declined to disclose company revenue or earnings, but he said occupancy was 80 percent.

Twelve years after Gaughan’s separation from Boyd, the deal can still be considered fair for both. The 15.8 million shares would be worth about $585 million today, excluding any dividends paid over the years. And recent Las Vegas casino acquisition prices suggest the South Point could be worth nearly as much.

Boyd Gaming acquired the Aliante Hotel, a high-end, 202-room property on the opposite end of the valley, for $380 million in 2016. The South Point has 10 times the Aliante’s room count, more slots and table games and an equestrian center that hosts more than 40 weeks of events, bringing tens of thousands of visitors to the resort.

DeCree said the South Point could be a desirable asset for a larger competitor seeking a greater share of the locals market.

But Gaughan said he is not looking to sell, and he has put the property in trust for his heirs. He has four children, including Michael Gaughan Jr., general manager of the JW Marriott in Summerlin, and John Gaughan, who is also involved in the gaming industry.

Still working

Neither age nor wealth has stopped Gaughan from putting in five to six days a week at the South Point, including a few hours at the sports book on football Sundays.

However, he no longer writes tickets — a tradition of his that went back to the 1970s.

“They took my writing station away from me,” Gaughan said with a laugh. “I can’t keep up with the keypad and the computer.”

That level of familiarity with Gaughan may keep his customers and workers loyal.

About 1,500 of South Point’s 2,200 workers have been there more than 10 years, said Gaughan, who meets with them as a group every year to discuss benefits and wages. Nearly a quarter have worked with him for more than 20 years. South Point workers do not belong to Culinary Local 226 or Bartenders Local 165.

Steve Stallworth, general manager of the equestrian center, has worked with Gaughan on and off for about 20 years. “I don’t say I work for South Point,” he said. “I tell people I work for Mr. Gaughan.”

Contact Todd Prince at 702-383-0386 or tprince@reviewjournal.com. Follow @toddprincetv on Twitter.

Don't miss the big stories. Like us on Facebook.
Business Videos
How much do Las Vegas casino CEOs make?
Las Vegas gaming CEOs made anywhere between $1 million and $24 million last year, according to company filings with the U.S. Securities and Exchange Commission. ((Las Vegas Review-Journal)
30-year-old Rio needs a little TLC
Nearly 30 years after the Rio opened, the red and blue jewel that helped catapult Las Vegas to a new level with its buffet and nightclub has lost its status along with its shine.
The latest on the Drew Las Vegas - VIDEO
Eli Segall recounts his tour of the Drew Las Vegas, formerly the Fontainebleau, on the Las Vegas Strip. (Michael Quine/Las Vegas Review-Journal)
Pinball Hall of Fame to move near south Strip
Operators of the Pinball Hall of Fame have been approved to build a new, larger arcade near the south edge of the Strip on Las Vegas Boulevard near Russel Road. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
National Hardware Show underway Las Vegas
The National Hardware Show kicked off Tuesday at the Las Vegas Convention Center (Mat Luschek / Review-Journal)
Caesars for sale?
Caesars Entertainment Corp. has been swept up in takeover speculation since the company’s share price tumbled last year amid disappointing earnings and concerns over a recession. Amid the decline, hedge funds scooped up shares. Billionaire activist investor Carl Icahn began buying shares of Caesars as early as January. Icahn acquired nearly 18 percent by mid-March. In February Icahn called on the Caesars board to study a sale as a way to boost shareholder value.
Las Vegas home prices
Las Vegas home prices grew fastest among major markets in February for the ninth straight month. But amid affordability concerns, the growth rate has slowed down. Southern Nevada prices in February were up 9.7% from a year earlier, according to the latest S&P CoreLogic Case-Shiller index. The last time Las Vegas' price growth fell below 10% was in September 2017, S&P Dow Jones Indices reported.
Free Parking Coming To Wynn
Free parking will come to the Wynn and Encore resorts on May 1, 2019. (Mat Luschek / Review-Journal)
Founding Venetian employees talk about 20 years at the Strip resort
The Venetian, which opened May 3, 1999, is celebrating 20 years on the Las Vegas Strip. Seven original employees talk about opening the luxury resort and working there for two decades. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Circa aiming for December 2020 opening
The 1.25-million-square-foot property will have 44-stories and 777-rooms. It will also have a separate nine-story, 1,201-space parking garage.
Boxabl official explains the building concept
Boxabl business development manager Galiano Tiramani shows off a room built by his company. (Blake Apgar/Las Vegas Review-Journal)
TI/Mirage Tram reopens
The tram that shuttles guests between TI and Mirage reopened this week after being closed for much of 2018.
Las Vegas Convention Center expansion taking shape
Renderings and actual footage show how the Las Vegas Convention Center is evolving.
Former Starbucks CEO Howard Schultz at Las Vegas convention
Former Starbucks CEO and potential presidential candidate Howard Schultz spoke at the Epicor Insights user conference at Mandalay Bay Convention Center Wednesday, April 17, 2019. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Drew Las Vegas to open in the second quarter of 2022
The 67-story Drew Las Vegas is slated to open in the second quarter of 2022 at the north end of the Las Vegas Strip. (Michael Quine/Las Vegas Review-Journal)
NAB Day 1 (Time Lapse)
NAB kicked off at the Las Vegas Convention Center on Monday, April 8, 2019. (Mat Luschek / Review-Journal)
National Association of Broadcasters Show shows 1mm thick 8K TV with 22.2 channel digital sound
Japan’s NHK Science & Technology Research Laboratories booth featured a 1mm thick 8K TV system used in conjunction with a 22.2 channel digital sound system at the National Association of Broadcasters Show at the Las Vegas Convention Center. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Nevada shoppers react to Smith’s no longer accepting Visa credit cards
On March 1, Smith’s announced that it would no longer be accepting Visa credit cards at any of its 142 supermarkets, including the 45 in Nevada.
Massachusetts Gaming Commission asks how long Wynn executives knew about misconduct
Business reporter Rick Velotta gives an update on the adjudicatory hearing on the suitability of Wynn Resorts to retain its gaming license in Massachusetts.
Henderson app developer part of Startup in Residence
Henderson based developers of the app On Point Barricade are taking part in Startup in Residence, a North America program dedicated to pairing tech companies with governments. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Sam's Town employees and customers talk of their love for the iconic casino
Longtime Sam's Town employees and customers love each other and love their casino. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Las Vegas apartments rents
Las Vegas’ apartment market has accelerated in recent years. Developers are packing the suburbs with projects, landlords are on a buying spree, and tenants have filled buildings.
William Boyd talks about the birth of Sam's Town
On the eve of the 40th anniversary of Sam's Town, William Boyd, executive chairman of Boyd Gaming and son of hotel namesake Sam Boyd, talks about how the casino became one of the first local properties in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
High Roller observation wheel turns five
The world’s tallest observation wheel celebrates it’s fifth year on Sunday, March 31, 2019. (Michael Quine/Las Vegas Review-Journal) @Vegas88s
Escape Room Industry Growing In Las Vegas
Escapology employees discuss the growing escape room industry in the U.S. and Las Vegas. (Bailey Schulz/Las Vegas Review-Journal)
Impact of parking fees on visiting the Las Vegas Strip
There are no data showing a relationship between Strip resort and parking fees and the number of out-of-state visitors to Las Vegas. But there are data showing a relationship between Strip parking fees and the number of local visitors to the the Strip. ‘’As a local, I find myself picking hotels I visit for dinner or entertainment, based on whether they charge for parking or not,”’ said David Perisset, the owner of Exotics Racing. ‘’It is not a matter of money, more of principle.’’ A 2018 survey by the Las Vegas Global Economic Alliance found 36.9 percent of Clark County residents reported avoiding parking at Strip casinos that charge for parking. 29.1 percent reported avoiding using any services from a Strip casino that charges for parking.
MGM's sports betting deals
MGM Resorts International signed a sports betting sponsorship agreement with the NBA in July It was the first professional sports league to have official ties with a legal sports betting house. The deal came just two months after the U.S. Supreme Court overturned a law prohibiting sports betting in most states. In October, MGM became the first gaming company to sign a sports betting partnership with the NHL. In November, MGM became the first gaming company to sign a sports betting partnership with the MLB. Financial terms of Tuesday’s deal and earlier partnerships have not been announced.
Faraday puts Las Vegas land on the market
Nearly two years after Faraday Future bailed on its North Las Vegas auto factory, the company has put its land up for sale. (Michael Quine/Las Vegas Review-Journal)
El Cortez owner Kenny Epstein on running the iconic property
Kenny Epstein, owner of the El Cortez Hotel in downtown Las Vegas, talks about Jackie Gaughan mentorship and answers rumors about bodies in the basement at the mob-era casino. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
LVCVA recommends construction of underground people mover
The Las Vegas Convention and Visitors Authority announced the recommendation for an underground people mover for the convention center. The system would have the potential to expand and connect Downtown and the resort corridor all the way to McCarran. (Michael Quine/ Las Vegas Review-Journal)