It was once a mining company with a significant presence in Nevada. But during the past decade, Nevada Gold & Casinos Inc. sold off its mining assets to focus on its growing and profitable gaming business, acquiring casinos and slot routes in South Dakota and Washington.
The company received its Nevada gaming license in January 2012 after state regulators approved its $26,000 offer for a 1 percent stake in The Nugget in Reno.
Nevada Gold followed that by recruiting Michael Shaunnessy, a veteran gaming executive, from MGM Resorts International to be its president and CEO, and launching its social gaming site, Gold Star Slots.
“The primary driver behind the Reno deal was to go through the licensing process because the company at that point in time had a pending casino deal next to the speedway, which is no longer,” Shaunnessy said.
Nevada Gold was in negotiations for a small equity stake and a management contract on a proposed hotel and casino at the Las Vegas Motor Speedway. The $60 million project would have included a 200-room hotel and a 30,000-square-foot casino.
“Like many things from five years ago, that sounded like a good idea when we all thought the world was going to expand exponentially in perpetuity,” Shaunnessy said. “But that didn’t happen, so a lot of things went by the wayside, that being one of them.”
Shaunnessy expects casino owner John Ascuaga and his family to exercise their option to buy back Nevada Gold’s 1 percent stake in The Nugget in Reno.
A new business model also meant a new company home. In March, Nevada Gold completed its move from Houston to Las Vegas.
“I think the relocation away from Houston was a long time coming because for the last three or four years, the company has principally been involved in pursuing the gaming business,” Shaunnessy said. “If you go back about a decade, they were in mining. Over time they changed their business model to focus on gaming. Houston became a less choice for the company.”
Today, Shaunnessy oversees a profitable company with a dominant 950-slot machine route in South Dakota and 10 mini-casinos in Washington state.
In March, Nevada Gold posted third-quarter net income of $235,356, or 1 cent a share, on revenues of $16.2 million. The company’s casinos in Washington contributed $14.4 million, while its South Dakota slot operations contributed $1.8 million in the third quarter.
“I can think of a lot of other markets I’d rather dominate,” Shaunnessy said. “However, it’s very good because we are in there. But it’s Deadwood, South Dakota, so the numbers aren’t tremendous for what you would think for an average slot route.”
He said the business in South Dakota is seasonal and competes with Native American casinos.
“It’s Deadwood, so there are roughly 1,300 permanent residents, and it’s 45 minutes from Rapid City, which is the closest large city,” Shaunnessy said. “Deadwood is still a very historic town like it was way back when. But in South Dakota, your license is limited to 30 machines per room.”
Nevada Gold’s clients include Holiday Inn Express, Cadillac Jack, Deadwood Mountain Grand and The Midnight Star, which is owned by actor Kevin Costner.
“The most famous bar in Deadwood is called Saloon No. 10, which is the location where Wild Bill Hickok was killed with his famous aces and eights poker hand,” Shaunnessy said. “And we route the games at Saloon No. 10.”
Washington’s gaming market includes 50 mini-casinos and several tribal casinos.
Nevada Gold’s last acquisition was in July 2011, when it acquired the Red Dragon mini-casino in Mountlake Terrace, Wash., for $1.25 million.
“Walk into a Las Vegas bar or tavern and there are 15 slot machines,” Shaunnessy said. “Think of those being two or three times the size at 6,000 to 7,000 square feet. You walk in and there is a bar, restaurant and 15 table games.”
Shaunnessy said Nevada Gold’s next step is to look for new acquisitions in Nevada and elsewhere, along with pursuing casino management contracts.
“We are looking at potential acquisition opportunities,” he said. “The challenge is finding one that is not outside our price range. I don’t mind one being a turnaround challenge, because I’ve been through that in my career. But I don’t want to pay a premium price for the opportunity to go through that pain and grief to turn it around.”
Contact reporter Chris Sieroty at csieroty@reviewjournal
.com or 702-477-3893. Follow @sierotyfeatures on Twitter.