For second time in six months, Gold Spike sold

A south Florida developer's bet on a downtrodden Las Vegas casino paid off in spades, but not in the form of a trendy, boutique hotel.

Just six months after buying the smoke-choked Gold Spike casino downtown for $15.6 million, Miami developer Gregg Covin sold the property to new investors for $21 million.

Covin had plans to convert the property into an upscale hotel with a casino, better restaurants and a hipper image.

The idea of the Gold Spike -- a place now known for selling tequila shots and cans of Mexican beer for $1 -- emerging as a boutique property with rooms fetching $125 or more per night was ridiculed on Las Vegas-themed Web sites.

But Covin, 38, insists upscale can flourish in downtown Las Vegas, much the same way he converted dilapidated Miami Beach properties into fancy, cash-producing hotels.

Instead, he wound up selling the Spike to Stephen Siegel and John Tippins of Las Vegas, businessmen who in August spent $5 million to buy the adjacent and shuttered Travel Inn.

Covin said he considered a joint venture with the men but they had a different vision for the site at Las Vegas Boulevard and Ogden Avenue.

"I really wanted to develop the Gold Spike, but to do it right you really need to have the Travel Inn next door," he said. "(Siegel) and I had a different vision."

Siegel and Tippins plan to keep the Gold Spike open while they renovate the rooms and, sometime this summer, upgrade the casino floor.

They also plan to reopen the Travel Inn and connect it to the Gold Spike to provide more rooms and amenities, if Nevada gambling regulators sign off on connecting a casino to a property that doesn't now have gambling.

On a recent tour of the properties Siegel practically beamed when talking about the possibilities. The idea of paying Covin $5.4 million more than the property sold for just six months earlier didn't seem to bother him or Tippins.

Each said they already had an eye on the Spike last summer, when Covin swooped in and bought it from Tamares Las Vegas Properties, owners of the Plaza, Las Vegas Club and Western casinos downtown.

"Somehow he moved in and got it from us," Siegel said of Covin. "We had to do what we had to do to buy it."

As for Covin, "he made out great," Siegel added.

The casino is the first gambling business for Siegel and Tippins.

Siegel is founder of the California-based Siegel Group. He's made money in recent years buying dilapidated Las Vegas extended-stay apartments, renovating the properties and making them more attractive for law-abiding, but rootless, tenants.

"Our main tenant would be the construction worker who comes to town, a lot of the casino workers," said Michael Crandall, the Siegel Group's business affairs director. "We take pride in not only cleaning up the building but also cleaning up the neighborhood."

So far they've developed 2,500 units in 13 Siegel Suites properties in Nevada, 11 in Las Vegas and one each in Reno and Mesquite.

At the Gold Spike Siegel and Tippins will face a bedraggled property that enjoyed its best days in the past.

After Tamares took over the joint once owned by renowned Las Vegas operator Jackie Gaughan, the Spike devolved from a place for cheap fun downtown to a dark and depressing dive.

"I don't want to go someplace where every time you go it is worse than the last time," said Matt Weatherford, operator of the Web site www.CheapoVegas.com.

The Web site jokes that cigarette smoke in the Gold Spike "won't choke a horse like it used to. It'll just give the horse a hacking cough. Trust us, we brought horses in here all the time."

Weatherford's site once spoke better of the Gold Spike and the Colorado-based Las Vegas-enthusiast held an annual party there.

But the removal of table games and the property's subsequent decline sapped the charm from the Gold Spike, leaving it a shell of its former self, he said. Weatherford moved the party to the nearby El Cortez, which is still owned partly by Gaughan and was recently upgraded to the tune of $20 million.

"A table game legitimizes a place. It makes it feel like a casino," Weatherford says. "We'll go back to the Gold Spike if they can make it what it was."

Tippins said that's the plan.

He and Siegel plan to bring back table games once a contract with Navegante Group, the current casino management company, expires in July.

"We want to make it fun again," Tippins said. "We want to make it loud inside."

Crandall said renovation work in the Gold Spike will start immediately, although the casino and hotel will remain open as workers go through the property room by room. They haven't yet decided how to connect the Gold Spike to the Travel Inn.

Navegante Group founder and Chairman Larry Woolf said table games would improve the atmosphere only if the new owners invest in the rest of the property.

Woolf, who has been critical of Tamares for neglecting its properties, said the decision to remove tables was due to the previous owners' desire for a bare-bones operation.

"If they clean the place up, spend some money, you'd want to have table games," Woolf said.

Contact reporter Benjamin Spillman at bspillman@reviewjournal.com or (702) 477-3861.