The Vegas Guy - Week of 02/04/2001

Week of January 3, 2001

SPECIAL REPORT: A Tale of Two Gambling Cities

CENTRAL CITY, Colo. -- It's a chilly Friday night in Colorado's most historic mining town, and Main Street is so empty you half expect Gary Cooper to come striding out for a gunfight. About half the Victorian storefronts stand vacant. There's a "Grand Opening" sign in the window of the Easy Street Casino-- next door to the Gold Coin Saloon, which is so old it's on the National Register of Historic Places--but the opening doesn't look very grand. Five or six people lazily drop coins into the new slot machines and a lone blackjack dealer stands motionless with no customers. The Easy Street may be the last new business to open on a strip that once had 18 thriving casinos. Central City is not admitting it yet, but the war is over. The archrival town of Black Hawk has won.

A few minutes later and a mile away, a boisterous crowd disgorges from a tour bus in front of the Mardi Gras Casino in Black Hawk. All along Black Hawk's broad Main Street, there are people and music and the constant soft tinkle of slot machines. The buffets are full, the bars are busy, and a stream of traffic pours in off the highway. The executives in back rooms are gloating.

"Central City got too greedy," says Herb Bowles, a 75-year- old retired football coach and former Black Hawk alderman who has watched events unfold in this mountain feud for a decade now. "I love Central City. Back in the fifties the Glory Hole Saloon was my home. But they did it to themselves."

For one brief moment, along about 1990, it looked like the 130-year rivalry between Central City and Black Hawk was coming to an end.

The two dying towns, isolated in the foothills of the Rockies, miles from the nearest ski slope, had been devastated by the closing of the last gold mine in 1982. The tourists who used to come for summer festivals and mining tours had tapered off to nothing. To get to Central City, with its quaint 19th-century buildings, you had to snake your way up treacherous Highway 119 and then trundle up a steep hill past the grimy Main Street of Black Hawk, which was still a dirt road. Once there, the main attractions were 1950's-style rock shops and faded souvenir stores. Both towns needed to strike a new lode.

They did.

On November 6, 1990, the voters of Colorado approved a Constitutional amendment allowing "limited gaming" in three dried-up mining towns--Central City, Black Hawk, and Cripple Creek. The proposed law was modeled after gaming in Deadwood, South Dakota, where bets were limited to $5, casinos were required to close at 2 a.m., and the income went mostly to historic preservation projects. Ten years later there are 41 casinos in the three Colorado towns, and for the most part they resemble old grizzled prospectors who are clicking their heels together and kissing their favorite burros. Black Hawk, which had a $160,000 municipal budget in 1989, will have $18 million to work with this year--an increase of 11,000 per cent! In fact, there's been so much gambling income that other envious cities have tried twice to get themselves added to the Constitutional amendment. Both times they've been defeated.

"There were ten towns that could have gotten in on this," says Bowles, who worked with Central City Preservation Inc. to get the Constitutional referendum passed. "We asked each of them to put up $10,000 for the legal fees, but they thought it was too much money. Telluride, Lake City, Leadville, Trinidad, Colorado Springs--they were all part of the original plan. But now the voters aren't willing to make gambling any bigger than it already is. The problem when you have gambling is that people get greedy. People got too greedy."

Proof of his point is that Central City and Black Hawk, less than a mile apart, are now in a more or less constant state of war. In any other state they would be called sister cities--one was founded in 1859, the other in 1860--yet they never consolidated. Historically Central City had the headquarters of the mining companies, the banks, the gambling halls, the livery stables, the fine hotels and--a point of special pride--its Opera House. Lillian Gish performed "Camille" there in 1932, and the only time they've ever missed an opera season was during the four years of World War II. They have one of the toughest historic preservation codes in the nation--at one time they even considered regulating the interiors of buildings--and it's a breathtakingly beautiful place in part because it has the narrow storefronts and slender winding streets of another era.

Black Hawk, on the other hand, was always the grimy mill town at the bottom of the hill. It was named after a Chicago manufacturing company that built the first mill there, and though it had gold mining as well, it was mostly filled with windowless industrial buildings, undistinguished shacks, and only one hotel of any importance--the 22-room Gilpin, which was crumbling and dilapidated before Bowles and his wife bought and remodeled it in 1979. (They sold out in the eighties and today it houses the Gilpin Hotel Casino.)

In 1989 the two towns had dwindled to a combined population of less than 350, and they were forced to bury the hatchet. Central City Preservation Inc., the organization founded to get the gaming initiative passed, was one of the few times in history that they worked together, and even then Black Hawk felt a little mistreated: seven of the CCPI board members were from Central City, and only two from Black Hawk--the mayor and the city manager. So it wasn't that surprising that once the casinos started opening the towns returned to their sniping. "Originally we were going to share police services, fire, parking and other things," says Bowles, "but Central City kept delaying. They never would sign the inter-governmental agreement. And they were way ahead of us. They had the only buildings that met the codes, because of their opera and tourism base. All our buildings were falling down. Finally we got tired of waiting on them and went our own way."

Ten years later, Central City has been ravaged by bankruptcies and closings while Black Hawk has prospered from a huge building boom, including projects that required the dynamiting of rocky hills to make room for bigger casinos. Central City accuses Black Hawk of abandoning the original purpose of the amendment--historic preservation--but Black Hawk responds that there was hardly anything left to preserve in Black Hawk. ("The casinos actually improved the look of Black Hawk," says Bowles. "Our beautiful mountain creek had always been covered up by ugly old mills.")

Because the terrain is rocky and uneven--there is hardly a level surface in either town--there were no parking lots to speak of. Black Hawk casino owners eventually built their own lot, levelling the top of a mountain, and asked Central City casinos to contribute part of the cost. When they refused, Bowles ordered the back gate of the parking lot bolted so that cars couldn't take the short way to Central City. Central City, stung by the exodus of casinos while ugly stepchild Black Hawk grew like a mushroom, pushed through a major highway project that will eventually route traffic directly from busy Interstate 70 over a mountain so that visitors won't be able to drive through Black Hawk first. Black Hawk, now flush with money, has countered with its own plans to widen Highway 119 to a four-lane autobahn, or, if that fails, a tunnel from Interstate 70 through the mountain that would be faster and more direct than Central City's highway. All three projects have drawbacks--litigation or funding or the time it will take to build--but at least one of them is certain to be built in this battle over controlling the approach to two towns that are literally five minutes apart, downtown to downtown. (The only important traffic comes from Denver, about an hour to the southeast, because its 3 million residents represent 95 per cent of the market.)

What's odd is that, for the first three years of legal gambling, it looked like Central City would clearly dominate the market. The first casino was the Dostal Alley Saloon, which opened October 1, 1991, in the cellar of a T-shirt shop on Main Street, and set the pattern for development--cozy mom-and-pop casinos with Old West themes that hearkened back to pioneer days.

"The local citizens . . . thought it would be similar to gaming in Virginia City, Nevada," writes Alan Granruth, a local historian who served on Central City Preservation Inc. "Businesses would continue their regular activity and have a few slot machines and a blackjack table or two. . . . After the tourists had lunch and a beer, perhaps they would drop a few coins in a slot machine. Gaming was to be just another attraction in the old mining town, neither the main nor sole attraction."

It didn't work out that way, Granruth says, because of what he says were inherent flaws in the enabling legislation. For one thing, all public officials were barred from owning casinos--but almost all of the major property owners were also public officials. ("I think that was an important provision," counters Bowles, "and I want to keep it. You can't have the people who are approving casinos, owning casinos.") Other Central City buildings couldn't be used for casino development because state regulators enforced building codes that couldn't possibly be met by any building erected prior to World War I. Then there was the Colorado Gaming Commission, charged with interpreting the definition of "limited gaming." Originally gambling was to take up no more than 35 per cent of any building--a provision that favored Central City, since tourism businesses were already established there--but that obviously went by the wayside, since there are dozens of casinos now that have very little besides slot machines, tiny gift shops and food courts.

Central City, in short, blames its problems on the nature of the legislation and the enforcement of the Gaming Commission. But Black Hawk tells another story.

"They had very little parking in Central City to begin with," says Craig Ramirez, the dapper 33-year-old general manager of the jaunty Red Dolly Casino, which sits on the line between the two towns, but is technically on the Black Hawk side. "Then the guy who owns the one big parking lot in Central City decided that he wouldn't lease it. He didn't care whether they had gambling or not. Sometimes it was open and sometimes it wasn't. And then the City Council announced a building moratorium! And even today, when they have no business, the cost of a slot machine license in Central City is double what it is in Black Hawk."

The key decision that doomed Central City occurred just six months after gaming began. In early 1992 Anchor Gaming--a slot machine manufacturer trying to expand into casino ownership-- spent $100,000 for the prime parcel of land in Central City. It was at the very gateway to the city, a "V" lot between the two separated lanes of the main highway. But by then Central City leaders had gotten cold feet. Fourteen casinos had opened in six months, and they had applications for 34 more. Citing concerns about water supply and parking and growth in general, the City Council announced a moratorium on all permits. Anchor Gaming had invested in what turned out to be a vacant lot held hostage by a City Council that had become anti-growth.

Stan Fulton, founder of Anchor Gaming and the inventor of the video poker machine, was furious--so furious that he abandoned the land, moved his project to Black Hawk, dynamited the side of a mountain for parking, and built Colorado Central Station Casino. Technically it satisfied all the "historic preservation" requirements. Since it was built on the site of the old Colorado Central train depot, Fulton used an Old West railroad theme throughout, and the earth-tone exterior would have blended in with the town just fine were it not for one fact: It was ten times larger than any other building in Black Hawk or Central City.

This was the pivotal event for the future of both towns. If Anchor Gaming had built on the "V" lot, other hotels and casinos would have followed, and there probably would have been a concentration of large casinos on the border between the two towns. It was the natural place to grow, so that the smaller casinos, limited by the tiny historic buildings of downtown Central City and downtown Black Hawk, could feed off the big players.

Instead, casino companies realized that Central City had no place to grow, no place to park, and no place to build. They followed Anchor Gaming to the area just southeast of Black Hawk-- technically inside the city limits, where the mills once stood and where all you needed was a few tons of dynamite to create huge building spaces, hotel rooms, parking lots, and, yes, okay, some kind of historic theme to satisfy the "historic preservation" mission. (Apparently even that pretense has evaporated. The biggest project in town, which opened two years ago, is a casino/hotel/parking garage called the Isle of Capri, owned by a Mississippi chain known for its cookie-cutter look- alike casinos, all with the same Caribbean theme. "They're the McDonald's of regional casinos," explains a competitor. The Isle of Capri doesn't have a single architectural detail that would fit the history of the town.) Today there are five mega-casinos in the gulch where the mills once stood, and 19 casinos in Black Hawk proper. Black Hawk accounts for 68 per cent of all gambling income in the entire state, which also includes 19 small casinos in Cripple Creek and two Indian casinos in the isolated southwest corner.

At one point in the mid-nineties Central City had 18 casinos. Today there are six. The most popular of them all, the Glory Hole, is permanently closed. Bullwhackers, another tourist favorite, simply switched jurisdictions, closing its doors in Central City and moving to leased space in downtown Black Hawk. The Central City police force has been cut to only two men, and they frequently have to ask for assistance from Black Hawk, which has 20 officers in addition to the chief and a full-time detective. In a typical month Black Hawk has about $40 million in gaming revenue while Central City has less than $5 million. (Cripple Creek, which draws primarily from the Colorado Springs market in another part of the state entirely, grosses about $15 million a month.)

With Black Hawk controlling 90 per cent of the market, there's little Central City can do to combat the bigger casinos down the hill. Central City did authorize one large building project in 1994--Harvey's Wagon Wheel, second in size to the Isle of Capri, with a parking garage and hotel--but it was after the building boom was well underway in Black Hawk, and there's been no further construction. Ironically, Harvey's built directly across the street from where Anchor Gaming had planned to build.

"We're the Vegas strip now," says Bowles, "and Central City is downtown Vegas. I think in the future Central City ought to concentrate on what they did in the past--the opera and tourist attractions. They should renovate what they have."

It may be difficult to bring back that business, though, now that the Isle of Capri and the Riviera--sister property of the historic Riviera on the Las Vegas Strip--have started bringing in live entertainment. They don't book big names--Bobby Vee, the early sixties singer, was a recent headliner--but they have typical Las Vegas lounge acts, B-list comedians, and banquet spaces for private parties. It's all working so well--with very little crime for a casino town--that a few state legislators are starting to look favorably on making the "limited gaming" less limited. Deadwood, South Dakota--the model for Colorado--recently raised its betting limit from five to a hundred dollars, and Black Hawk is pressing for a similar change.

"i think we're a little over-regulated," says Bowles. "These men who run casinos shouldn't be told how to run their businesses. I would also favor getting rid of the 2 a.m. closing time, because we don't have enough hotel rooms here. That means we're releasing people onto a dangerous two-lane highway at 2 a.m. every night."

The changes would also make Black Hawk resemble more traditional casino destinations like Las Vegas and Atlantic City, where the gambling never stops and the high-roller rules. The only quaint regulation that seems in no danger of going away is the prohibition against neon signs, or big lighted signs of any type, so that Black Hawk and Central City at night are fairly gloomy from the outside.

It doesn't matter much, though, because the future seems to be buses and cars that pull right into the casino parking garage and go straight to the casino floor, never setting foot on the historic western streets of the town. These are the money tourists--the ones that spent enough money in Black Hawk to finance a brand new Justice Center ("We financed it for 15 years, but we paid it off in two," says Bowles), bonds for a new high school, a new library, and new athletic fields.

Back at the Dostal Alley Saloon where it all started ten years ago, Jamie Joyce slides into a booth and runs over her duties as manager, cook, cashier, sometimes bartender, and the woman who pays off jackpots on the 71 slot machines. "We're the smallest casino, so everyone does a little of everything."

The upstairs t-shirt shop is closed. So is the souvenir rock shop. All that's left are slots, a bar and a small grill. And late on a Friday afternoon, the number of slot machines actually being used was . . . two.

"Most of our customers are locals," says Joyce.

People from Denver?

"No, Central City locals. They all live here. Some of them live within walking distance. They come for happy hour, for food and drink. They don't gamble much. The toughest part of my job is when I have to cut off beer. I make that decision. We're responsible if somebody gets too drunk, even if they're just walking across the street to their house. That's probably the biggest problem we ever have--drunkenness."

The Dostal Alley is, in fact, just about the only casino that kept to the original plan, as described by historian Granruth--gaming as a little diversion on the side. But even on this small a scale, the original business--souvenirs--was totally eliminated, to make way for more slot machines.

"I moved to Central City when I was in third grade, in 1980," says Joyce, "so I've seen ten years of gambling and ten years before gambling. Before gambling, it was a bunch of bars and shops, but it was never busy. Gift shops, restaurants. They had mining tours. The mining tours were popular. You could walk into the cave, see the gold and the mining equipment. Donkeys would pull you in a cart. They don't have any tours anymore. I guess more people are interested in gambling. I guess when you have gambling, people don't want to ride in a donkey cart anymore."

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