Michael Gaughan is well known in the locals casino business. His Coast Casinos were legendary for giving locals what they wanted: namely good values on food and entertainment and good odds on the casino floor.

After merging with Boyd Gaming, Gaughan took a corporate position with the company, which opened the South Coast casino in December 2005. Boyd wasn’t enthusiastic about how the property was performing initially, and Gaughan was growing tired of the corporate life, so he sold his interest in the company to buy South Coast, which he renamed South Point.

The property recently opened a new hotel tower with 830 rooms to help give it a better advantage in attracting convention business. It has the largest convention space of any locals casino in Las Vegas, and Gaughan wanted to be able to exploit that.

He recently spoke to Casino Connection Managing Editor Greg Jones about the rooms, business at South Point and the overall market right now.

Casino Connection: When South Point opened in December 2005, the Silverado Ranch off-ramp was not ready. It was supposed to be ready around the time the property opened, but it wasn’t until recently that it was actually operational. Have you seen how much of a difference it makes having that there?
Gaughan: It has made a substantial difference in business. It’s easier to get to me, and it’s also opened up the west side of the property.

And you just opened up a new hotel tower with 830 rooms. Could you talk a little about that?
We do a lot of convention business out here, and I couldn’t get some conventions because I didn’t have overflow rooms. So I can do between 1,000 out of 1,400 room conventions, and I only had 1,300 rooms.

We started the rooms before business slowed down. Maybe if I had it all over to do again, I wouldn’t build those rooms at this time.

In hindsight, maybe I should have waited until next year to build them, but now I’ve got them and now they’re open.

What kind of occupancy rates are you seeing?
We ran 90 percent this week, somehow. And we’ve got a huge convention so we’re sold out next weekend. I’m sold out tonight and tomorrow night, then we’ve got about 70 percent to 80 percent, for a couple of days and then I’ve got three days of 100 percent.

But it’s going to be a scramble for the rooms around here.

Any thoughts on how long it will be before things get sorted out?
I think it is going to take a awhile. I see both the local market being weak and the tourist market, and I do about 50-50.

Do you think some of the properties coming online soon will help?
That’s going to help the local market. I don’t know what it is going to do with the tourist market.

Do you have plans for any additional expansions at South Point?
I’ve got about 50,000 more square feet available to me, but I don’t see anything happening for a while. It kind of depends on what happens with these rooms. It’s going to be wait-and-see.

The first thing I’m seeing is that when the hotel is full, the restaurants are full. Maybe if occupancy goes up, I may want to add a couple of rooms here.

You offer good odds, good pay tables on video poker, lower limits on the table games; does that help in times like this when people are trying to stretch their dollar?
I’ve always done a great job with the local people. I’m keeping pace with last year, and that’s pretty good right now, but I’m doing it by bringing in more people. The people are spending less.

How do you deal with people spending less?
If they’re going to spend less, you’ve got to bring in more people.

What are some of the ways you’ve found that work for that?
Not cutting food product back, not cutting my help back. I haven’t laid anybody off yet, but I’m not hiring much either. I’m just trying to survive the next six months and keep everybody working.

How is business at Michaels?
Michaels is probably the only place that hasn’t been hurting. One thing we’ve found out about Michaels is that while at the Barbary Coast, it was kind of always the same business, here we have gigantic nights and slow nights for some reason. At Barbary Coast we always did between 50 and 70 people every night and now we do between 90 and 130 every night. We still do a little more, but we do have some slow nights.

Is it more during the middle of the week or the weekends?
I don’t really know. I’ve had a Thursday night where they did 105 and then a Friday night I did 32. A lot depends on what I have in the Equestrian Center. A lot of the horse events are during the week, and they’re five to 10 days long, the equestrian events. When we have those in town, Michaels seems to do a little better.

Equestrian Center is something that no one else has here in Las Vegas. Have you been able to leverage that to drum up business?
Only problem we have is that we have to compete with the other cities in the country. And other places are subsidized by the city. For instance, Reno is subsidized by the city of Reno.

It just makes you think a little more.

Steve Stallworth recently left the Orleans Arena to work for you at the Equestrian Center. He had accomplished some great things at the Orleans, and I’m wondering if you have any grand designs that you have him working on.
I can’t keep up with Steve. We were just back at the AQHA (American Quarter Horse Association) convention in Amarillo, and we had a big meeting with the executive committee there, and Stallworth is very, very good.

Did you know him from your earlier days?
I knew him from Thomas and Mack. I stole him from Thomas and Mack. He’s excellent. He can sell. And he wants to do some concerts at the arena and some fights at the arena. He is already moving. Grass does not grow under Stallworth’s feet.

How easy is it to convert the Equestrian Center?
I’ve got a plastic floor I can roll in in two hours. It depends on the event. For some I’ve got to take the dirt out. If I wanted to do a fight, I could just put a floor down right away. If I want to do something nicer, I’ve got to take the dirt out.

To take the dirt out takes about 12 hours. I’ve got all the heavy equipment here and the people, so I can get it done pretty fast.

We haven’t done much of it because we’re staying primarily with the horse events. But Stallworth, like I said, he wants to do more. I just stay out of his way.

How many days do you have the Equestrian Center booked for?
Last year it was a little under 180 days.

So there is plenty of time to get in some other events around them?
We have plenty of weekends open. The problem with some of the events, the major horse shows go over 10 days. That ties you up for 10 days and if another horse show is coming in right behind it, it takes about two days to get the old people out and the new people in. And every horse show uses different dirt. I’ve got four different kinds of dirt here, and I need about two days between the bigger events.

When the people come in for the equestrian events, they fill the rooms and they fill the restaurants, but do they spend any time on the floor gambling?
I hope so. It depends on the groups. Some groups are better than others.

The cutting horse shows, the Arab shows, the hunter jumpers are pretty good. We had team pinning last week and they weren’t bad.

Barrel racing show is probably a little weak, but they rent a lot of rooms.

You recently got the statue of Benny Binion on the main floor leading into the Equestrian Center. Could you talk a little about how that happened?
Becky Binion still owns it and she kind of forgot it when she left the Horseshoe. But Terry Caudill was very nice and gave it to me for $1.

I’ve been trying to feed him at Michaels for about two months and I just can’t get him out here. I don’t know him that well. Jack had talked to him before and said he seems to be a very nice guy.

Another thing you’ve got going on is the Summer Concert Series at the pool. Is that doing what you were hoping it would do? Does it help drive some traffic to the property?
It does, but everybody now is doing the pool party. So where the pool parties were good two or three years ago, they’re a little tougher today.

Yours is a little different from some of them because you’ve got live music, whereas most of the other parties all use DJs.
The better acts do a better job. Everything in the local business, everybody is doing the same thing right now.

So in that kind of market, what do you have to do to move ahead? Do you just follow along or do you try to do the opposite to stand out?
You just try to give the people a better experience and a little more value for their money.

By Roger Gros

Roger Gros is publisher of Casino Connection and editor and publisher of Global Gaming Business magazine, the industry’s leading gaming trade publication. Prior to joining Global Gaming Business, Gros was president of Inlet Communications, an independent consulting firm. He was vice president of Casino Journal Publishing Group from 1984-2000, and held virtually every editorial title during his tenure. Gros was editor of Casino Journal, the National Gaming Summary and the Atlantic City Insider, and was the founding editor of Casino Player magazine. He was a co-founder of the American Gaming Summit and the Southern Gaming Summit conferences and trade shows. He is the author of the best-selling book, How to Win at Casino Gambling (Carlton Books, 1995), now in its third edition. Gros was named “Businessman of the Year” for 1998 by the Greater Atlantic City Chamber of Commerce.

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