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Michael Gaughan’s solution to the recession: Expand the South Point

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South Point owner Michael Gaughan.
Photo: Steve Friess

True confessions time: I pretty much never think about the South Point Casino. We don’t live anywhere near it, I’ve never noticed anything that interested me on the entertainment schedule and I can’t say readers have ever asked about it. I don’t mention it in my travel writing and it’s possible that the last time I was there was for a 2006 interview with Jerry Lewis—made famous when his publicist was fired for trying to charge me $20,000 to speak to him.

It’s just one of those seemingly bland locals spots, off on its own, doing its own thing, and that thing hasn’t been all that compelling.

That is, not until its owner, the plaid-wearin’, big-belt-buckle-sportin’ Michael Gaughan, did what nobody else does these days: He expanded.

Uh, dude? Haven’t ya heard about the recession?

“Well, cutting back hasn’t worked,” Gaughan said on Monday, which, coincidentally, was the day Nevada’s unemployment rate hit an all-time high of 14.2 percent. “I decided to try something new. I got tired of hearing about everybody cutting back.”

Truth be told, this expansion wouldn’t normally stop the presses. It’s modest, really, an additional 55,000 square feet to the casino that includes 400 more slots, a new poker room with 13 more tables than before, a new lounge with a stage and a new 175-seat race book from where I write this column. A second phase this fall brings a Japanese restaurant and a Steak ’n Shake, the Midwest burger favorite Gaughan fell in love over the years on visits to his St. Louis casino.

But these, of course, aren’t normal times, and Gaughan is no normal casino proprietor. The 67-year-old son of legendary Downtown king Jackie Gaughan, Michael pioneered the hybrid locals-tourist resort with The Orleans five years before George Maloof gave it a whack. Six years ago his Coast Casinos merged with Boyd Gaming, but he didn’t get along well with the Boyd board because —get this—he opposed building Echelon. Echelon, in case you’ve forgotten, is the part-built skeleton standing where Stardust was, its construction halted in 2008. Gaughan thought a $5 billion project was too big and expensive, so he got out by buying back the South Coast, the last resort Gaughan had built.

Renamed the South Point, the quiet, 2,200-room resort is as much a reflection of its folksy owner as that pair of curvaceous brown glass towers up the road are of their stylish, New-York-Plaza-Hotel-condo-buying owner. Gaughan is a lifelong horse, rodeo and auto-race enthusiast, so his place has an equestrian center where car and bull-riding events are staged. His close friend Steve Wynn, once a partner with Gaughan in the Golden Nugget, may boast about knowing his customers, but Michael Gaughan actually works a window at his sports book every Sunday.

“I don’t do the yuppie crowd,” he said, noting he tried a nightclub for two months and found the clientele chased away his staid, older regulars. “That’s not who I am.” (Lest Gaughan sound like a hick, he won’t be here this weekend to greet the CEO of Steak ’n Shake because, natch, he promised his wife he’d take her to see Andrea Bocelli in Italy.)

Like Wynn, however, Gaughan has total control of his domain, and it suits him. The expansion isn’t happening because he’s doing well but because he’s stuck at 80 percent occupancy. With tragically low room rates, he tossed $20 million into the improvements in the hopes that increased gaming revenue will be a balm. South Point hasn’t had layoffs but some employees have seen shorter hours; Gaughan axed the free Strip shuttle to save $500,000 because “I was sending people up there but nobody from up there was coming here.”

Oh! And he loosened his slots, too. “The others think that in bad times you tighten up but you tighten them when people are playing a lot,” he said. “That’s where they have it opposite.”

Doing the opposite seems to work for Gaughan. As he says, it’s worth a shot. It’s not like anything else is working these days.

Follow Steve on Twitter at TheStripPodcast or head to VegasHappensHere.com for his blog and weekly celeb-interview podcast, The Strip. E-mail him at SteveFriess@aol.com.
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Steve Friess

Steve Friess is a freelance journalist based in Ann Arbor, Michigan. His work has appeared in the New York Times, ...

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