(Las Vegas Review-Journal) The Lucky Dragon, the one-year-old Asian-themed
hotel-casino, is temporarily closing all gaming and casino restaurant
operations as it struggles to attract customers. The move jeopardizes hundreds
of jobs and $60 million in loans from Chinese investors seeking American
citizenship.
“Effective immediately Lucky Dragon Hotel & Casino is
beginning the process of repositioning and, in doing so, will have a reduction
in staff while it temporarily closes all gaming and restaurant operations,” the
company said in a statement Thursday morning. The casino floor and restaurants
will resume operations “within six months,” the company said in the statement.
The 203-room hotel will remain open, as will the gift shop and the hotel’s Cha
Garden restaurant and bar on the first floor.
Signs posted on the casino’s entrance doors read, “Casino
temporarily closed.” Construction workers outside the building turned off water
that spun a stone ball sculpture. According
to hotel workers, the casino closed at 7 a.m. Thursday morning. Only employees
and hotel guests were allowed in the parking lot as of Thursday morning. The
hotel’s 203 rooms are fully booked during CES, an international consumer electronics
show that officially starts Tuesday, according to a hotel worker taking
reservations over the phone Thursday morning. The Lucky Dragon declined to say
whether “repositioning” implied the casino would change its name or focus on
Asian clients.
Small crowds
The boutique casino opened near the north Strip to great
fanfare in December 2016 with plans to hire 800 people. But the casino never
drew crowds to its small floor dominated by baccarat tables. Just a few months
after opening, the Lucky Dragon shuttered one of its restaurants and fired
about a hundred people, including the general manager, to cut costs. The
property’s founders sought to tap the fast-growing Asian and Asian-American
middle-class populations in Las Vegas and on the West Coast.
Nearly 6 million people of Asian ethnicity live in
California, while more than 200,000 live in Clark Country as of July 2016,
according to the U.S. Census Bureau. Los Angeles, a big feeder market, is just
a four-hour ride from Las Vegas. While the strategy seemed credible, it
nonetheless put the Lucky Dragon in direct competition with bigger players like
Boyd Gaming and Station Casinos for the lucrative, local Asian client.
Industry
consolidation
And the launch of a stand-alone casino was running counter
to the gaming industry’s growing trend of consolidation. Casino operators have
been acquiring smaller competitors at a record pace over the past three years
to widen their customer bases, cross-sell their properties and lower costs amid
sluggish industry growth. The Lucky Dragon had to build its customer database
from scratch. ”It is tough to compete in Las Vegas against major operators that
have been around a long time,” said John DeCree, an analyst at Union Gaming.
”It takes a while to ramp up a new casino. If you don’t have deep pockets, it
could be difficult to keep operating.” It could not vie with Boyd and Station
on generous food comps, nor did it offer a diversity of amenities, Asian
gamblers in Las Vegas told the Review-Journal last month.
SLS Las Vegas, located just down the street from the Lucky
Dragon, stepped up its efforts to attract local Asian players around the time
the Lucky Dragon opened. SLS began offering weekly baccarat prizes of up to
$30,000 in promotional chips, the players said. Boyd’s Gold Coast, a favorite
among local Asian players, added more baccarat tables and prizes as well. A
narrow choice of casino games may have also squeezed the Lucky Dragon’s revenue
generation, DeCree said. The casino generated the majority of its revenue from
baccarat, which DeCree said is ”low margin and very volatile.”
500 employees, EB-5
funding
The Lucky Dragon had more than 500 full-time and part-time
employees as of December. The company did not say how many people would
temporarily lose their jobs. Laid-off staff will be able to return once the
casino reopens, the company said in the statement.
The Lucky Dragon was funded with $60 million in loans from
120 Chinese families seeking a permanent green card through the EB-5 program. Under
the program, foreign investors can receive permanent green cards if they invest
$500,000 in at-risk projects that create 10 jobs. EB-5 investors are generally
willing to accept a nominal interest rate in order to receive the green card.
The Lucky Dragon investors face the prospects of losing
their money and right to a green card if the project fails.
