Last week started with two big casino news items that were rife with symbolism: the closing of the Riviera and the official groundbreaking for Resorts World. Some 24 hours after padlocks were slapped on the Riviera’s front doors, lion dancers gyrated in an air-conditioned tent across the street on the former site of the Stardust. The two events were close enough, both in time and space, that the circle-of-life narrative wrote itself.
But lost in the Riviera/Resorts World news cycle was the announcement of another Strip milestone—one that may have more significance for Las Vegas’ short-term future: The Tropicana has a new owner, national casino operator Penn National Gaming.
The Tropicana, like the Riviera, is a Las Vegas classic. Opened in 1957, it had its share of mob ties: First, New York underworld boss Frank Costello was personally linked to the property shortly after its opening, prompting a quick change of owners. Then, 20 years later, the FBI’s Strawman investigation captured evidence of ongoing skimming at the casino. By 1979, the Tropicana entered the corporate era, with its acquisition by Ramada Inns. For $70 million, the Phoenix-based hospitality chain became a casino owner, a new step for the “Tiffany of the Strip.”
The Tropicana gave Ramada a sense of just how lucrative its business could be; that lone casino generated more than 20 percent of the entire company’s revenues in 1980. The following year, Ramada opened an Atlantic City casino, which outearned the original Tropicana. As the hotel business faced challenges and gaming was poised for expansion, Ramada in 1989 sold off its hotels and restaurants, retaining only its casinos, and renamed itself Aztar.
Aztar executives seemed to have made the right bet: With the construction of MGM Grand, New-York-New York and the Mandalay Mile around it, the Tropicana was perched on a prime corner of the Strip. As the Las Vegas real estate market heated up at the turn of the century, the Tropicana’s 34 acres became perhaps the most coveted commodity in town. A bidding war for the whole of Aztar, which by this time included five casinos, broke out between Pinnacle Entertainment, Ameristar Casinos, Colony Capital and Columbia Sussex. In May 2006, Columbia Sussex took the Trop and the four other casinos home for about $2 billion.
Columbia Sussex’s plans to expand its flagship property to as many as 8,000 rooms matched the ambition of the times. Then came the recession, which coupled with regulatory issues in Atlantic City led to a bankruptcy that saw the Las Vegas property split from the rest of the Tropicana portfolio.
This being the Strip, there’s always another entity around the corner willing to take a shot at reviving a tired property. This time it was private equity investor Onex, which tried a South Beach makeover that left the Tropicana a bit smaller (thanks to the demolition of one wing of garden rooms) and a lot whiter than it had been in years. Wisely, the new owners attempted to get into the lucrative nightclub game, but they failed with three separate concepts.
Still, when Onex decided to throw in the towel, the Tropicana remained a prime acquisition target for three reasons: location, location, location. For $360 million, new owners Penn National get about 1,500 rooms at one of the busiest corners in world, with space to add more.
With a portfolio of 22 other casinos in North America—including the M Resort, which it acquired in 2010 following a debt swap—Penn National is an instant player on the Strip thanks to the committed casino players in its loyalty program. (The lack of such a customer base has hindered “independent” casinos like the new Tropicana, the Riviera and the Cosmopolitan.) Like the 2018 opening of Resorts World, the Trop under Penn’s stewardship has the potential to bring new visitors to Las Vegas—in this case, gamblers with serious play at regional casinos. That’s a big deal, because even with the proliferation of nightclubs, festivals and restaurants, Las Vegas still has an awful lot of slot machines and table games.
No, the Tropicana may never regain its reputation as “the Tiffany of the Strip,” but it is going to have something that’s more bankable in post-recession Las Vegas: a list of gamblers. That’s why Penn may very well succeed in making the Tropicana a winner once more.
David G. Schwartz is the director of UNLV’s Center for Gaming Research.