Scarlet’s Casino in Central City shuttered this week and laid off its 50 employees, becoming the second casino to close since the city’s $38 million highway opened less than two years ago.
The latest closing comes as a recent audit of the city’s financial records shows that the business-improvement district will be unable to make the next payment on the bonds that financed the construction of the Central City Parkway.
The four-lane, 8-mile highway, which opened in November 2004, was supposed to be the ace in the hole for a city that has long struggled to compete with sister city Black Hawk.
While Central City’s gaming revenues have increased slightly since the road’s opening, the growth in activity hasn’t hit industry and city projections.
“The business levels weren’t what we expected,” said Kevin Wolff, general manager of Scarlet’s. “The original projections were for larger revenue, and the market never bore that.”
Scarlet’s opened in February 2005 and featured 289 slot machines and four table games when it closed for good Tuesday morning, Wolff said.
The Teller House casino opened at about the same time and closed five months later, in July 2005. Both were operated by Swiss-based 3C Gaming LLC.
“The outlook is dim” for Central City, said William Palermo, chief executive of Gaming & Resort Development, a casino-consulting firm based in Laguna Niguel, Calif. “The road hasn’t been the cure-all.”
Gaming & Resort issued a report six months before the parkway opened that predicted the road would be more beneficial to Black Hawk than to Central City.
The Central City business-improvement district issued $45.2 million in bonds to finance the road and to cover the initial bond payment and other costs.
The 20-year bonds are to be paid off with property taxes.
The district is scheduled to make a $4.4 million payment on the bonds by Dec. 31.
But development activity in the city hasn’t hit projections to generate enough funds to make the payment, said Joe Behm, president of the business-improvement district.
Scarlet’s and Teller House were opened in existing buildings that were vacant.
Century Casinos’ $50 million, 60,000-square-foot casino, which opened in July, is the only new construction the city has seen since the road opened.
Behm said bondholders have agreed to allow the district to make good on its payment at a later date.
“They knew that our projections were probably a little more aggressive than the actual growth we were going to see, yet they were willing to take that risk,” he said.
The fortunes of Central City, once the state’s premier gaming town, tanked in the mid-1990s as casino developers and gamblers flocked to Black Hawk, which is closer to Colorado 119, the main road into the gambling towns for metro Denver travelers.
Staff writer Andy Vuong can be reached at 303-954-1209 or avuong@denverpost.com.
$543.5 MILLION
Black Hawk’s gambling revenue in fiscal year 2006
$69 MILLION
Central City’s gambling revenue in fiscal year 2006
