Central City – In the heart of downtown’s Main Street, the only gathering on a recent weekday at Papone’s Palace is the dust on the bar and other fixtures remaining in a casino that closed shop years ago.
Next door, at Scarlet’s Casino, the slot machines aren’t ringing, either. Workers are wheeling the machines into a truck since the casino shuttered last week.
This old mining town, once Colorado’s premier gambling destination, is still struggling to shake its bad fortunes despite the construction of a much ballyhooed $38 million highway.
“People here are scared,” said local miner and city gadfly Brad Shinners. “They are very scared.”
The Central City Parkway, which had been in the works since the late 1990s, opened in November 2004. The parkway connects the town with Interstate 70 at the Hidden Valley exit, allowing visitors to get to Central City without driving through Black Hawk.
The city pinned its revival, and pledged its property taxes, on the 8-mile road.
But the rash of new developments that Central City had hoped for hasn’t come. The developments are needed not only to attract visitors but to allow the city’s quasi- public business improvement district to make payments on bonds issued to finance the road. The bonds are backed by taxes on property values.
Since the road was built, Central City has seen only one new development, by Century Casinos. As a result, the district won’t be able to make its next scheduled bond payment by Dec. 31.
“One thing we know for sure is the way the district projections were set up, we needed two to three additional brick-and-mortar projects within the city … to cover the debt service on the bonds,” said Joe Behm, president of the business improvement district. “We got one of them with Century. The piece that’s missing is the two other ones.”
Behm said Philadelphia- based HWC Investors, which bought the bonds, has agreed to revise terms of the deal so the payment could be made at a later date.
HWC couldn’t be reached for comment Friday.
Locals and analysts say most visitors who use the parkway drive on through to Black Hawk.
“It sends people speedily on their way to Black Hawk,” said Beverly Miller, manager of a gift shop, bevie Sue’s Emporium, in downtown Central City.
Miller said the businesses in town “certainly struggle,” but she remains optimistic that the Central City Parkway can reverse the city’s fortunes.
Analysts say it’s still too early to write off the road as a bad investment because it may still attract new developments.
Colorado Springs-based Century Casinos poured $50 million into a casino and hotel that opened in July. The development also includes a 488-car parking garage, something the city had long coveted. The city agreed to pay 60 percent of the cost of constructing the garage.
“The road was good at getting people to go through Central,” said Ryan Worst, a gaming analyst with Brean Murray, Carret & Co. “Additional capital will help get those people who go through to stay there instead of going through to Black Hawk.”
When limited-stakes gaming launched in 1991, Central City was the hot spot. Parking lots overflowed. The city had to push would-be developers down a mile to sister city Black Hawk.
But in the mid-1990s, Central City’s fortunes tanked as Black Hawk began its rapid rise into the Colorado gambling powerhouse that it is today.
Buddy Schmalz, Central City’s mayor, said the shift was inevitable.
“Geographically, it was bound to happen,” said Schmalz, whose family owns Dostal Alley Casino in Central City.
At that time, Colorado 119 was the only way into the area, and Black Hawk had the advantage of being the first city that visitors reached from the road.
Central City’s strict adherence to historic-preservation guidelines and Black Hawk’s less stringent application of the guidelines also may have sped the shift.
Central City wouldn’t allow developers to tear down entire buildings to construct a new casino.
Black Hawk has given developers almost free rein. Mountainsides have been blown up to make room for casinos. Ameristar Casinos recently broke ground on a 33-story hotel that the company is billing as the highest structure between Denver and Salt Lake City.
At its peak, Central City had nearly two dozen casinos.
Today, it has six to Black Hawk’s 21.
Two casinos that set up shop in Central City after the road opened – Scarlet’s and the Teller House – have since shuttered. Both were owned by Swiss-based 3C Gaming LLC. Scarlet’s closed Tuesday, and the Teller House closed in July 2005.
Kevin Wolff, general manager of Scarlet’s, said revenue never hit projections. He said the company probably overspent by opening two casinos.
“They just overextended themselves,” Wolff said. “They really went out on a limb. They probably could’ve handled it with one property.”
Meanwhile, gambling revenues in Black Hawk dwarf those in Central City. Black Hawk’s casinos generated $543.5 million in fiscal 2006, up from $527.7 million.
In Central City, revenues increased from $49.7 million in fiscal 2004 to $65.6 million in fiscal 2005. Revenues are total wagers minus payouts. But the growth slowed in fiscal 2006, with the city posting $69.6 million in revenue, only a slight gain over fiscal 2005.
On the positive side, a new development could be on its way in Central City.
Central City Development Co. recently sold a 1.5-acre parcel to Las Vegas-based Pinnacle Entertainment for more than $8 million, according to Bill Russell, president of the development company.
Pinnacle spokeswoman Pauline Yoshihashi declined to comment. Pinnacle operates casinos in Nevada, Louisiana, Indiana, Argentina and the Bahamas.
Lee Marquez, 69, a slot player at Century Casino, said Central City could use some “big money” companies and “big hotels” like those in Black Hawk to return to its glory days.
But Lynnette Hailey, city manager for Central City, said that’s not in the cards. Instead, the company will focus adding smaller casinos and other attractions, such as gift shops.
“We’re not going to build the mega-casinos,” Hailey said. “We’re not going to compete against a city (that has casinos) that are a much greater volume and magnitude than ours. We’re staying small. We’re staying diversified.”
Staff writer Andy Vuong can be reached at 303-954-1209 or avuong@denverpost.com.
