Doubling Down on Reno

By now, everyone has heard of Reno’s rebirth as a high-tech manufacturing and storage center. The city is in the midst of a transition from a 20th century tourism economy to a 21st century high-tech economy. It is often termed the Tesla effect, but there are more forces at work than Tesla. It is just one of the companies involved in Reno’s metamorphosis. National and multi-national companies involved in manufacturing, solar energy, data storage, warehousing and distribution are moving here and helping to reshape the economy. Although the rebirth is just beginning and most of the anticipated benefits in employment, taxes and increased economic activity have not yet arrived, big things are already happening.

In the next 20 years, Tesla is expected to generate about $97 billion in economic activity in and around Reno and boost regional GDP by an estimated 26 percent. Besides the 6,500 factory positions, Tesla is expected to create 16,200 more indirect jobs. Dana Hull, Bloomberg News, 7-12-15

Tesla Motors plant is scheduled to start manufacturing cells and modules in 2016 and is expected to boost battery production while also bringing costs down. Jason Hidalgo, Reno Gazette-Journal, 7-7-15

When it comes to Northern Nevada’s industrial market, forget about recovery. It’s all about expansion now, according to a report. “Developing, buying, building and leasing are all happening at a strong rate, and the wheels of the market are continuing to accelerate,” Tom Miller wrote. Bill O’Driscoll, Reno Gazette-Journal, 7-2-15

Since the Second World War, the city has depended on casino gaming. Between 1950 and 1990, gaming was the driving force in a thriving economy. It was great while it lasted, but nothing lasts forever. Since the early 1990s, the local casino industry has been in decline and it has been dragging Reno down with it. The major culprit is Indian gaming. There are now Indian casinos in Washington, Oregon and California. Every time a new Indian casino opened, it took a small bite out of Reno’s gaming revenue; over time those small bites amounted to eating Reno’s lunch.

As a result, the dominant casino narratives have been revenue declines and closed casinos. Month after month it was the same sad tale, less revenue and more casinos closing. In the last couple of months, two more casinos have sold and closed. The buyers intend to repurpose the casinos; that is what all of the other buyers have done. Most investors have believed Reno had too many casinos and too few customers. Although occasionally a casino developer did come along, thinking he saw an opportunity in the ineptness of locals. The mission of those developers was to show the locals how to run a successful casino. They did not succeed with their casino or their lesson.

However, a new trend is surfacing. In the last two years, three long-time casino operators have doubled down on Reno. Unlike the egotistical blowhards from somewhere else, each comes from a family with deep roots in casinos in the “Biggest Little City” and each knows the market and the casinos they bought. Through all of the difficult times, they have been in the trenches fighting and now they see opportunity here. Since 2013, Ferenc Szony, Jeff Siri and the Carano family have all increased their bets on Reno.

The first to put his money into the downtown was Ferenc Sznoy. In 2013, Szony bought the Sands Regency from Affinity Games. Ferenc knows Reno; he has worked for Hilton, the Cladianos family, Herbrst Gaming and Affinity Games. Ferenc was hired as CEO of the Sands in 1997. He stayed with the property through the Herbst and Affinity ownership. Instead of retiring to sunny beaches, he came back to Reno and put his money and career on the line.

The Sands Regency is Reno, Gold Ranch in Verdi and Terrible’s Casino in Dayton will all be sold. The company might be new, but it will be headed by a familiar face here in northern Nevada: gaming veteran Ferenc Szony, who has long been affiliated with the Sands Regency and Affinity Gaming. KRNV-TV, 9-7-12

Jeff Siri has put his money into the game twice since 2012 when he bought the Club Cal Neva. Jeff worked in the Cal Neva for his entire gaming career. In 1981, Jeff was hired as controller, he was promoted to CFO and finally in 2001 made CEO. He bought the casino from the founding ownership group after William Hill bought the sports book operation in 2012. With the William Hill money in their pockets, the original owners wanted to retire and Jeff wanted to own a casino. In 2014, he opened Siri’s, his second casino on Virginia Street. It is a small slots-only casino. Jeff’s investment is not based on bravado, but on a solid understanding of the market and his product.

For more than three decades, Jeff Siri has played it quiet on the Reno gaming scene, working his way up the corporate ladder to ownership of the Club Cal Neva. Now, the Reno native will make a splash of his own when he opens Siri’s Casino in the old Primadonna Club downtown on April 11. Bill O’Driscoll, Reno Gazette-Journal, 3-29-14

The Carano family has been in the casino business right next to the Reno arch for over 40 years. The patriarch of the family, Don Carano opened the Eldorado Casino in 1973. It had just 200 slot machines, 12 table games and 280 rooms. In the first twenty years, Reno was growing and the Eldorado grew with it. Today it has 870 rooms, 1500 slot machines and 55 tables. In 1995, in partnership with MGM the company built the Silver Legacy with 1700 rooms. The company has also expanded out of the Reno market and in 2014, merged with MTR Gaming Group. The combined company operates six properties across Nevada, Ohio, West Virginia, Louisiana, and Pennsylvania with a combined 3,300 hotel rooms, 280 table games, 32 restaurants, and approximately 10,000 slot machines and video lottery terminals.

The Caranos are a Reno family and their heart is here. In July. the Caranos demonstrated their faith in Reno by buying out MGM. The Eldorado is going to take full ownership of Silver Legacy and Circus Circus. Just as with Siri and Szony, the Caranos know what they are buying and they know the market. Gary Carano, the oldest son and corporate CEO said it very clearly, “We’re doubling down on Reno. There are a lot of strong winds behind Reno. Reno has got exciting things happening in its future.”

Reno’s Eldorado Resorts Inc., controlled by the Carano family, is acquiring MGM Resorts’ 50 percent stake in the 35-story Silver Legacy Resort Casino as well as neighboring Circus Circus Reno hotel-casino in a $72.5 million cash deal. “Now that we’re public, it’s our vision to grow the company and enhance shareholder value,” Carano said. Bill O’Driscoll, Reno Gazette-Journal, 7-7-15

It in the wake of Tesla and Reno’s rebirth, three very knowledgeable casino operators are betting on Reno. It takes courage in 2015 to bet on a casino in Reno; but maybe if you know your product and the market well enough it is a good bet. It is common wisdom in the stock market to bet on insiders. When the insiders sell, get out. But when the insiders are buying, it is time to buy. After a very long dry spell, three insiders in Reno are buying; Ferenc Szony, Jeff Siri and the Carano family are demonstrating their faith in Reno and themselves by increasing their investment in the city. As Gary said, they are doubling down on Reno.


1 Response to “Doubling Down on Reno”

  1. 1 Suzanne Stormon July 15, 2015 at 5:44 pm

    I wish them luck. Maybe a little turn around.

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