Gaming entrepreneur builds on North Las Vegas success to expand downtown
At first glance, entrepreneur Seth Schorr might seem out of place in his casinos, which are in some of the tougher neighborhoods in and around North Las Vegas.
That’s because he and his partner, Jeffrey Fine, come from prestigious Las Vegas families and easily could have invested in more affluent parts of the the valley.
But Schorr, 35, says the company he and Fine control, Fifth Street Gaming, will never forget the North Las Vegas area where it found its footing, even as it works on grandiose development plans downtown and as far away as China.
"The foundation of our company started there," Schorr said. "We love that area. We think there might be more opportunities there on the horizon."
Schorr’s father is Wynn Resorts board member and executive Marc Schorr, a longtime lieutenant to Steve Wynn. The elder Schorr worked for Wynn when he owned the Golden Nugget and Mirage Resorts, which developed the Bellagio, the Mirage and Treasure Island.
Before striking out on his own, Seth Schorr also worked for Wynn, holding entry-level positions and key executive posts, such as supervising the Wynn Collection of Fine Art, developing Wynn’s international marketing department in Macau and running an early Wynn exploratory effort for online gaming.
Fine, in the meantime, is a grandson of the late Las Vegas Sun/VEGAS INC publisher, Green Valley developer and community leader Hank Greenspun. His mother, Susan Fine, is a well-known philanthropist, and his father, Mark Fine, is a prominent developer. Besides his work with Fifth Street Gaming, Jeffrey Fine works as a restaurant entrepreneur and high-end developer.
After leaving Wynn, Seth Schorr worked for a time on Wall Street before returning to Las Vegas to look for opportunities in the gaming industry. He teamed up first with real estate executive Bruce Deifik in 2008 to buy what was then called the Speedway Casino at Cheyenne Avenue and Interstate 15.
The Speedway today is the Lucky Club and is part of the Fifth Street Gaming group that also owns the Silver Nugget and Opera House casinos, as well as runs gaming at Siegel Slots and Suites. The group also owns the Little Macau Ultra Tavern in Chinatown.
Downtown, Fifth Street struck a deal to manage gaming at the Gold Spike and, when it opens late next year after a $100 million-plus renovation, the 650-room Downtown Grand, formerly known as the Lady Luck. Demolition and construction already are under way, with a ceremony celebrating the project planned for today.
Fifth Street Gaming also is developing bars and restaurants in the emerging "Downtown3rd" district adjacent to the Downtown Grand. Schorr already has created a farmers market there and is working on other activities to draw people to the area. One is "Cycle Pub," a 14-seat bicycle with a designated driver that takes customers on a bar-hopping ride to nine downtown haunts. The business has been so successful that Schorr and his co-investors are working on getting a second bike.
Fifth Street Gaming also is helping to develop a $50 million, 100,000-square-foot retail area near the Downtown Grand and the Mob Museum that would open in 2014. On top of that, Schorr and his co-investors are pursuing separate ventures involving Internet gaming and a new company that eventually could bring tens of thousands of Chinese tourists to Las Vegas and other U.S. destinations.
As for the company name, the "Fifth Street" in Fifth Street Gaming comes from Las Vegas Boulevard’s original designation as Fifth Street. The company employs 450 people and expects to add 800 jobs when the Downtown Grand opens.
Given your family background and experience with Wynn, were your colleagues surprised when you and Jeffrey Fine invested in North Las Vegas locals casinos?
People saw the opportunity, so they didn’t pass that kind of judgment. People were surprised that I was spending six and a half days a week working in arguably the toughest ZIP code in all of the valley. But we embraced the people and the culture, and we learned a lot.
How did your previous work at Wynn and on Wall Street prepare you for that opportunity?
In New York City, I had a financial services business where I found lost shareholders for publicly traded companies, brokerages and transfer agents. I was a service provider to Wall Street. I had a taste of entrepreneurship. It gave me the opportunity to start from scratch, to hire, to create systems, to work on accounting and branding.
These were all things I had exposure to at the Mirage and the Wynn organization, but to be able to do it myself, I realized I couldn’t go back to working for someone else.
And when I set the expectations for a line employee — for a bellman, a valet, a front-desk person — I worked those positions. I know what that’s like. That helps me manage people. It helps set up standard operating procedures.
Gaming regulators sometimes ask about your security because of incidents at the casinos requiring police attention. How does your staff head off trouble?
It’s verbal judo and understanding how to engage a customer who is generally intoxicated. And that’s no different whether it’s at the Wynn or in North Las Vegas. It’s understanding the circumstance they’re in, maybe getting someone a cup of coffee and defusing the situation before it escalates.
Eighty-five percent of the time, you can do that. The other 15 percent, you very respectfully walk them out. If you handcuff them and throw them against a wall, they might grab a bottle and hit a guest.
Are your investments at your properties improving the community?
The first improvement I did at the Speedway was establishing a new employee dining room. Not new slot machines. Not a new restaurant, which would generate revenue.
And Jeff Fine did the same thing at the Silver Nugget. This was independent of each other.
Making the employee dining rooms nicer had great value in the return from what you got out of the employee. It made an impression. It was less about the customer and more about the employee.
Our guests and our employees are, in many cases, one and the same. Our guest at the Silver Nugget might be an employee at the Lucky Club. By creating jobs, we clearly have an impact on the neighborhood. And it’s not just jobs. We try to create an environment where people are proud to work.
One of your big focuses now is the Downtown Grand. Given the fact that there still are a good number of unfilled hotel rooms in Las Vegas, why do we need 650 more?
We know that the average tourist visits two and a half properties. What I love about downtown Las Vegas is that somewhere between 8 million and 12 million people visit the Fremont Street Experience every year.
We have 12 casinos within walking distance of the Downtown Grand. There is a built-in market, and the Downtown Grand is the first new hotel.
There has been some great renovations, but no one’s done what we’re doing. This is not lipstick. It’s the closest thing to just imploding it. It will be brand new, every nook and cranny. We think that’s a big deal.
Why would you only manage the Downtown Grand as opposed to owning it as well?
It’s owned by CIM Group, of Los Angeles, a major $10.9 billion fund manager.
People in Las Vegas, like Steve Wynn, Sheldon Adelson and Jim Murren, develop the best integrated resorts in the world. CIM is the best revitalizer of urban neighborhoods — Third Street Promenade in Santa Monica, the Gaslamp district in San Diego, a project in Oakland. They go into neighborhoods that need to be revitalized, and that’s what downtown Las Vegas is. CIM is playing a significant role in revitalizing the neighborhood.
I’d rather be working with them than if you handed the keys to me and said, "Do it on your own."
Why are you confident you can fill the Downtown Grand?
We are partnering with Choice Hotels, which is a midmarket company with a high-end brand called the Ascend Collection, which we’re a part of. It’s for boutique, independent properties around the country.
Choice has 15 million users in their loyalty club. To have that kind of partner will help us fill those rooms and bring new people to downtown, as opposed to just cannibalizing the downtown market.
The Downtown Grand is very Americana. It’s industrial, factory, urban and authentic. It’s like coming to an American city right off the Fremont Street Experience, which is all about the roots of Las Vegas.
Part of your target market is tourists from Asia?
The Downtown Grand has a midmarket international Chinese component.
I’m not talking about the whales who go to the Venetian, the MGM Grand and the Wynn, but the midlevel customer who is still spending $10,000 to $15,000 per trip. They come to shop and eat, and gambling is No. 3 on the list versus the whales who are here to gamble.
Our research has shown that for them, the room is the most important factor. Of course they want to stay in a clean room. They’d rather spend $79 per night than $179. That’s why the Downtown Grand, which has a beautiful room, is targeted to them.
We’ll have the amenities they require, such as the slippers and electric tea kettles and rice cookers. You can’t get that at some of the nicer Strip properties today. You’ve got a coffee machine and a microwave, but you can’t get a tea kettle and a rice cooker.
We have a private baccarat room. We have an authentic Chinese restaurant next to the baccarat pit. These are all things that some of our cousins on the Strip have figured out for the high roller. But nobody has truly offered that to the midlevel customer, the guy spending $50 or $100 per hand, not $50,000 or $100,000 per hand.
You and your partners have created Viva Tours LLC to bring Chinese travelers to America. What does that company do?
We package the tours: hotel, food and beverage, retail trips and special cultivated experiences, like Ferrari Dream Racing or Maverick helicopter tours. It’s a B-to-B business, meaning we sell it to the major tour operators in China.
For a whale, a known gambler, certainly Wynn will roll out the red carpet. But let’s say you’re not a known gambler. You’re a guy in China — and there are plenty of wealthy people in China with new money — who is not a sophisticated traveler like a European. They don’t know English well yet. They want their hand held, and they want a premium experience.
A lot of the tour operators have been very low-end. What we’re doing, we refer to in the gaming business, at least in Macau, as the "premium mass market."
We have packages for Los Angeles, Las Vegas and Hawaii. We started out with Las Vegas packages, and we quickly learned you can’t sell Las Vegas-only packages. They want to come to America for 14 days. The want to fly into San Francisco or Los Angeles. They want to spend three or four nights in California, three nights in Las Vegas and then they either want to go to Denver or the national parks or as far as Washington, D.C.
We identified well over a year ago the Downtown Grand would have this component, and in researching that, we realized there was a greater need, a business in and of itself, that would be profitable.
You also have an interactive gaming business called Golden Dragon Baccarat on Facebook. What is that?
We identified that there were no baccarat games in for fun/for free gaming, which is perfectly legal. There are lots of slot games and lots of poker.
We are in the process of fine-tuning the game. In the works are three or four variations of baccarat, which have different rules, making them more exciting. We’ll have a suite of games both for Facebook and for Europe, where online casino gaming is legal, not just intrastate poker (like in Nevada).
These proprietary games will have a land-based component. You’ll be able to play the game in the real casino. We think they’re so interesting that people will want to play them in real life.
We may even introduce the game through terminals in casinos, essentially creating interactive baccarat games you’d see on your slot floor. We believe there’s a market for that in Macau.