Casinos come and go in ever-changing Las Vegas, but the Lucky Dragon Casino failed after only 2 years, and was recently sold for $36 million. The new owner, Ahern Rentals, plans to turn the doomed casino into a non-casino hotel and conference space.

All Smoke, No Fire

And the shortest-lived Las Vegas casino award goes to: Lucky Dragon Casino. Casinos are bought and sold on a regular basis in Las Vegas, a town constantly under renovation and billion-dollar expansion. But the Lucky Dragon Casino breathed its last puff of smoke only 2 years after it opened. In a run plagued with funding problems, location issues, and failed targeted marketing, the Lucky Dragon closed last October.

Industry experts who initially performed the autopsy on the dead Dragon all agreed that the location of the casino was a real problem. The north Strip area of Las Vegas is considered too far from the main action to be profitable, and the area has been plagued with problems since its initial development.

Marketing Gamble Misfires

Lucky Dragon grand opening

In addition to its bad location, the theme of the Lucky Dragon completely missed its mark. The lavish Asian-themed décor, dining experiences, and ‘boutique’ individuality failed to attract its target market. The $160-million casino was designed to attract Asian high rollers, but failed to draw any significant number of foreign or local visitors.

After a grand opening filled with ceremonial dancing dragons, costumes, and Asian-themed fanfare, the spark fizzled and died. No amount of feng shui or Asian street food could resuscitate the beast.

The casino was built just after the financial crisis, and the timing to build a Las Vegas casino with such a narrow focus simply did not pan out. The 27,500-square-foot casino floor focused on baccarat, pai gow, and sic bo. In addition, most of the Asian high rollers the Lucky Dragon sought to attract were already having a blast closer to home: Macau and Singapore take the lion’s share of the world’s gambling action.

Located on West Sahara Avenue north of the Strip, the hidden Dragon was far from all of the main Vegas action. The facilities featured staff who spoke various Asian languages, in hopes of catering to visiting Asian high rollers. But the casino did not attract those high rollers, and failed to please locals, who wanted good value and generous comps. The cash-strapped casino could not afford to give people any freebies.

Financial Trouble from Day 1

The Lucky Dragon was the first major Las Vegas casino project to be built from the ground up after the financial crisis. Most Vegas casinos are sold and renovated by the new owners, but the owners of the Lucky Dragon decided to take a huge gamble and build from scratch.

Initial funding of the casino was secured with a series of loans gathered from 120 Chinese families. The families contributed nearly $90 million to the casino costs, in return for U.S. residency. The federal EB-5 visa program offers permanent residency for foreigners who invest $500,000 or more in U.S. business ventures that create jobs.

Casino developer Andrew Fonfa

In addition, casino developer Andrew Fonfa appealed to the Vegas City Council for help—to the tune of $25 million. The Council flatly refused, as the Council does not lend public money for private casino businesses. Fonfa turned to an investment fund called Snow Covered Capital to secure an extra $90 million to complete the casino project.

Bankruptcy and Closure

Just 2 years after the Lucky Dragon opened, its owners closed the doors and declared bankruptcy. The property sat untouched for months while creditors hovered like vultures. Snow Covered Capital valued the property at less than half of the $143 million value claimed by Fonfa, hoping to secure a quick sale in order to recoup its losses. The property failed to attract any bids, and was finally sold at auction for $36 million, not enough to repay the $50 million owned to Snow.

Don Ahern CEO of Aherns Rentals

New owner Don Ahern said he would “absolutely not” keep the Lucky Dragon name, as the doomed casino was a bad bet, a risky gamble, and anything but lucky.

But what happens to the Chinese families who invested money for visas? Citizenship and Immigration Services spokesman Michael Bars said that the residency status of any investors would not be in jeopardy if the new job requirement is still met, but he did not specifically comment on the Lucky Dragon investor families.

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