Casino at ex-Rat Pack hangout closes at Tahoe

[March 31, 2010]  RENO, Nev. (AP) -- Before the Las Vegas Strip ruled the gambling world, Frank Sinatra, Dean Martin and Sammy Davis Jr. helped make the Cal Neva Lodge one of Nevada's coolest casinos in the early 1960s.

On Wednesday, roulette wheels will stop spinning and blackjack games will cease at Sinatra's old resort that straddles the Nevada-California border on Lake Tahoe's north shore at Crystal Bay.

While the resort's current owner hopes to reopen the casino under a new outside contractor by year's end, some analysts think the Cal Neva might have dealt its last hand. They said Tahoe casinos are particularly vulnerable to the double-whammy of the recession and competition from Las Vegas and Indian casinos.

In 2009, gambling revenues at Lake Tahoe casinos were roughly half of the 1992 total when corrected for inflation, said William Eadington, an economics professor and director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno.

"The realities are when you have that kind of decline the weakest operators typically get pushed out," Eadington said. "The older, tired casinos -- and the Cal Neva is a great example -- don't have much to offer for gaming."

Sinatra owned the Cal Neva from 1960 to 1963 during its heyday, drawing fellow Rat Pack members Martin, Davis and Peter Lawford, and stars such as Marilyn Monroe, Joe DiMaggio and Juliet Prowse.

Monroe spent her final weekend at the Cal Neva before she died of a drug overdose in Los Angeles in August 1962. The small cabin where she stayed still stands and is part of a tour offered by the resort.

Sinatra renovated the Cal Neva, adding the celebrity showroom and a helicopter pad on the roof. He used tunnels to shuffle mobsters and celebrities beneath the resort so they wouldn't be seen by the general public, said Carl Buehler, a bartender who leads tours at the resort. The tunnels were built in the late 1920s so liquor could be smuggled in during Prohibition, he said.

"This was one of the hottest casinos in Nevada when Frank owned it," Buehler said. "Frank had all the stars coming in and out of here, and it was always packed with people. I think the history is what keeps the Cal Neva going."

Sinatra's gambling license was stripped by the Nevada Gaming Control Board after Chicago mobster Sam Giancana was spotted on the premises.

Richard Bosworth, Canyon Capital Realty Advisors senior director, said the Los Angeles-based financial institution that has owned the rustic resort since last year has held discussions with several gambling-license holders who have expressed an interest in managing the casino.

He noted the rest of the property, including restaurants and the showroom now named for Sinatra, will remain open. The company has overseen significant turnarounds in non-gambling operations such as hotel and wedding bookings since becoming the landmark's owner through foreclosure.

"We have worked hard to successfully stabilize business operations over the past year, and we are confident that an operator shift at the casino will only further enhance the value of the Cal Neva resort," Bosworth said in a statement.

Former Nevada state Archivist Guy Rocha said he questions whether the casino will be able to reopen because of the decline in Nevada's gambling business.

The Cal Neva's colorful past isn't enough to draw younger gamblers not as familiar with Sinatra and other celebrities who entertained there more than 50 years ago, he said.

"People just aren't coming in the numbers to gamble like they used to," Rocha said. "The Cal Neva doesn't capture people's imagination the way it once did."

The Cal Neva is one of Nevada's first legal casinos. The present resort was built in 1937, when a fire destroyed the original lodge that had opened in 1926. Before Sinatra's tenure, Judy Garland first performed at the lodge in 1935 at the age of 13.

Canyon Capital took over the Cal Neva after foreclosing on a $25 million loan to its prior owner, financier Ezri Namvar. A two-state auction of the property last year netted no bidders. Namvar bought the Cal Neva from Chuck Bluth in 2005.

At a meeting last week, Lake Tahoe casino owners agreed the local gambling industry is in sharp decline and the current status quo is not a viable option.

"The cost of doing nothing is considerable," said John Koster, regional president of Harrah's Northern Nevada.

Mike Bradford, president of Lakeside Inn and Casino in Stateline, said he has had to lay off about 100 employees since 2006.

"I just couldn't afford to pay their salaries," he said.

Elsewhere on Tahoe's south shore, Bill's Casino closed and the Horizon Casino eliminated table games of chance last year, further signs of the industry's distress.

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On the Net:

Cal Nevada resort: http://www.calnevaresort.com/

[Associated Press; By MARTIN GRIFFITH]

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