The Nugget of John Ascuaga: A Sad Ending to a Noble Career By Ken Adams March 2, 2016 at 4:31 pm When Michonne Ascuaga resigned from the Nevada Gaming Commission, it was a sad event for Nevada and for the Ascuaga family. She is part of the second generation of her family in the casino industry, chosen by her father to be the leader of the family business in the 21st century. Ms. Ascuaga’s father came to Nevada in 1955 with Dick Graves to open the Nugget Casino in Sparks. Dick Graves left Idaho because slot machines were no longer legal; he moved to a friendlier environment to ply his trade. In just a few years, Graves had built a chain of small casinos around northern Nevada. But he was not a greedy man and by 1960 he was ready to sell and retire. He sold the Sparks Nugget to John Ascuaga for $3.75 million dollars on a handshake; Dick said, “Pay me when you can, John.” John did paid him and in the ensuing 40 years built a resort that was the pride of the Ascuaga family and the Sparks community. By the end of the 20th century the Nugget had 1600 hotel rooms and nine restaurants, a full casino, 110,000 square feet of convention space and a showroom that hosted top performers of the era. For the citizens of Sparks, the Nugget was Sparks; it was the place to go for an evening of fun, headliner entertainment, holiday dinners and the place to put friends and family up for the night. It was a mark of pride to work at the Nugget and a sign of success to remain there for a long time. For most of its history, the Nugget was the primary driving force of the local economy; its rooms, entertainment, restaurants and special events that brought hundreds of thousands of people to Sparks. Under Ascuaga’s leadership, the Nugget was a conscientious and generous corporate citizen. It supported many charities and good causes, among a scholarship program; over a 60-year period the Nugget awarded hundreds of college scholarships. The Nugget was a success and John Ascuaga was an honored and respected businessman and citizen. However, as the century ended times were changing.By Y2K, northern Nevada’s casino industry was under siege from Indian casinos in California, Washington and Oregon and competition from casinos all over the country. The Nugget had assumed $75 million more in debt to add more rooms, restaurants, casino and convention space. With fewer customers and less revenue, the Nugget was severely challenged. But things could and did get worse as the largest recession in 70 years hit Nevada. In the midst of this crisis, the Nugget was in the process of transitioning from one generation to the next, Michonne had become CEO and son Stephen was a senior executive. The difficulties seemed insurmountable and the family decided to sell the property. With the recession and competitive pressure from Indian gaming, selling a casino in Reno or Sparks was as difficult as operating one. Still, in 2013, a sale was announced; Global Gaming & Hospitality purchased the Nugget. The terms were never disclosed, but it is certain the price was low and did not reflect the size of the physical property or its history. Global Gaming may not have paid a high price, but it did take on a very risky proposition. Even with dramatically reduced debt and increased operation efficiency, profitability was far from certain. Regardless of the risk or the rewards, the deal was done and the Ascuaga family bid good-bye to a cherished part of its history. Governor Sandoval appointed Michonne to the Nevada Gaming Commission, Stephen was hired by another casino and John went quietly into retirement. It seemed like a fitting exit for a legend, until 2016. By the beginning of this year, all of the conditions that had led the Ascuaga family to sell the Nugget had changed. The expansion of Indian gaming had stopped and gaming revenues in Reno were starting to stabilize. Nationally the recession was over and Northern Nevada’s economy was entering a high tech boom. Tesla was building the world’s largest factory and dozens of high tech companies were following Tesla to Reno. The real estate market was recovering rapidly and any building with rooms suddenly became desirable. Long vacant or underused properties commanded good prices and sold quickly. A $50 million student housing project next to the university was announced and the president of the university declared he would hire 400 additional faculty members within a year. The recession and the old economy were just fading bad dreams. The Nugget was a viable property again. On February 11th Global Gaming & Hospitality announced the sale of the Nugget to Marnell Gaming. And, in what might or might not have been a coincidence, the details of a year-old law suit between John Ascuaga and Global Gaming were released to the press. Besides the claims and counter claims, the document revealed a federal investigation into the Nugget’s compliance with the Bank Secrecy Act under the Ascuaga administration had been in process at the time of the sale. Immediately Governor Sandoval said he was unaware of the investigation when he appointed Michonne to the commission and then within 24 hours, Michonne resigned from the commission. For a very proud family, it must have been an even more difficult time than the selling of the Nugget. The Ascuaga name and Michonne’s reputation were tainted, but unfairly in my mind. The subject is personal for me. A few months after I left the Comstock in 1990, the casino was fined $100,000 for failure to properly adhere to Nevada regulations designed stop money laundering as the Bank Secrecy Act is meant to do. I was not guilty of anything and I did not have to pay any fine, but still my reputation was damaged. Neither the Nugget nor the Comstock was accused of money laundering; the issue was failure to follow the proper procedures. Casinos in Nevada are required to document cash transactions. It is a tedious and time consuming process and as many customers consider it invasive, it can be stressful. The actual work of documenting large cash transactions is left to line-level employees and supervised by shift supervisors in each department. The process is audited regularly by in-house auditors, paid outside auditors and periodically by state auditors. Still, things are not always done the way they are supposed to be done. When Nevada discovers a violation of regulatory procedures it takes action. For major violations it usually levies a fine as it did with the Comstock or more recent when Nevada regulators fined Caesars over a million dollars for its violations. Michonne was not on the gaming floor of the Nugget, she did not personally check the paperwork daily nor review surveillance tapes to ensure compliance; no senior executive does. The Nugget is a large corporation and all large organizations operate through structure and delegation of authority. However, in matters such as this, the corporation and its senior executives bare the ultimate responsibility. By those standards Michonne will be judged. I am quite certain she did nothing wrong, but she and her family will carry this as part of their legacy. That is sad, sad for John, the family and the gaming industry in Reno. John does not deserve a tarnished image. He deserves to be remembered for his vision, generosity and loyalty to his family and the gaming industry.