MESQUITE, Nev.—Gregory Tso Hui Lee, the only Asian casino operator in Nevada, stood on a hill eighty miles from the Vegas Strip at the Arizona border, contemplating the half-built residential development that lay nestled in the sun-red mesas at his feet.

He looked hopeful, but worried.

“It was probably too much too fast,” said Lee. “But the next buyer will buy it and come back.”

>> Take a tour of Mesquite’s Eureka Casino Hotel with its owner, Greg Lee

A self-described “believer in the vision of Mesquite,” Lee owns the local Eureka Casino Hotel, the success of which has been largely tied to the development of Mesquite’s retirement community. Though the housing crisis has hit Mesquite hard, Lee is optimistic that the Eureka will not only weather the recession, but transform this restful little town from a freeway stop into a sort of Palm Springs. With casinos.

Lee’s gaming revenues have held steady in the last year. Black Gaming, which owns the remaining three casinos in town, is struggling to stay afloat under the weight of the debts it took on to buy out its competitors. Last December, it closed one casino temporarily and laid off 342 employees. Though the majority of those employees were rehired at its two other casinos, the company reduced its workforce by another 147 workers in May.

But unlike Black Gaming, and bucking the trend of the gaming industry, the Eureka has virtually no debt, the mark of an immigrant work ethic passed down through the generations. 

Lee, 45, is the grandson of Joe Shoong, a nineteenth century Chinese immigrant who opened 35 National Dollar Stores across California, Hawaii, Nevada, and Oregon without taking out a single loan. Shoong became one of the country’s first Chinese American millionaires. Lee’s parents went on to develop real estate all over the West.

“My father tells me it is much more difficult getting used to having less, than it is getting used to having nicer and nicer things,” said Lee.

>> Read more about Greg Lee’s grandfather Joe Shoong in this Time Magazine article from 1938.

A youthful man of humble bearing, Lee is thoughtful, often introspective, and deeply earnest. He was born in Honolulu, Hawaii and grew up in the Bay Area. As a child, he and his brother often spent Christmas and spring vacations in Vegas, taking tennis and golf lessons while their parents worked. He graduated from Harvard like his father, and went on to earn a law degree from the University of Southern California before setting off for a career in corporate law in Midtown Manhattan.

“It was what I thought that I’d want to do—live in New York City and work for a firm where you wore nice clothes and shiny shoes,” said Lee.

But after a year, he began to question if law was his true calling.

“You’ve seen the movie Harold and Kumar?” said Lee with a self-deprecating grin. “He comes back and he’s interviewed by people, ‘Oh you’ve worked for an investment bank, what’s that like?’”

Lee would say that he found the law interesting, but the every-man-for-his-own-glory air that pervaded the firm bothered him. In 1995, he quit his job and moved to Las Vegas to build the Eureka, a project that his father had just launched, while he figured out his next steps.

As the gaming industry faces the worst recession in modern history, border towns like Mesquite, Laughlin, Primm, and Jean that have historically depended on slot machine starved visitors from California, Utah and Arizona saw profits go through the floor. The casinos are squeezed not only by the economic downturn, but also by the increasing number of Indian-owned casinos in California.

As of May 2009, the number of visitors to Mesquite has shrunk by 29 percent over last year, on top of a 11 percent decline in 2008. Gaming revenues fell 12 percent in 2008, and have plunged another 18 percent so far this year.

Eureka, by contrast, has seen its casino grow bigger than any of Black Gaming’s, and it unveiled its third restaurant last year, a flashy multi-cuisine dinner buffet that can feed up to 420 at the same time.

“It was important to us as a leader to have the best buffet,” said Lee as we paused to admire the aquarium wall, packed with tropical fish, at its entrance. “It’s a kind of status symbol.”

Like Las Vegas, Mesquite’s earliest settlements sprang up as watering holes along the Mormon Road. Dairy and alfalfa were the area’s main industries for much of the 20th century. After I-15 was built in the 1970s, the small farming town’s location as the first stop in Nevada for traffic coming from Utah attracted gaming pioneer William “Si” Redd, who took over a sleepy truck stop and turned it into a full-service casino called the Peppermill in 1983. (Its name was changed to the Oasis in 1995.)

Mesquite incorporated a year later, and city founders began to look for ways to build its economy.

In 1988 or 1989, the Lee family bought a piece of land on the other side of town from the Peppermill, right off the interstate, with plans to build their first casino and hotel.

“I really have to give the credit of the initial vision of this being a good market, a place where we could be successful – I really give that to my dad,” said Lee.

Two other developers also came to town around that time. Randy Black opened his Virgin River across the street from Eureka in 1990. Similar in style to the Oasis, the Virgin River features a small casino building and a group of motel-style lodgings that he expanded as the resort grew. Then in 1995, about a year before Eureka was set to open, Merv Griffin built Players Island, Mesquite’s first resort-style casino, with a pool and a waterfall.

“You could hear him playing the piano in the commercials,” said Lee. “For Mesquite that was really big.” 

The Lees were new to the hotel and gaming business. They had just taken over operations of a small casino on Sahara Boulevard, also called Eureka, but Mesquite was a grander endeavor. The family moved to Vegas from the Bay Area and bootstrapped almost all of its cash, more than $20 million, for the initial capital investment.

In 1997, the “Rancho Mesquite” opened with a simple, boxy casino with 500 slot machines, one restaurant, two bars, and a 215-room hotel next door. It was the smallest complex in town. And although it catered to the freeway traffic, Lee quickly discovered that drive-in visitors weren’t interested in the casino or its restaurants, just a clean bed and an early morning checkout.

“We built a local casino with no locals,” said Lee. “It was a rough go.”

One day over lunch, Lee and his father told their troubles to gaming veteran Norm Jansen, who had grown up in the business and at the time owned the Boardwalk, where City Center is now being built.

He asked if they knew of any other Asians who were in the casino business.

Lee and his father couldn’t think of any, besides the short wave of Japanese speculators who bought bankrupt casinos in the late 80s and early 90s. All of them failed.

To that Jansen replied, “Well, do you think there’s a connection?”

For the first time, the Lees wondered. Mesquite was a small, rural town. “I’m sure they didn’t see any Chinese on the street,” said Lee. He gave it some thought and added, “But I really can’t say that I felt it’s been a hindrance at all.”

When Lee makes his rounds at the Eureka, little things that no one else would notice jump out at him. The color of the carpet in the newer wing doesn’t quite match the shade of the original. The hotel’s glass doors wobble too much in the wind.

He stops to joke around with the regulars. The year Eureka opened, Lee lived in the hotel and got to know its blue-collar clientele, the handful of local retirees and workers at the other casinos who sustained the Eureka during its first few years. They liked the property “maybe for the wrong reasons,” said Lee, because it wasn’t crowded and they could get service easier. And they confided in him as they would a son, ticking off a wish list that included a nicer restaurant for special occasions, a lounge to listen to music, the newest slot machines.

Over the next few years, Lee remade the casino piece by piece, reinvesting up to 10 percent of past years’ revenues and took no cash out of the business. He renamed the complex Eureka and added a steakhouse, lounge, and updated the slots.

As Mesquite began to attract more retirement communities and golf resorts, the town’s population mushroomed, growing 10 to 20 percent every year. In 1990, it had 2,000 residents. By 2000, there were 10,000. By 2008, 20,000.

In 2007, home builder Pulte’s Del Webb company commenced construction on a 2,000-acre, 3,500-home Sun City community for upper middle class retirees, complete with indoor swimming pool and an 18-hole golf course. A half-dozen smaller housing developments were also in the works before the housing crisis hit.

“One day I just closed my eyes and I started looking around me but different,” said Lee. “I started seeing that we had a nice town.”

As the town grew and changed, so did the Eureka. It veered away from competing with Las Vegas and set its sights on attracting folks from Salt Lake City or Grand Junction looking for a nearby weekend getaway. It struck a deal with Mesquite’s Wolf Creek Golf Club, ranked the second best golf course in Nevada by Golf Digest last year, as the lodging partner for its golfing packages, which attract 40,000 players a year from all over.

Between 2005 and 2007, Lee spent $30 million adding more casino space, slot machines, a new bar, new back offices, the dinner buffet, and shelled out another $3 million to update the hotel. He tore out the desert landscaping and replanted the outdoor pool area with lavish evergreens—olive trees and Canary palms.

“The other hotels were getting worn down and dying on the vine,” said Steve Sargent, Wolf Creek’s director of golf. “To the Eureka’s credit, they were proactive and renovated their facility.”

Following family tradition, the major renovation was accomplished with minimal leverage. Lee secured a sizable revolving line of credit but has kept it largely unused. Instead, he meticulously studies how much each new amenity will pay off and looks for ways to squeeze revenue out of what he already has. He’s thinking about classing up the computer room in the lobby with wood paneling and turning it into a board room for corporate golf-and-meets. 

“Everything we add has to make more money,” said Lee. “We don’t have a choice. If we make a mistake and build something that does not add or reduces profits, the virtuous cycle of investing for the future is destroyed.”

Lee points to Del Webb’s Sun City retirement community as something that will cause the town to continue to grow “as far as you can see.” The proposed Mesquite Desert Falls attraction international sports training and tournament complex is also under development, and another master planned resort community of 190 acres, Solstice Mesquite, is in the beginning phase of construction. That project is designed to include a casino, hotel, water park, amphitheater and a retail shopping center.

“When we started off, 200 rooms was probably as many as we could fill,” said Lee. 

But setting his sights on catering to the high end golfer, the one who wants “the resort lifestyle, with the big fat pool massages and the whole thing,” as described by Sargent, Lee envisions adding a spa with colorful cabanas, another 100 to 200 hotel rooms, and a bigger garden area that can also host retreats and weddings.

“Not only will you put your family there, but you’ll be proud that you live in Mesquite because of the Eureka Hotel,” said Lee, as if he longed to corral the entire town of Mesquite into his home.