Investor Drops Effort to Buy Poker Club in Gardena
An investor, whose application to the City of Gardena to buy the Horseshoe Club had run into problems with both the city and with the state attorney general’s office, withdrew the application this week, signaling the demise of the city’s oldest poker club.
Herbert Stern, the former president of the Commerce Casino, asked city officials Tuesday to withdraw his application for a transfer of the Horseshoe Club’s operating license issued by the city.
Stern declined Thursday to discuss why he requested the withdrawal, but in the past had objected to conditions set by the city for the transfer.
“I’m disappointed not only for myself but for a lot of the employees,” Stern said Thursday. The club had about 75 to 100 employees when it closed for remodeling on May 23, down from a normal work force of about 250.
Horseshoe General Partner Milton Corwin said the 40-year-old club would not reopen under the old ownership, and that the 4.4-acre site at Rosecrans and Vermont Avenues was up for sale as commercial real estate.
City officials said they have received inquiries from potential buyers interested in the Horseshoe property, a number of whom have expressed interest in continuing to operate a club at the site.
“Under proper management I think it could be successful” as a club, Mayor Donald Dear said. “I think it would be a choice corner for any kind of business.”
Corwin did not disclose the asking price for the property, but Stern and a partner, Los Angeles attorney Leonard Baum, had proposed buying the club, if the transfer of a city operating license had been approved, for about $4 million.
Corwin said selling the property for commercial development and not as an operating card club diminishes the value of the property as well as the amount of the return on the investments of the 91 shareholders, who have owned the club since 1951.
The closing of the Horseshoe has not adversely affected card club revenues to the city, said City Manager Kenneth Landau. In fact, card club revenues have increased, from $308,817 in June, 1988, to $371,493 in June, 1989, city records show.
City officials and card club players said the city’s remaining two clubs, the Eldorado Club and the Normandie Casino, have taken up the slack.
Lester Mindus, a Gardena psychologist who played at the Horseshoe nearly every day for eight years, said he had joined other former Horseshoe customers who now play across Rosecrans Avenue at the Normandie Casino.
Two Clubs Left
“I’m pretty happy where I am, but it’s not the same,” Mindus said.
The Normandie’s bustling atmosphere is far different, he said, from the relative emptiness at the Horseshoe during the months before it closed.
“It’s sad there are only two clubs where there were once six,” Mindus said.
Together in their heyday, Gardena’s six poker clubs provided about a third of the city’s revenue.
The Horseshoe was once the most profitable of the casinos, said Tom Parks, formerly a 25-year Horseshoe employee who is executive vice president of the Gardena Valley Chamber of Commerce.
“At one time we were the top club in town,” Parks said. When Proposition 13 passed in 1978, however, other cities “were strapped for funds and started looking at (clubs) as a potential revenue raiser.”
Gardena’s card clubs, after having a monopoly on the market in Los Angeles County since 1938, began lagging behind newly opened clubs, which offered bars, a greater variety of games and higher limits.
“Gardena (clubs) eventually did those things, but they were always following behind what the other clubs were doing,” Parks said.
City Councilman Mas Fukai, the council’s most vocal critic of the Stern-Baum buyout proposal, said he was sorry to see the club closed.
“I don’t blame anybody except the present management of the Horseshoe Club,” Fukai said. “They let it run down.”
Fukai said the city had been justified in setting stringent financial conditions for the transfer of the license because the city was protecting its reputation for closely monitoring its poker clubs.
The plan by Stern and Baum to buy the club encountered problems soon after it was proposed in March.
In May, the council tabled the application after Stern and Baum balked at meeting five city demands for the license transfer, including obtaining a $6 million letter of credit and setting up a $180,000 escrow account to cover employees’ pay for four weeks.
The council tabled the proposal again in June after an investigation of Stern’s background by the city’s Police Department revealed discrepancies with Stern’s written application.
Stern said on the application that he had never been a party to a lawsuit, but the city found that he had been involved in at least two lawsuits. One, filed in 1984, alleged financial misconduct against the management of the Commerce Club. He was the president. The suit was later settled out of court.
Baum, who is also Stern’s attorney, told the council that the omission of the lawsuit from the application was an oversight.
Also in June, the state attorney general’s office informed city and club officials that the gaming registration certificates of the club’s shareholders was to expire July 1 and could not be renewed because the club was closed.
Baum told the city council that club officials planned to renew all 91 certificates, but Corwin said Thursday that the shareholders have since been informed that that plan has been scrapped.