Coloradans See Gambling as Different Kind of Mother Lode : Economy: The betting debuts in 3 former mining towns Tuesday. Residents hope for return of boom times. But many fear it’s the devil in disguise.

Construction is everywhere. Dumpsters, concrete trucks and heavy machinery clog narrow streets as hundreds of workers scurry in and out of century-old buildings, pounding, painting and sawing in an air of anticipation that has not existed in this historic mountain town since 1865.

The reason is that limited stakes gambling will debut here and in two other Colorado communities on Tuesday. And many residents are betting that gambling will help restore the luster to their once-thriving mining towns.

Central City and neighboring Black Hawk, two tiny communities high in the Rocky Mountains about 25 miles west of Denver, were once bawdy, booming towns where gold was king and fortunes were often made.

But as the gold veins dried up, so did the communities. For the last several decades, residents have sold memories and artifacts of their past to outsiders in a summer tourist economy that barely limped along. Each year there were fewer jobs and less money. Public facilities and buildings fell into disrepair, and a population that once numbered 50,000 dwindled to 600.

Now, however, the cities think they have struck a different kind of mother lode. Central City and Black Hawk, along with Cripple Creek, a former mining community 45 miles outside of Colorado Springs that once boasted the nation’s richest known gold deposits, will be open for gambling Tuesday in a grand experiment that could have implications for similarly distressed Western communities.

In a last-ditch effort to save their communities, residents last November pushed through a statewide initiative that allows low stakes gambling in the three towns. Bets will be limited to $5 at slot machines, and at blackjack and poker tables.

If everything goes as planned, gambling is projected to generate $140 million a year in gross receipts in the three towns, create thousands of jobs, dramatically boost retail sales and eventually dump a collective $7 million annually into city coffers, eight times their current operating budgets.

But even as these cities stand on the brink of new-found fortunes, residents and city officials who fought for gambling quietly confess there are signs that what they perceived as the salvation for their dying communities may just be the devil in disguise.

They fear that Cripple Creek, Central City and Black Hawk may be saved in name only, with gambling stripping their towns of the charm and flavor they want to preserve.

“I know that had this not happened, we would have just dried up,” Central City Administrator Jack Hidahl said as he sipped on a beer in the Elk’s Club, one floor up from the cacophony of construction that he oversees. “But I can’t tell you how many times I’ve looked in the mirror and asked myself: Have I unintentionally helped unleash a monster?”

For now, the anticipation of gambling is paying huge dividends. In all three cities, loans and construction projects predicated on potential earnings have allowed badly needed improvements to be made to water treatment and sewer systems.

Historic buildings, many in such poor condition that they were about to fall down, are being renovated under the watchful eye of historical preservation councils as they are made ready for gambling. Old roads also are being paved and new ones built.

The months of nearly 24-hour construction have meant hundreds of jobs, and the help-wanted signs that dot the windows of the new casinos promise more to come.

“It’s nice to see people working,” said Sandy Jensen, who holds the newly created city clerk’s job in Black Hawk.

And similar to the strike-it-rich days of the late 1800s, some residents have made fortunes almost overnight as real estate prices have been pushed higher and higher by speculators and casino investors.

In Cripple Creek, Norbert Larsen, a construction worker, walked away with a $160,000 profit from 10 lots he bought a month before the state ballot initiative was approved and sold two months later.

In Central City, residents like Vern Terpening, owner of Terp’s Leather Goods, and J. D. Carellis have become millionaires by selling property that nobody wanted 18 months ago.

Others await their share of the bonanza. Dick Beall, owner of a Cripple Creek gift shop that was about to go bankrupt, said he has sunk “everything I own” into transforming his facility into a gaming parlor.

Central City Mayor Gene Schmalz resigned recently so he could turn the downstairs of his gift and T-shirt shop into a casino. Black Hawk Mayor Bill Lorenz did the same. He is building a two-story gambling facility adjacent to his restaurant. His son, Tony, is developing a casino a few doors away.

Fewer than a third of the projected 60 casinos, the vast majority owned by out-of-town investors, will be open Tuesday, however, as efforts to prepare for an estimated 6,500 visitors a day have created problems in construction and governmental reorganization.

Complete government agencies--including fire departments, police departments and public works--have either had to be created or greatly expanded. And much of this effort has revolved around people determined to maintain the small-town flavor of their communities.

“We sold gambling as an attraction that would get more tourists, and not a major industry,” said Hidahl of Central City. “We had visions of five or six slot machines in a building. We didn’t want to be like Deadwood.”

Deadwood, S. D., a remote Black Hills mining town, was struggling for survival when it instituted gambling two years ago. While gambling has proved to be a financial boon, it also has dramatically transformed the town.

Virtually all of Deadwood’s retail fixtures have vanished, pushed aside by gambling interests. Crime and traffic problems have doubled. Skyrocketing property values and rents have driven many longtime residents, and a large portion of establishments not tied to gambling, out of town.

To avoid repeating those mistakes in Colorado, local and state officials instituted a plethora of building requirements and gambling restrictions.

But some of those plans have begun to backfire. The higher cost of preserving buildings instead of replacing them has forced owners to put in more slot machines to guarantee a return on their investment. Casino operators also have found a loophole in an ordinance that limited the percent of space that could be used for gambling in retail operations.

As a result, small casinos average 40 to 50 slot machines, the predominate gambling device, while larger ones boast from 150 to 200 machines.

“Nobody expected it on this scale,” said John Ficke, an 11-year Denver transplant who campaigned for gambling and whose real estate business is booming. “I’m nervous about it. It’s ultimately going to rule this town and that’s scary to me. Maybe we could have done something different, but I don’t know what that different could have been.”

There also are signs that other problems often associated with gambling may occur here.

In Cripple Creek, population 750, the number of criminal complaints has gone up 350% during the last year--rising from 81 for January through August, 1990, to 269 for the same period this year.

Affordable housing already is a problem. In Black Hawk and Central City, housing prices have doubled and tripled, Ficke said.

And the political will to halt the spread of gambling in the three communities appears to be waning.

In Cripple Creek, Bill Fox, who campaigned for the ballot initiative that allowed gambling, was recalled from the City Council earlier this year for spearheading an effort to limit each casino to no more than 100 machines.

“I personally knocked on over 3,000 doors promising that we were going to keep everything small, keep our small-town flavor and quaintness,” Fox said. “As soon as the election was over, the promises were forgotten.”

Times researcher Ann Rovin contributed to this story.