By Joe Garner
Denver Rocky Mountain News Staff Writer

The story begins with water, like so many other tales from the arid West.

Colorado's booming casinos first were proposed so Central City could raise $6 million to upgrade its antique water system to meet new federal standards.

That was the pragmatic start of an economic bonanza. Today, almost nine years after opening their doors in 1991, the state's legalized gambling establishments have paid more than $38 million in taxes, created a new tourist draw and transformed Cripple Creek, 45 miles west of Colorado Springs, and Central City and Black Hawk, 35 miles west of Denver.

Voters' decision in 1990 to institute small-stakes gambling meant a brand new day for the three once-roaring mining camps that had fallen on slow times as down-at-the-heels tourist attractions.

The three towns were born to profligate luxury, arriving with golden spoons in their mouths.

The Cripple Creek Mining District billed itself as "the world's greatest gold camp," with mineral production estimated at $500 million. Central City, Colorado's first boomtown, proclaimed itself "the richest square mile on earth," drew celebrities to its opera house and rivaled Denver. Black Hawk boomed by processing ore from nearby mines, attracting one of the area's earliest permanent churches but also saloons, brothels and gambling dens.

More than a century later, Black Hawk, especially, has been re-created as a gambling theme park: towering, $100 million, brick-and-glass casinos have been shoehorned into the narrow valley, linked to massive parking lots above the valley by shuttle buses that trundle back and forth.

"My first image, coming into Black Hawk, is, 'Where am I?' Then I get up to Central City and I know this is still Gilpin County," said Sally Hopper, a former Republican state senator. In 1988-90, she took up her constituents' call for prosperity and historic preservation through a constitutional amendment to permit casinos.

"I was naive enough to honestly believe we were going to have a few slot machines in the candy shops and the T-shirt shops," she admitted. "The upside is the amount of money that has gone to the state, the jobs that have been created and the fact the old buildings are being saved, but it doesn't look like what we thought it would be."

Although it is largest of the three towns, Central City is struggling, with the fewest casinos and licensed games.

"Central City was amazingly empty when I was there last summer," said Patricia Stokowski, author of Riches and Regrets: Betting on Gambling in Two Colorado Mountain Towns. "There were almost no visitors in the gambling halls."

She said small-town political feuds, lawsuits and recall elections have stymied growth of the town's casino industry -- plus a perception that parking is too far from the casino front doors.

"Central City shows that to get a lot from gambling development, you have to invest a lot," Stokowski said. "You have to upgrade your city services and infrastructure and organizational level."

Although Black Hawk is the smallest of the three towns, it has 19 of the state's 48 gambling parlors and almost half the licensed games.

Black Hawk generated two-thirds of the state's $63.5 million gaming tax revenue last year.

"Every time a new casino opens, our market grows by what that casino does in business," said Medill Barnes, executive director of the Black Hawk Casino Owners Association. "We've yet to arrive at a point where there are any indications of any kind of market saturation."

"The town is only a little over 50 percent built-out," Barnes said. "Who knows if the rest will be built?"

Colorado's first casinos, many of which have gone out of business or been absorbed into larger operations, came into existence as the nation gave in to its pent-up lust to wager. In the 1980s and early 1990s, state after state embraced tax revenues from various kinds of gambling, from lotteries to racetracks, riverboats and casinos.

Now all but Utah and Hawaii permit wagering, typically with restrictions on types of games or limits on amounts of bets or losses, said Paul Doocey, editor of International Gaming & Wagering magazine.

In November 1990, Colorado voters split 57 percent to 43 percent to permit only slot machines, poker games and blackjack with a $5 maximum bet -- limits still in effect. The constitutional amendment provided for tax revenue to be divided this way: 50 percent to the state, 22 percent to local governments and 28 percent for historic preservation. The historic preservation grants alone have totaled $65 million for 1,500 projects statewide.

By allowing casinos in the mining towns, Colorado voters also authorized them on the Ute Mountain Ute and Southern Ute reservations in the Four Corners region, 350 miles from Denver. Under federal law, if a state permits gambling, tribes are permitted to offer the same games in reservation casinos.

Each tribe converted its bingo hall into a casino, earning them new economic self-confidence in southwestern Colorado.

Although the casino industry has boomed, Coloradans also resolutely voted down attempts in 1992, 1994 and 1996 to permit casinos in about 30 other communities. No casino question has appeared on the statewide ballot since 1996.

"I don't believe those votes were an indictment of what we already have. Rather, I think voters were saying they didn't want to expand casinos in other places," said Tom Kitts, head of the Colorado Division of Gaming.

Kitts also said he knows of no organized movement to increase the $5 betting limit or to add more games in Colorado casinos. Either change would require voters to amend the state constitution.

Across the nation, however, there is a trend for states to liberalize the rules each implemented initially to control gambling, said Doocey, editor of the industry magazine.

"I think gaming is losing its bogeyman image as communities become accustomed to the casino or riverboat or racetrack in their back yard," he said.

In Colorado, access to the Gilpin County casinos is the issue, not liberalized gaming rules. Average daily traffic on Colorado 119 into Black Hawk has increased almost five times since before casinos opened, with a corresponding increase in injury accidents, according to the Colorado Department of Transportation.

To attract more gamblers, Central City proposes building a road directly from near the Hidden Valley exit on Interstate 70 to the town, but the plan has been challenged twice in court. In a countermove, rival Black Hawk is discussing a tunnel for almost a mile from I-70 to lure gamblers trying to answer the siren call of the slot machines.

Colorado Milestones, which appears Tuesdays, is part of a yearlong project by the Denver Rocky Mountain News, NEWS4 and the Colorado Historical Society. Digital and print copies of historical images available at the Colorado Historical Society (303) 866-2305.

Online: RockyMountainNews.com, keyword "2000."

On TV: Sunday at 10 p.m.: Colorado History: The changing face of Colorado, from the people who built the state to those who will carry it into the next century.

December 21, 1999

Colorado Millennium 2000 is a yearlong project by the Denver Rocky Mountain News, NEWS4 and the Colorado Historical Society
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