The Neon Line: Promises Unfulfilled
A Buying Spree in West Reno
Jacobs Entertainment (JEI) is leading Reno into a real estate and financial disaster. JEI has not delivered on its promises, and it wants the City of Reno to help finance its ill-conceived vision of a “Neon Line” west of downtown.
JEI began acquiring properties in Reno, west of downtown, in 2015, with the purchase of the Gold Dust West. In 2017, they resumed buying, acquiring the Sands Regency hotel and casino for $26 million and the Gold and Silver Inn, along with up to 100 other properties, for an estimated total of $100 million.
JEI enticed the Reno City Council with promises of redevelopment and obtained permits to demolish up to 45 properties, including 18 weekly rental motels, displacing hundreds of low-income residents.
JEI has built only one new property, the 245 Arlington Apartment, and renovated just one, The Renova Apartments. There has been no development progress across the remaining lots. The company has attempted to attract joint venture partners or to sell these properties, but there has been no progress since 2017.
JEI has focused on renovating the Sands Regency into the J Resort, including building the Glow Plaza, and is currently building an outdoor festival venue at 2nd and Arlington, and appears to be betting on the festival venue to boost them financially.
(Note: This article was first published 2/20/2025. An update will be posted soon.)
A Neglected Casino Property
The Sands Regency, an 800-room casino hotel, has changed hands multiple times since its expansion in 1988. It was sold to Herbst in 2006, to Truckee Gaming in 2013, and to JEI in 2017. It grew into disrepair.
JEI has reportedly taken on $500 million in debt at an interest rate of 6.75% to finance the renovation of the Sands Regency into the J Resort. This amounts to an annual interest payment of $33.75 million.
Renovations began in 2019, but the property now faces a mismatch in customer demographics. Historically, it catered to a blue-collar crowd, but the renovation has driven up prices, alienating its traditional customer base but not attracting many new customers.
Reviews on social media indicate widespread dissatisfaction with the price increases, and they call out that it’s not a resort like other large casino properties in Reno.
Uncertain Viability of the J Resort
JEI is a private company that does not publish its accounting statements. Estimates and conclusions in this article are based on publicly available information, industry-standard factors, and financial ratios.
For the J Resort to achieve financial viability, it would need to generate an estimated $110 million in gross revenue, comparable to the Atlantis casino, which reported revenue of $133 million with a similar room count.
However, based on estimated operating expenses and debt service obligations, even at this revenue level, the J Resort might run at a $7 million annual loss, which would require Jacobs to distribute the debt service company-wide across of JEI’s entire casino portfolio in which case the J Resort might have a +23% operating margin.
JEI appears to be betting on achieving Atlantis-level revenue, but current conditions do not support such optimism. From the reviews and observations J Resort might be half empty. It’s hard to tell.
It appears that JEI is relying on the festival plaza at 2nd and Arlington to cover the shortfall. Still, this event space is unlikely to generate the necessary revenues, given that it will be challenging for them to host 10 or more shows with ticket sales exceeding 10,000 units. The maximum capacity is 15,000 attendees.
Jacobs would have to outdo the Golden Center in Sacramento and the Shoreline Center in Mountain View to reach their goals.
Looming Risk for Jacobs
JEI’s $500 million in bonds mature in 2029, and its ability to refinance is uncertain. Other casinos typically issue bonds with terms of 7-10 years, allowing more time to accumulate cash reserves. JEI's five-year bond term suggests refinancing risk.
The company has not developed any of the 100+ lots it acquired, meaning it cannot generate revenue from them or use them as collateral for refinancing. If the company cannot secure additional funds or attract development partners, insolvency by 2029 is possible.
Requests for Public Assistance
JEI has requested significant financial support from the City of Reno, including $20 million in tax-increment financing (TIF) which is pending, 40% (up to $20 million) of new tax revenue, $4.6 million in infrastructure improvement reimbursements, and $1.57 million in sewer fee abatement which has been granted and building permit and sewer connection fee deferrals with a 5-year payment schedule.
(Note: Recently, Jacobs revised their TIF down to $20 million, and the city of Reno extended their sewer connection deferral indefinitely.)
These requests from Jacobs place a burden on Reno’s already strained finances. Reno is facing a $25 million budget deficit in 2026. The city’s redevelopment fund has been depleted due to the underperformance of the Bowling Stadium, Event Center, and Ballroom, which were financed with approximately $100 million in tax incentive bonds in the 1990s.
Reno has already lost approximately $2.5 million in room tax revenue over the last five years due to JEI’s demolition of 18 motels. Property tax revenue has declined as demolished properties reduce taxable value; however, the exact amount is difficult to determine.
Risks for The City of Reno
Jeff Jacobs, the company’s CEO, is known for high-risk, high-debt investments. He has publicly stated that the Neon Line development will be the capstone of his career. However, his financial decisions suggest a speculative rather than strategically sustainable approach.
Despite receiving significant concessions from the Reno City Council, JEI has failed to present a concrete development timeline. Hundreds of residents were displaced, and citizen objections were ignored. Jacobs’ political connections, including campaign contributions and advisory roles, have influenced city decision-making. The city has allowed JEI to bypass sign and billboard regulations, leading to legal action from Scenic Nevada. Former city council member and Mayor Schieve’s campaign manager, Jessica Sferrazza, is an advisor to Jacobs.
(Note: The Nevada Supreme Court just ruled that Jacobs can erect the signs.)
If JEI fails with the Neon Line vision, Reno will be left with vacant lots and lost tax revenue. The city must exercise caution before approving any further financial benefits for Jacobs. Given this situation, the Reno City Council should reconsider further financial support for JEI until the company demonstrates a viable path forward with the development of its properties.
Conclusion
JEI should provide transparent development plans and execution strategies and be held to them. The Reno City Council should seek public input before granting further financial assistance. JEI must find ways to monetize its vacant lots, even if through discounted sales or joint ventures with developers. JEI should not be granted any tax incentive bond financing.
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