The land that the Castaways was built on was first used in 1931 for the Red Rooster Nite Club. That structure was destroyed by a fire in 1933 and it was rebuilt. In 1942, the San Souci Auto Court was built next to the Red Rooster. Later it was absorbed by the Sans Souci Hotel, Inc., which in October 1957 opened the Sans Souci Hotel. In 1963, the property became the site of the Castaways Hotel & Casino. The latter experienced financial trouble and was sold and renamed Oliver's New Castaways Casino. During the 1960s, the hotel had a 15,000 gallon aquarium behind the front desk. Three times a day a show was put on by three naked women in the aquarium.
In February 1970, the Castaways was sold to billionaire Howard Hughes for $3 million as part of his spree of buying Las Vegas properties. The resort operated until July 1987, when it and the surrounding property were purchased by Steve Wynn. Wynn then proceeded with his plans to develop a new resort on the Castaways' former grounds using the working name Golden Nugget on the Strip. The resort became Mirage and opened on November 22, 1989. A few years later, the Treasure Island was built on more of the land that had been used as the Mirage's parking lot and additional adjacent undeveloped land.