Mississippi coast casinos set to storm back
Posted on Thursday, December 15, 2005
BILOXI, Miss. — Anyone visiting Biloxi in the days after Hurricane Katrina might reasonably have concluded that it would be a long while before slot machines were again ringing their incessant chimes. The storm destroyed nine of the 10 casinos in Biloxi, and the 10 th sustained significant damage.
Yet so well financed is the gambling industry — and so profitable are the facilities lining the Mississippi beaches — that one casino is set to open its doors to the public on Dec. 22, and another will open the day after Christmas. A third, the Palace Casino, will have spent $ 23 million in four months to reopen by New Year’s Eve, said the general manager, Keith Crosby.
In fact, all 10 Biloxi casinos have told the city they will rebuild, and most plan larger, more elaborate facilities than they had before Katrina. One, Harrah’s Entertainment Inc., the world’s largest gambling company, has told city officials that it plans to invest as much as $ 1 billion in a new resort-casino — a figure sizable enough to catch people’s attention even in Las Vegas. And a growing list of investors, looking to take advantage of a new state law allowing land-based casinos, is seeking an audience with city officials or state regulators in Jackson.
For better or worse, casinos provide that rarest commodity along a Gulf Coast battered by Katrina : optimism.
“Legalized gaming,” said Biloxi’s mayor, A. J. Holloway, “is going to be what saves us.”
By contrast, inaction and uncertainty dominate the story line in New Orleans, as businesses wonder if their customers will return.
“It’s not a question of whether the business community will take a huge hit, but how bad that hit will be,” said Jay Lapeyre, who, as chairman of the Business Council of New Orleans, speaks on behalf of more than 50 of the area’s largest corporations.
Casinos, of course, can make unpleasant neighbors. Biloxi residents complain about the traffic and the noise. The gambling palaces tower over a once-quaint beach community of modest homes. One casinohotel in this town of 55, 000 is the tallest building in Mississippi ; another reigns as the state’s most expensive.
Still, they’re proving resourceful, resilient neighbors by serving as an economic lifeline in a town that lost one-fifth of its housing stock and well over 10, 000 jobs.
Elected officials and industry executives appear bullish about an economy they expect to grow significantly over the next few years as casinos take advantage of a Katrina-inspired change in Mississippi law that allows them to construct their gambling halls on land as long as they build within 800 feet of the coastline. Before Katrina the state permitted operators to erect hotels, parking structures and the like on land, but the casino itself had to float on water, so the operators had to place on barges elaborate two- and three-story casinos, which still lie in ruins along the coast.
Pre-Katrina, Biloxi’s casinos employed 15, 000 and in the most recent fiscal year contributed $ 19. 2 million to the city’s budget. That’s more than twice the amount the city raised in property taxes. “The city needs the casinos to come back home and come back fast,” said William Stallworth, a member of the Biloxi City Council who spent time in Jackson in October to make sure the casino law was changed.
There seems no shortage of investors.
“Since the storm, I’ve had 10 to 12 developers express interest in coming to Biloxi to open a new casino,” said Larry Gregory, executive director of the Mississippi Gaming Commission. “I suspect we’ll end up with at least three or four more new facilities operating in Biloxi over the next two years.”
Mississippi’s casinos pay 12 percent in taxes on their winnings, “which is on the low side of casinos nationwide,” said Frank J. Fahrenkopf Jr., chief executive of the American Gaming Association.
The Mississippi Gulf Coast casinos, including two in Gulfport and a third in Bay St. Louis, generated $ 1. 4 billion in profit last year and paid $ 168 million in state and local taxes. Gregory predicted that within two years the coastal casinos would clear $ 2 billion and contribute more than $ 240 million to state and local coffers — a prediction that might be overly conservative, said Timothy M. Hinkley, president of the Isle of Capri Casinos, a chain based in Biloxi that opened the first casino in the city in 1992.
“This has proven to be just an incredible market,” Hinkley said. “I’ve consistently underestimated its potential.”
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