Hurricane Katrina’s devastation of the Gulf Coast gambling industry could sway Mississippi legislators to consider allowing land-based casinos and scrap the law that placed them on the water in vulnerable spots.
“I think that will be a public policy question that will be on the minds of every legislator when they come in for the next session,” said Larry Gregory, the Mississippi Gaming Commission’s executive director. “That discussion will be the No. 1 issue in this legislative cycle. This will definitely put the fire under their feet.”
More than half of the 13 casinos in Biloxi, Gulfport and Bay St. Louis were destroyed by the hurricane that roared in off the ocean, Gregory said Wednesday.
“The only casino I saw that looked intact and stable was the Beau Rivage,” in Biloxi, he said of property owned by Las Vegas-based MGM Mirage Inc. “It’s more than just the casinos. It’s the infrastructure. It’s going to take several years to get that up and running.”
Mississippi requires casinos to float, either along the Gulf Coast or on the Mississippi River. A state law that took effect earlier this year allows the floating casinos to build permanent pilings to stabilize the barges.
It’s not clear if that reinforcement would have been enough to save the casinos in a Category 4 or 5 hurricane. None of the casinos had a chance to construct pilings.
Rep. Steve Holland, D-Plantersville, said the law should be rewritten to allow land-based casinos, but only in areas that had gambling barges before.
“I think if they had been on land, it still would have been disastrous, but not nearly as much,” said Holland , a member of the Gaming Committee in the Mississippi House.
Some lawmakers, particularly religious conservatives, have opposed land-based casinos along the coast or the Mississippi River because they fear other, inland counties would push for gambling house, too.
After the hurricane, “I think what you’re going to see, politically, is a different mind-set on everything,” Holland said.
Powerful winds and a massive storm surge laid waste to the region, tossing some of the barges on which the casinos rested like toy boats and crippling the state’s $2.7 billion gambling industry.
Las Vegas-based Harrah’s Entertainment Inc. likely lost two casinos in the powerful hurricane: the Grand Casinos in Biloxi and Gulfport. The Beau Rivage sustained “significant damage, “ as did Biloxi’s Casino Magic, which is owned by Pinnacle Entertainment Inc. of Las Vegas.
The Casino Magic Bay St. Louis and Boomtown Biloxi Casino in Biloxi were severely damaged, according to owner Penn National Gaming Inc. Television footage showed the Copa Casino in Gulfport and the Hard Rock casino in Biloxi appeared to have extensive damage.
The Treasure Bay Casino in Biloxi was a total loss, said Bernie Burkholder, president and chief executive.
Gary Loveman, Harrah’s chairman and chief executive, said putting casinos on boats didn’t make any sense. It’s been a running debate since the state legalized floating casinos in 1990 and the first one opened in 1992.
“I’ve just never understood that,” Loveman said. “It’s not simply an inconvenience. ... it’s a public safety problem.”
Loveman, who runs the world’s largest gambling company, said Harrah’s would rebuild on the Gulf Coast but would take a hard look at putting a casino on a barge again.
JP Morgan gambling analyst Harry Curtis wrote in an investor’s note that the state would benefit from land-based casinos.
“In the long run, we think this legislation would be good for the state’s tourism industry,” because it could encourage greater investment and greater amenities,” Curtis said. He cautioned that “investment would not occur unless casinos could build facilities to withstand Category 5 hurricanes.”
Gregory said losing the casino industry would hobble the state. About 14,000 people work in the casinos along the Mississippi coastline. Each casino has a land-based hotel, and thousands more employees work in those.
“We just want to make sure that they come back to this state,” he said. “That’s vital to our communities.”