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Time to consider bringing the Coast’s casino industry onshore?

For several years, there has been speculation that if the Coast casino industry and its 16,000 employees suffered a major hit from a hurricane — causing catastrophic damage to the floating casinos — the economic hardship to local communities could lead to casinos being allowed to move onto land — out of harm’s way.

Now, the discussion is beginning about how to provide better protection for the casino industry before a worst-case scenario develops.

The Mississippi Gaming Commission (MGC) is undertaking a study of what can be done to prevent the loss of tax revenues, jobs and local income that could accompany major losses if a category three or stronger hurricane hit the dockside casinos.

“A major hurricane could cause an economic catastrophe that would be akin to having Keesler Air Force Base shut down,” said Len Blackwell of Gulfport, chairman of the MGC. “We are very careful about trying to preserve economic treasure that Keesler is. I think we should also be realistic and say gaming tax revenues and employees are an asset that we ought to be equally interested in preserving.”

He points out that the Biloxi City Council recently voted to deny a permit for a high-rise condominium near Keesler even though the base commander had no objections. The council voiced fears of incremental impacts that could make Keesler vulnerable to base closure.

“By comparison, not only did we allow the casinos to be in a place of peril, we require them to be there,” Blackwell said. “It is not smart at all for the state to be in that position. That is risking too much of our assets. Why should we allow this capital resource of our state to be in a situation where it could vanish overnight, crippling us economically?”

Larry Gregory, executive director of the MGC, said the MGC is charged with regulating an industry whose tax revenues provide invaluable support to state and local governments.

“The loss of tax revenues from gaming would be a financial nightmare for our state,” Gregory said. “Not to mention the number of jobs that would be lost if our casino industry were to suffer a devastating blow that forced the properties to close or lose substantial amounts of money. The commission recognizes that the requirement under Mississippi law that casinos in Mississippi float puts them at great risk to suffer from the ruinous effects of natural disasters, such as hurricanes and tornadoes, and it also puts them at risk of dire financial straits due to the fact that resting barges have a finite life expectancy and must be periodically repaired at extraordinary costs.

“Thus, the commission has asked me to conduct research and gather data regarding the possible financial and physical risks that our casino properties face due to the requirement that they float in navigable waters. At this time, I am just beginning the lengthy process of compiling facts and figures to present to the commission for their review regarding this matter.”

Gregory said his presentation would in no way be a recommendation, but merely an analysis of this situation for the commissioners to consider.

“It will then be up to the commission to decide which course of action to take, if any,” Gregory said. “The commission has made it emphatically known to me that they are in no way seeking any changes in the law regarding site approval. If they do choose to go forth and seek guidance from the state Legislature, a full report will be prepared and presented to the Legislature and public input on the matter will also be solicited.”

Blackwell said the MGC is in the preliminary stages of “taking a long hard look” at the current vulnerability of the casinos.

“To do that, we need all the facts and figures,” Blackwell said. “When giving presentations at seminars, I’ve had casino companies tell me, ‘We have money allocated to spend in Mississippi and we hate to spend it on our barge because it has such a limited life expectancy’. As these barges deteriorate and become more and more obsolete, it doesn’t make sense to replace those barges with other temporary assets. That is not smart policy on the part of the state.”

Blackwell said accommodations have already been made in the Delta region to allow casinos to be located in artificial moats located in former cotton field. And the Beau Rivage Casino on the Coast is built on pilings over the water, instead of being on a barge that moves up and down with the tide.

“All this stuff about being on navigable waters is legal fiction,” Blackwell said. “Let’s disabuse people of that legal fiction, and get down to the real deal. I’m looking at it from the state’s standpoint. We can’t afford to lose 40,000 jobs and $330 million in tax revenues. The same principals apply in Tunica in a lesser way. Those casinos are also vulnerable to tornados and floods.”

Blackwell said it is his personal opinion that Hurricane Lili and Tropical Storm Isidore in 2002 were a real wake up call.

“It made me realize that it is time for us along the Coast, but also in the Delta counties, to start thinking about what to do as far as the future of the situation of gaming enterprises along the coastline,” Blackwell said. “I think everyone is very satisfied with the fact that the casino industry is isolated along the shoreline. I think that is far more important at this point in time than the fact they are floating. People like the fact they are down by the shore. But there is no purpose being served by requiring them to float. They resemble buildings. The public looks at them, and thinks they are buildings. They are permanently moored, so it is not possible for them to navigate. Furthermore, in the Delta counties from the very beginning casinos have been allowed to dig artificial moats out in cotton fields. It would be much more honest to allow casinos to be situated on their existing land sites. I would not favor going beyond those sites.”

Blackwell said he would not recommend doing away with the requirement that casinos sign a tidelands lease.

“I think new casinos and casinos that would want to relocate on the land part of existing sites ought to have to jump through all of the hoops and go through every step every casino previous to them has had to go through,” Blackwell said. “I would not be in favor of relaxing any of those requirements. You would almost need dual applications, virtual applications showing where the vessel would be on a tidelands lease, and the actual application that would show where the casino would be landside instead of on tidelands. I would retain attributes of tidelands leases. I would keep it so any appraisal of tideland areas leased to state would still have to be based on its use for gaming. The only thing I would not require is that the casino apparatus actually float in that space.”

Blackwell stressed that much study and input from the gaming industry and the public would be needed before any major changes were undertaken. But he expects there would be support from the environmental community and maritime industry interests for getting casinos out of the water and onto land to allow more appropriate use of the water for amenities such as marinas that would benefit the public.

Taking a look at the history of gaming, few could have imagined that today millions of dollars worth of infrastructure would sit atop floating barges. First, gaming was allowed outside the 12-mile limit from shore, then it was allowed inside the limit, and finally it was allowed dockside with the boats not being required to cruise at all.

“Then all of the things have happened to make these things not look like paddle boats, but buildings,” Blackwell said. “To me it is evolution (not requiring the casinos to float). It is not a radical change, in my mind.”

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sure Bay Casinos is one of the most exposed casinos on the Coast. Bernie Burkholder, president and CEO of Treasure Bay Corp., said the casino

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