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Study indicates gaming boosts retail activity

Prior to legalization of gaming in Mississippi, opponents voiced concerns that casinos would draw away sales from local grocery stores, restaurants and other retail businesses because area residents would be spending more of their discretionary money at the casinos rather than at local businesses.

But a study released recently by the University of Southern Mississippi (USM) is evidence that casinos have actually had a very positive impact on local sales, particularly for the retail pull factor (RPF) that measures a county’s ability to draw shoppers from outside of the county.

An analysis done by Dr. Charles P. Cartee, professor of finance/real estate at USM, studied retail and personal income data supplied by the Mississippi State Tax Commission and the Bureau of Economic Analysis from the period 1990-2002.

Tunica has seen the most dramatic increase in RPF, and now has the highest RPF in the state. Tunica’s RPF has increased about 405% between 1990 and 1997. In Tunica, sales went from $39.6 million in 1990 to $307 million in 2004. Harrison County didn’t see as dramatic an increase in RPF, but overall retail sales nearly tripled from $1.3 billion in 1990 to $3.5 billion in 2004.

“The dramatic increases in RPF and sales in gaming areas kind of negates the argument that casinos would harm local retailers, doesn’t it?” Cartee said. “Not only are people spending more, more is coming from outside being spent in local businesses. The ability of these areas to draw retail sales increased significantly after gaming was legalized.”

A score of one is flat, with counties with a score of less than one losing sales to outside areas, and scores of more than one drawing sales into the county. The RPF is a general measure of how much retail sales are coming outside the county compared to what the county could support inside based on the level of income.

The report “Impact of Gaming on County Retail Pull Factors in Mississippi” shows that from 1990-1992, prior to introduction of gaming, Tunica County’s RPF was below 1.00. It moved to 1.26 in 1993 and jumped to 3.76 from 1993-1994 as the full impact of gaming development took place. It reached a high of 4.90 in 1997, and in 2002 stood at 3.37.

Webster Franklin, president and CEO of the Tunica Convention and Visitors Bureau, said sales have increased so dramatically because gaming has brought in large numbers of visitors, and currently employs about 16,000 people. That has spurred development of new retail opportunities like the Casino Factory Shoppes.

“The addition of these tourist-based amenities is not only of benefit to those coming into our county, but those who have lived here for years, as well,” Franklin said.

The other largest gaming area in the state is in Harrison County. Cartee said Harrison County RPF improvement wasn’t nearly as marked as that of Tunica County because the county was already a major regional trade center.

“In 2004, retail sales were $307 million in Tunica County as opposed to $3.5 billion Harrison County,” Cartee said. “There is no comparison in the magnitude of sales. Harrison County retail sales in 1994 increased almost 31% in one year. That is a lot. Then they held those levels in somewhat that range in most of the period after that.”

Sales in Harrison County dropped a little in 2000 and 2001, an effect attributed to September 11th. Then in 2003 and 2004, sales recovered and climbed again.

Cartee said while these figures don’t prove a one-to-one correlation between gaming and retail sales, there is no other variable that could account for this marked increase in retail sales.

“You can’t attribute all of it to gaming, but what else has come in here during that period of time that could account for it?” Cartee asks. “There are no other major new employers or business expansions that you could attribute this to. I think the casino industry employs about 13,000 to 14,000 people in Harrison County, and statewide it is over 30,000. So when you have that kind of employment, there has to be a big impact on sales.”

The report states that unlike Tunica County, Harrison County’s RPF was above one before the introduction of gaming. From 1990-1993, its RPF ranged from 1.07 to 1.09. As the impact of growth of casinos grew after August 1992, the impact on RPF was apparent, increasing from 1.09 in 1993 to 1.24 in 1994. Harrison County’s RPF was 1.29 in 2002, the latest year for which figures are available.

Vincent Creel, spokesman for the City of Biloxi, said that sales tax revenues have accounted for an increasing share of the city’s budget since gaming came to town.

“Right now, gaming and sales tax revenues account for from between 55% to 59% of our budget,” Creel said. “It has become a significant portion of the city budget.”

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.

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