Gaming companies can now expedite plans to rebuild the Mississippi Gulf Coast casino industry.
Early in the nine-day hurricane recovery special session that began September 27, Mississippi lawmakers approved an onshore casino bill that allowed casinos to move inland 800 feet, but a technicality concerning the tidelands issue was not resolved until October 7.
“I was happy with the outcome,” said Rep. Bobby Moak (D-Bogue Chitto), chairman of the House Gaming Committee. “It was a good compromise.”
When it rolled ashore August 29, Hurricane Katrina bludgeoned the coast’s 12 casinos, plus Hard Rock Hotel and Casino Biloxi, the 13th gaming operation slated to open the following week. The Category 4 storm pushed several casino barges across U.S. 90.
State lawmakers arrived at the bargaining table September 27 with no cohesive voice on an appropriate distance casinos could build from the shoreline. The industry proposed 2,000 feet; local boards of supervisors proposed 1,500 feet. The compromise bill allowed casinos to move inland up to 800 feet, roughly the length of three football fields. The bill was amended September 30 to remove “defined bodies of water.”
State lawmakers legalized casinos in 1990 but restricted them to the waters of the Mississippi River and the Gulf of Mexico. The new law helped transform the 26-mile stretch of sand beach dotted with sleepy fishing villages along the Mississippi Gulf Coast into a first-rate tourist destination.
Bruce Nourse, director of public affairs for Beau Rivage, which represents the casino industry’s largest investment on the coast and the gaming operation to take the largest financial toll from Hurricane Katrina, said MGM Mirage plans to rebuild the casino in the same spot.
“All we asked for was the ability to fill in underneath our barge to make it more stable,” he said. “We spent about $25 million more than anyone else to build our barge to withstand a very high tidal surge and the barge performed exactly the way it was designed. The floor of the casino is at about 21 feet, and we had about four feet of water in the casino. We’re looking at engineering that would raise the barge five feet so if another Katrina rolled in, the tidal surge wouldn’t get onto the barge.”
Even though some casinos are opening temporary facilities within the next six to eight months, Nourse said Beau Rivage would wait to open “when it’s 100% complete and of the very high standards that people expect of an MGM Mirage property.”
Mississippi Economic Council president Blake Wilson said the state chamber of commerce took an aggressive leadership role in lobbying for land-based casinos because “if this didn’t happen, the state’s recovery wouldn’t go as quickly. It was a critical, critical issue.”
Moving casinos inland sparked controversy over tideland leases — money casinos pay to the state for the ability to perch on land covered by water at high tide. Last year, a tidelands fund received about $7.5 million for capital improvement projects, including the construction of piers and artificial reefs in the tri-coastal counties. The bill that passed October 7 required casinos moving inland to pay into the tidelands fund, depending on the size of the investment. Payments will range from $400,000 to $750,000 per year. Casinos remaining on the water can retain their current tidelands lease with similar payments.
“It doesn’t increase the lease amount, it makes it more stable,” explained Moak. “The final version of the bill was this: if you have a lease in place right now, you can do one of two things. You can keep the lease you’ve got and deal with the Secretary of State once every five years for review, or you can convert the lease to a 30-year lease, tied to the CPI (Consumer Price Index) for an annual increase. This is regardless of whether casinos fill in underneath or not. However, if someone comes in new to the market without a tidelands lease, they pay an in-lieu tidelands lease, based on the amount of money they invest in the property.”
State lawmakers were criticized for not remedying casino industry issues sooner.
“There was a lot of thinking that they’d make quick work of the casino issue because they’re such money generators, but good gosh, with the biggest natural disaster in the history of the country, it’d be hard to imagine the Mississippi Legislature being able to do all that business in one day,” said Marty Wiseman, director of the John C. Stennis Institute of Government at Mississippi State University. “Overall, it was about as non-partisan a session I’ve ever seen. This disaster erased party lines. Disagreement for political reasons was minimal. The scary part was that it brought to the surface again some sectionalism issues. The people in North Mississippi were not as sympathetic as folks on the Coast wanted them to be, but hopefully those feelings will be minimized by the next regular session, when the red jerseys and blue jerseys will be put back on again.”
The Legislature passed different proposals to establish a grant program to help homeowners rebuild after storm damage — the House plan called for a $100 million pool allowing individual grants of up to $25,000; the Senate version suggested a $500-million pool, with the same grant maximum amount — but neither version passed.
“It would have been foolhardy to pre-empt federal dollars,” said Wiseman. “I know it adds a few days to the wait, but they need to maximize the use of state dollars, and use as much of the federal checkbook as they possibly can. Maybe in the end, everybody will be better off, with more money all the way around.”
Moak said, “As soon as we know what the feds are going to do, I suspect we’ll be back in a special session pretty soon. I hope the federal government will weigh in on this issue relatively quickly.”
Contact MBJ contributing writer Lynne W. Jeter at email@example.com.