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Casino, condo development accelerates region’s recovery

From devastation sometimes comes opportunity. And although no one asked for or wanted Hurricane Katrina, the massive amount of reinvestment in casino and related condo or condo-hotel projects on the Mississippi Gulf Coast is now estimated at $1 billion — with another $1 billion worth of projects waiting in the wings.

Larry Gregory, executive director of the Mississippi Gaming Commission, said interest in the Gulf Coast gaming market is contagious. “New developers and Wall Street are looking with a keen eye at the growth happening on the Coast,” Gregory said.

Coast casino properties that have been able to reopen since the storm are doing a booming business. Three Biloxi casinos in January and February grossed more than 50% of the total amount for the previous 12 casinos during January and February of 2005.

“Preliminary reports for March 2006 indicate the Biloxi properties continue to rebound from Katrina,” Gregory said. “Four thousand of the 15,000 casino employees are now back to work. Gaming square footage pre-Katrina was 673,583. With three properties, it is now 137,510. The number of games pre-Katrina for the Gulf Coast was 18,077 slots and table games. We now have 3,521 or roughly 20%. The number of hotel rooms available at the three casinos is 1,511 or roughly 18% of the pre-Katrina 8,525 casino hotel rooms.”

Gregory said between four to six properties plan to reopen in 2006: Beau Rivage, the former Grand Gulfport, Boomtown, Treasure Bay, Grand Biloxi and Casino Magic Bay St. Louis.

“If all six properties reopen — the number of employees would increase by about 6,500 bringing the total casino jobs to 10,500 compared to the 15,000 pre Katrina,” Gregory said.

Square footage of gaming space is expected to increase to 388,150, and the number of games is expected to be 11,771. An additional 2,806 hotel rooms are expected to be available later this year at Coast casinos bringing the total number of rooms for the coast at casinos to 4,317. That would represent about 51% of the pre-Katrina number of rooms.

In 2007 more casinos are expected to open. The Silver Slipper is expected to open in Hancock County employing about 500. And in 2008 permanent projects will begin replacing temporary locations making way for much larger resort style properties which will provide for increases in employment, number of games, convention space, hotel rooms and other amenities.

Every casino that was in Biloxi prior to the storm is planning to come back. But they won’t be the same.

“They will be bigger and better,” says Beverly Martin, executive director, Mississippi Casino Operators Association. “I think several of them have plans to include some type of condominium development in with their new expanded properties, be it condominiums or condo-hotels. Probably most will be condo-hotels that would be in a rental pool.”

Right now the properties that already open are seeing heavy traffic.

“It is a nice problem to have,” Martin said. “I’ve been to the IP three times, and all three times I have seen people waiting two and three deep waiting for a slot machine so they could get on it. The poker rooms are pretty amazing, too. Most of them didn’t have poker rooms before the storm. That is a change since the storm I have seen. I credit that to the World Series of Poker on television. That has really given poker a shot in the arm.”

It is estimated that $1 billion worth of casino/condo projects are underway, and another $1 billion in new investment will be on its heels. Martin said most of the investment will be in Biloxi, but some are also planned in Hancock County, Gulfport and D’Iberville.

“There is real interest in D’Iberville by casinos, including condo-hotel properties as well, which would be very beneficial for D’Iberville,” Martin said. “These condotel developments will be good for the housing because, as everyone knows, we have a huge need for housing right now. Some of these casinos projects will be mixed use. Some will be affordable type townhouses, and the others will be upscale condominiums.”

While many people might be surprised at how the casino industry is roaring back from the devastation of Katrina, Martin is not.

“I did anticipate the growth because the exact same thing happened after Camille,” Martin said. “The Coast was in a slump when Camille hit, and the influx of money and rebuilding revitalized the economy. But nothing like this. I think this is going to make the Camille rebuilding look small. And now the casinos are not restricted to growth by being over the water. The state Legislature was very wise to allow them to move onshore. We are currently seeing an economic boom we haven’t had since the first casinos opened in early 1990.”

Legislation allowing the casino to build on land cuts costs in half, Martin said, and makes it much easier to obtain insurance needed for financing. Even if some casinos had been willing to invest building in the water, insurance might not have been available.

Biloxi Mayor A.J. Holloway said that casino and condominium developments will be the key to the city’s Katrina recovery.

“The private investment community is what is going to pull us through this, not just assistance from government programs,” Holloway said.

One casino that won’t be moving ashore is the Beau Rivage in Biloxi. The Beau Rivage had a permanently moored casino structure on pilings that survived the storm.

“As far as the barge, it did exactly as it was intended,” said Mary Cracchiolo, director of public relations for the Beau Rivage. “It stayed in place. We were able to keep the casino where there is optimum visibility and ease of access. We are well into our rebuilding effort. We will be recreating some of our customer’s favorites while re-examining all of our venues, amenities and systems to continue to insure we are as responsive as possible to our customers’ needs and desires.”

The Beau is remodeling all the hotel rooms, the restaurants, casino, theater and spa and retail offerings. It plans to reopen August 29 with 1,200 of 1,740 rooms. The balance of everything will be open in the fourth quarter.

“We are working to put people back to work and get the property back open,” Cracchiolo said.

Roy Anderson Corp. (RAC) has been heavily involved in several of the casino projects. RAC just completed work at the IP Biloxi and is currently working on the Harrah’s Biloxi project as well as the Copa project in Gulfport. Copa Casino’s owner have purchased the former Gulfport Grand Casino.

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

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