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Gaming revenues hit all-time high

After Hurricane Katrina came ashore in 2005 and blasted the Mississippi Gulf Coast, the state adopted a plan to get the area’s casinos back up and running. The employment and tourism dollars would help offset the widespread loss of jobs and help fuel rebirth of the economy, proponents argued.

While that plan has its detractors, one fact is undeniable — casinos, and not just those on the Gulf Coast, have bounced back in a real way. In fact, 2007 was a record-setting year for the state’s industry in terms of gaming revenues.

According to the Mississippi State Tax Commission (MSTC), casino gross gaming revenues last year were approximately $2.89 billion. That surpassed the old record set in 2004 of approximately $2.78 billion, and was more than $300 million above 2006’s revenues of approximately $2.57 billion.

Coast casinos took in approximately $1.3 billion in 2007, which topped 2004’s record revenues of approximately $1.23 billion. Mississippi River county casinos in 2007 saw gross gaming revenues of $1.59 billion, their second-best total ever. (The record was set in 2006 at approximately $1.66 billion.)

What led to this record-setting year, what is the impact on the state and local economies and what is the forecast for the industry in 2008?

Rebuilding momentum

Larry Gregory, executive director of the Mississippi Gaming Commission since 2001, says one does not have to look any farther than the post-Katrina recovery efforts on the Coast to find the reason for the casino industry’s stellar 2007. And the fact that most of the rebuilding is occurring on land instead of barges on the water is another big plus.

“Without any doubt, the success of 2007 is attributed to the Gulf Coast market rebounding after Katrina,” Gregory says. “With the ability to protect their investment on the Gulf Coast, the casino operators have continued to reinvest in their properties. Patrons continue to have confidence in the Mississippi market.”

He adds, “The stability of the gaming market in Mississippi is another contributing factor. This gives casino owners the assurance they need to continue their investment in our state.”

With its banner year behind it, what does 2008 hold for the state’s casino industry? Gregory says more good news can be expected. And he sees bigger and better gaming venues in Mississippi in the near future.

“Gross gaming revenues have exceeded pre-Katrina numbers for the 29 state-regulated casinos operating throughout our state,” he says. “There are 10 casinos in the Tunica area, three in Greenville, four in Vicksburg, one in Natchez, and 11 along the Gulf Coast. Each market has its own sets of challenges.

“Overall the gaming industry is thriving in Mississippi. I see 2008 as a year of steady growth with one to two new developments being announced. In order for a new property to compete in the Tunica or Gulf Coast market, they will need to be a large resort-style property with added amenities, not just another casino. More focus must be placed on non-gaming activities or amenities. As a result of a solid political and business environment, developers continue to exhibit strong interest in the Mississippi gaming market.”

Taxing issues?
The record revenue resulted in corresponding all-time-high tax collections from gaming. According to figures from the MSTC, total gaming tax collections from January-December 2007 were approximately $350.44 million, which topped the previous record of approximately $333.01 million from January-December 2004.

While the record tax revenue is obviously a coup for the state as well as local governments, the pluses do not end there, according to Dr. Denise von Hermann, dean of the University of Southern Mississippi’s College of Arts and Letters. von Hermann is a noted expert on gaming, and in 2003 wrote the book “The Politics of Lottery and Casino Expansion.”

Von Hermann says, “About half of the state’s casino patrons, excluding those who visit the Choctaw casinos, spend one or more nights in local accommodations. About 85% arrive in their personal vehicle. Statewide, these visitors are typically married, in their late 40s to mid-50s, and have middle to upper-middle family incomes.

“That having been said, you can see that these people have substantial impact on the state’s economy beyond the gaming taxes we collect. It varies by casino region within the state, but on average local visitors make up only about 35% of persons playing at any given time. The out-of-state or out-of-region visitors tend to buy gas, visit local eateries and/or retail establishments, and may even visit other (non-casino) entertainment venues nearby.

“When the casinos prosper — and when they do it by enticing non-Mississippi residents to come visit our state — they are a significant, positive force for the state’s economy. If we limit their ability to attract out-of-state visitors by raising taxes or imposing restrictions on their ability to compete, we risk harming our own economy.”

Contact MBJ staff writer Wally Northway at wally.northway@msbusiness.com.

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