With the slowing national economy, gaming, once considered a recession proof industry, is showing some slowing, too. Personnel layoffs have been reported at some Coast and Tunica casinos although building and planning for new gaming facilities continues.
Webster Franklin, executive director of the Tunica Visitors & Convention Bureau, says it might have been true that gaming was recession proof when Las Vegas and Atlantic City were the only real gaming destinations, but that has changed.
“Now that every American is within a three-hour drive of a casino, the gaming industry is ultimately affected,” he said. “It’s our job in Tunica to effectively market our destination as the place of choice when consumers are deciding where to spend their discretionary money.”
He feels the slight year-over-year decline in gaming revenue in the Tunica market is chiefly due to rising gasoline prices. “The Tunica CVB and its gaming industry partners have reallocated marketing dollars to areas closer to Tunica,” he said, “and we are marketing to these prospective visitors because they are most likely to visit our destination during the slowing economy.”
Biloxi attorney Michael Cavanaugh, who represents several gaming companies, says the good thing is that the economy is always cyclical with its ebbs and flows.
“Gaming is not recession proof but it will come back around,” he said. “There’s still a tremendous amount of casino development interest in this community. I talk to people every day and they agree that money is tight right now, but money markets don’t last forever.”
However, he points out that gaming investors are looking at the long haul, and they anticipate the market will be much better in mid- to late 2009. Since it takes nine months to secure gaming approvals for new facilities, developers are still looking at the Coast market.
“Developers still believe in this area as a market. What’s happening is a natural part of the economic life in America,” he said. “My client, RW Development, will go before the State Gaming Commission in June on getting their site approval. I also have others looking and they are not deterred by this temporary setback.”
Plans and management for Biloxi’s proposed Bacaran Bay Casino Resort, a project that’s been on the drawing board for a few years, have changed, according to John Ed Ainsworth, managing partner of Gollott Properties. The resort was being developed by Torguson Gaming, headed by Marlin Torguson, former owner and operator of Casino Magic.
“We are trying to restructure and refinance Bacaran Bay at this time,” he said. “Gollott Properties has reclaimed the property from Torguson Gaming because they defaulted on their payment of the land they were leasing from us. We made a settlement and allowed them to keep a small interest.”
Bacaran Bay is now being developed by Phoenix Gaming Group, which is made up of Cailliavet Street Development Group and the New Orleans Fire Fighters Pension Fund. Originally planned to have the state’s first condominiums and many other amenities, Bacaran Bay had hoped to break ground this year. Now, it hasn’t been determined when the ground breaking will take place. The property is being reconfigured to include a 750-room hotel in phase one, 65,000 square feet of gaming space and four restaurants, but no condos. The price tag has also been reduced by several million.
“I can’t make a prediction on the groundbreaking, but we do expect to complete the financing in 90 days. We must secure financing,” Ainsworth said. “The permits are being transferred and we will get the authority to proceed with construction.”
In spite of the slowing economy and what he calls the constantly changing dynamics, Ainsworth is optimistic about Bacaran Bay and the Coast gaming market.
“I have no reservations about the economy. We have commitments for financing,” he said. “The main thing we need is stability in this market. Biloxi had a record year last year, and I have no doubt the city will be on par with Las Vegas and Atlantic City in five years. All the cities along the Coast will benefit from that.”
Cavanaugh and Ainsworth expect new properties to open in the next two to three years.
“The GO Zone incentives are still in place and we hope to get some added incentives for non-gaming development,” Cavanaugh said. “The Coast’s revenues were record for the month of March. I can assure you people are interested in this market.”
Contact MBJ contributing writer Lynn Lofton at firstname.lastname@example.org.