Slower gaming growth on Coast reflection of overall economy
by Lynn Lofton
Published: March 3,2008
The Mississippi Gulf Coast gaming market has recovered from Hurricane Katrina and is expected to have slow growth, some industry observers say.
“Gaming analysts say the ability to attract capital is more difficult than in the past,” said Michael Cavanaugh, a Biloxi attorney who has represented various gaming interests for 15 years. “The amount of equity a casino developer must put up is a good bit larger now. Money is not as easily obtained or as cheap as in the past. That is a reflection of the general economy, not the gaming industry.”
He points out that no new casino has been started in Biloxi since the storm. Hard Rock was scheduled to open when the hurricane struck, and although Margaritaville has started construction, he considers it a rebuilding and re-theming of the Grand Casino and Casino Magic that were on the site prior to the storm.
“I think the economy will slow the pace of new projects in this market,” he added. “The market is healthy, but money is not available right now for new projects. The casino industry is not recession proof. Gaming analysts say the ability to attract capital is more difficult than in the past.”
An exception is the Golden Gulf, a casino proposed by RW Development on Veterans’ Avenue in Biloxi. This developer is also building several condominium projects in Biloxi. Cavanaugh represents the developer, whom he says has the capital raised to do the casino project and will appear before the Biloxi City Council in March for permitting. Site approval has already been okayed by the Mississippi Gaming Commission, according to executive director Larry Gregory.
“RW Development is committed,” Cavanaugh said. “Projects like that will continue and go forward. I know a lot of people are talking — there are ideas and some have sites, but no one has the money in hand.”
In addition to the Golden Gulf, Gregory says the gaming commission has licensed Margaritaville and Bacaran Bay in Biloxi and site approvals for two projects in D’Iberville. “I do believe we will see several new projects moving forward in 2008,” he said. “But, there have not been any new applicants for site approval in the last six or eight months.”
Work is underway on Margaritaville by Harrah’s Entertainment. Bacaran Bay Casino Resort, a project of Torguson Gaming Group, anticipates that construction will begin this year and will open in 2010.
Marlin F. Torguson, the group’s chairman and former owner of Casino Magic in Bay St. Louis and Biloxi, says the casino resort anticipates hiring more than 2,000 employees. It will include the area’s first all-suite hotel and will also have condominiums.
“The Mississippi Gulf Coast market continues to be a strong performer with record-setting gaming revenues,” he said. “The completion of the $51-million expansion of the Gulfport-Biloxi International Airport, its ability to now service up to 2.5 million annual passengers and its future expansion plans will generate even further growth for the area.”
But Scott R. King says the Coast market is a drive-in market in spite of the airport’s growth. He has worked as an analyst for several casinos, and currently works as a consultant along with teaching casino resort management studies for Tulane University.
“The market will grow, but not by leaps and bounds. There’s only so much money out there you can get,” he said. “Adding more slot machines won’t grow the market; it will cannibalize it because the surrounding population is not there. We don’t have large population numbers like Atlantic City has. You also have to consider there are 11 operating casinos who are aggressively marketing to maintain and grow their player bases. Any new property will be challenged to compete for these players.”
He thinks the two-year rebounding period from the hurricane is over and the market has stabilized. Slot machines and table positions are at 85% of pre-Katrina levels, but revenues are slightly greater.
Contact MBJ contributing writer Lynn Lofton at email@example.com.
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