Economic downturn hangs over Southern Gaming Summit
by Lynn Lofton
Published: May 11,2009
The state of the economy was on the minds of attendees at last week’s Southern Gaming Summit in Biloxi. Attendance figures were not available at press time, but the crowd was noticeably smaller than past years.
A general session featured a panel of gaming executives who discussed the state of the industry with moderator Jon Lucas, president and general manager of IP Casino in Biloxi. The panel was made up of Virginia McDowell, president and chief operating officer of Isle of Capri Casinos; John Payne, president, Central Division, Harrah’s Entertainment; and Tim Wilmott, president and chief operating officer, Penn National Gaming.
“The impact of the economy has changed the industry,” McDowell said. “We’re seeing customers come less and spend less when they come, but they’re holding us to a higher standard.”
Payne, whose division includes casinos in Mississippi and Louisiana, said these markets are running better than other gaming jurisdictions.
“In view of the economy, we’re creating value; not discounting,” he said.
Wilmott said the focus is on taking care of core customers rather than trying to expand the gaming customer base at this time.
“As we get through this stuff, we will see improvements and learn lessons,” he said.
All said their businesses have down sized and learned to run more efficiently.
Noting the different gaming markets around the country, all three feel that Mississippi’s gaming industry is suffering less than others.
“Atlantic City is in a death spiral and won’t turn around,” Wilmott said. “Las Vegas will turn around and continue to grow and prosper.”
Although the regional markets are strong, they are seen as vulnerable to any new competition that could come from surrounding states, including Florida, Texas, Alabama and Tennessee.
“Tunica is struggling and Biloxi is a tough, highly competitive market,” McDowell said. “There is a danger that in giving away things such as food and rooms, we devalue them.”
Wilmott commented about a recent stay at the Beau Rivage Casino Resort in Biloxi. “I was the only one in the check-in line without a cooler and paper bags. We’ve got to expand the customer base here.”
Payne, who’s had a long career with Harrah’s, said he doesn’t remember a time with so many gaming properties for sale and in trouble. Questioned about Harrah’s huge Margaritaville Casino in Biloxi, he said, “Construction has stopped due to the economy. We are still passionate about the project and hope to know more about our plans in the next six to eight months.”
All three said the industry is taking long, hard looks at expenditures and must make better decisions on how to allocate capital.
“In the past, we were in a constant search for improvement,” McDowell said. “We would do something like add an expensive restaurant and other amenities. We don’t have that kind of capital to spend anymore.”
Noting the favorable gaming tax structure in Mississippi, McDowell said, “We need to look at the industry as an economic partner, not a cash cow.”
As the gaming executives were telling of breaking the habit of chasing shiny new gaming technology, numerous technology vendors and other vendors were opening booths in the exhibit hall.
Although there were a few empty vendor spots, rows and rows of booths displaying the latest in slot and other gaming technology were open, hopeful of catching the attention of casino decision makers.
Neil C. Johnson, president of International Merchant Services in Dallas, Texas, said the crowd was smaller this year. “We sell automatic teller machines and ticket redemption machines and have been involved with gaming 10 years,” he said. “Sales are down this year.”
Tom Dashiell and Domenic Mezzetta of Harlow’s Casino Resort in Greenville were on hand to discuss their new property with other attendees. The riverfront casino opened in November 2007 to become Greenville’s third casino.
“Things are going well,” Dashiell, assistant general manager, said. “It’s hard to say if the economic downturn is affecting us because we opened in the downturn.”
While gaming properties are not expanding in the current environment, the Silver Slipper Casino in Hancock County is building an upscale restaurant in Diamondhead.
Construction is out of the ground with plans to open the restaurant in early September.
We think it will bind us to the community and give us opportunities to give out tickets for free slot play and other things,” said Jack Sukmann, chief financial officer. “We have many customers who come from Diamondhead, and the restaurant will be open to the public.”
Biloxi banker Chevis Swetman doesn’t think the Coast market will have any gaming expansion for two to three years.
“There’s a lack of capital and the industry consumes a lot of capital,” the president and CEO of The Peoples Bank said. “The number of lenders is smaller, the amount of casino syndication is smaller, the debt level is more restricted and interest rates will be higher. Everyone is putting expansions on hold.”
To sign up for Mississippi Business Daily Updates, click here.
Top Posts & Pages
- The Dan Jones-IHL saga: Is this the story that started it all?
- Dan Jones rejects IHL offer, won't publicly apologize
- Email from Nash to Delta Council’s Morgan included in DHA court file
- BREAKING NEWS: Trustees offer new deal to Ole Miss chancellor Dan Jones
- Suit against Kemper employee Brett Wingo is dismissed
- Ole Miss chancellor: Talks continue over job status
- DAVID DALLAS — From Dan and Dixie with love
- Delta Health Alliance CEO Karen Fox under investigation for possible misuse of funds
- Law to bolster utilities’ economic development efforts gets mixed reactions