State’s casino industry slips to fifth in U.S.

ACROSS MISSISSIPPI — Mississippi’s longtime dream of passing New Jersey to become the nation’s second-largest gambling destination has not happened. Now, Pennsylvania and Indiana have passed the Magnolia State in terms of casino revenue.

The economy and the competition have contributed to Mississippi’s current standing as the No. 5 gambling market in the United States. Of course, this spring brought the worst flooding along the Mississippi River since 1927, forcing the river casinos to close temporarily. And, Hurricane Katrina in 2005 knocked the Gulf Coast casinos out of business for several months, some of them for more than a year.

Then there was the unexpected — and to some people inexplicable — 9 percent drop in August gambling earnings from a year ago at Mississippi’s state-licensed casinos.

“I have no insight. I would hate to speculate,” Allen Godfrey, executive director of the Mississippi Gaming Commission, said about August revenue.

Godfrey said while Mississippi was once third behind Nevada and New Jersey, it has dropped to fifth behind Indiana and Pennsylvania.

“Pennsylvania probably is going to continue to grow. It is a fairly new market. We’ve been a fairly consistent market and there is room to grow,” Godfrey said.

The casino business nationwide has been struggling to recover from the Great Recession, which slashed discretionary spending and business travel and was followed early in 2011 by rising gasoline prices. Recently, some economists have been warning about the possibility of another recession amid slow job growth.

The 19 casinos along the Mississippi River took in $94 million from players in August, down $6.5 million from August 2010. The 11 casinos along the Gulf Coast won $90.9 million, down from $101 million a year ago.

Overall, casino winnings totaled $185.1 million, down from $201.7 million a year ago. For July, typically a busier month for the business, winnings totaled $210.6 million.

The news came just as lawmakers were wrapping up budget hearings in preparation for the 2012 session.

Casino tax revenues to the state and local governments have remained relatively steady — totaling $274.5 million in the fiscal year that ended June 30, 2010. Not bad. However, it is lowest revenue figure since post-Katrina, when revenues were $273.5 million in the fiscal year ending June 30, 2006.

That factor weighs on lawmakers as they write a state budget. Gambling taxes represent about 3 percent of all revenue collections in Mississippi.

Economist Scott King, director of research and policy for the Gulf Coast Business Council, said market share attracts gambling companies.

“We’re down considerably,” King said about revenue from coast casinos. “We were a $1.3 billion market, now we’re about $1.1 billion. We’re not going to get back to that $1.3 billion overnight. I think it’s attainable, but not in 2012 and not 2013.”

Webster Franklin, president/CEO of the Tunica Conventions and Visitors Bureau, said while both the Tunica and Gulf Coast markets grew independently of each other, it is growing competition from outside Mississippi — nearby areas such as Florida, Louisiana, Missouri, Indiana, Iowa, Oklahoma — that’s affecting casino earnings.

“While everyone is hopeful that the economy will turn around, our industry is not a necessity but a choice. And people are now choosing to spend much less on leisure entertainment options like visiting a casino,” Franklin said.

King also said Mississippi has new competition that didn’t exist previously.

“There are two racetracks in Arkansas that have electronic gaming devices similar to traditional gaming. They do about $10 million a month. During the flooding they more than doubled their output and they have demonstrated they have the capacity to do more. There is competition on almost every side of us.”

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