MBJ EXCLUSIVE: With gambling revenues falling, Tunica looks for an ace in the hole
by Frank Brown
Published: August 1,2013
Tags: Alan Godfrey, Balloon Bash, Clifton Johnson, Delta Country Jam, gross gaming revenue, Mississippi Gaming Commission, Mississippi River, Schulz USA, Southland Greyhound Park, Tunica, Tunica County, Tunica County Convention and Visitors Bureau, Tunica CVB, Tunica Resorts, Webster Franklin
The people of Tunica County have toiled through the worst of economic times, and basked in the bright lights of success.
But their King Midas, better known as the gaming industry, is losing its touch.
Recently released numbers for the first half of this year support the trend that Mississippi is on pace for one of its lowest gaming revenue years since the late 1990s.
In the first six months, gross gaming revenue in Mississippi — the amount wagered in casinos minus any winning payouts and adjustments — is down $65 million, or about 5.5 percent, over 2012, according to numbers on the Mississippi Gaming Commissionwebsite. Gross gaming revenue for the first half of 2013 was $1.108 billion. At the same point in 2012, it was $1.173 billion.
While the six-month drop is felt statewide, the largest decline is seen among the river counties, which have seen revenue drop from $610.4 million in 2012 to $566.7 million this year, a drop of 7.2 percent over last year.
“It seems like in the last 2-to-3 weeks, people are starting to understand the predicament that Tunica has been in for the last five years,” said Webster Franklin, head of the Tunica County Convention and Visitors Bureau. “We started noticing changes about 5 years ago when economy really went south. We saw a decline in revenue and an increase in competition. Gambling started in Missouri, there was limited Indian gaming in Alabama. Cherokee gaming in North Carolina took part of our national market.”
“We’re at a critical point. Our problem today is not a gaming problem; it’s a tourism problem. If we can improve tourism, the side effect will be that the casinos will continue to prosper. We don’t need more casinos; we need more other things to do.”
“This further supports the concept that gaming in this state has got to be amenity driven,” said Alan Godfrey, executive director of the Mississippi Gaming Commission. “The state may need to fall a little more until the state finds a reason to bring people back. We’ve got to make it more attractive.
On the coast, revenues fell 3.7 percent, from $562.2 million to $541.4 million in the first six months of 2013.
Most of the drop along the Mississippi River counties is in the 10 Tunica/Lula casinos. Statistics on individual casinos are not released, but Godfrey said the smaller mid-river markets — Greenville, Natchez and Vicksburg — seem to be steady. “That’s probably because they’re pulling from more the local market,” he said.
“I think it’s going to be hard to reverse the trend,” said Clifton Johnson, Tunica County administrator. “The gaming landscape has changed. The economy is rebounding, but the competition has increased.”
The drop in casino revenue has a impact on state revenue, but it has an even larger effect on the local budgets in Tunica County.
“It’s affecting us in different ways,” said Johnson. “We’re still getting about 4 percent, which will be about $28 million this year. That’s about $3 million less than last year. We’re losing about 10 percent in operational revenue a year.”
“We’ve reduced some programs. Last year, we issued a tax to repay our debt services. We saw about a 33 percent increase in the property tax rate. That was money that was previously paid from casino money. Some services have been reduced, but not essential services. Things like recreation, community services, meals on wheel and the housing program.
“We’ve cut a little in advertising,” said Johnson. “But we haven’t had to cut other things yet that draw tourists. We’re trying to offset the employment loss by trying to bring in more industry.”
In 1987, government statistics called Tunica County the poorest county in the nation, prompting The Rev. Jesse Jackson to label it “America’s Ethiopia,” highlighted by a well-publicized open sewer through slum area of “Sugar Ditch.”
By the late 1990s, it was the third-largest casino market in the country; even jumping to second in some surveys. By 2007, it had dropped to fifth. In the 2013 survey by theAmerican Gaming Association, the Tunica/Lula market has fallen to 10th, two spots behind the Mississippi Gulf Coast market.
“People from all over come to Tunica and say there’s not a whole lot here,” said Franklin. “But if you’re a Mississippian and live here, the changes are astronomical. We didn’t have a four-lane road in the county in 1994, we had one stoplight, and you couldn’t get gas between the Blue and White Restaurant and Memphis.
“One void we’ve been trying to fill is a water park, but we haven’t been successful,” Franklin said. “We’ve had some success in the economic development process, going from an agriculture area to one that now brings in manufacturing. The Schulz USA pipe plant has added a couple hundred jobs. That’s helping diversify the economy and bring in jobs.”
While the explosion of gambling nationwide in the last 10 years has hurt Tunica, the reduction in gamblers visiting Tunica-area casinos is clearly illustrated in quarterly survey numbers released by the Mississippi Gaming Commission. In 2011, visitors in January, February and March were estimated at 2,008,465. In the first quarter of 2012, that number fell to 1,495,999. In the first quarter of this year, the latest numbers released, visitors slipped slightly to 1,461,138.
Its biggest loss of audience has been from Tennessee – the state 30 minutes to the north that originally was to provide much of the revenue. In 2011, about 726,000 Tennesseans visited Tunica in the first quarter. Then the Mississippi River flooded in May 2011, forcing many Tunica casinos to shut their doors for several weeks. By the first quarter of 2012, only 476,000 Tennesseans visited, and that number dropped to 462,000 in the first quarter of this year, according the Mississippi Gaming Commission. That’s a 36 percent drop over two years in the first quarter. Neighbors in Arkansas quit visiting at an 18 percent rate over that time.
Much of that drop can be attributed to Arkansas casinos in West Memphis and Hot Springs, which offer racing and slot machines that are considered “electronic games of skill” to dodge the anti-gambling decree in the state constitution.
Gamblers at Southland Greyhound Park in West Memphis wagered $908.25 million on games during the first five months of the year. Arkansas has seen tax revenue from those gamblers increase by 32 percent over last year.
“I don’t think they ever had a $100 million month of waging until the flood,” said Johnson. “The main factor is it’s close; it’s convenient. Before the flood, people didn’t pay Southland much attention. It would close at midnight, then after the flood, people wanted some place to go. Southland increased its operational time, and did some renovations. It became more attractive to the locals.”
“I read the other day that Arkansas’s two casinos have increased revenue in each of the last 50 months,” said Franklin.
Amenities are needed – and some are on the way, such as the planned minor league baseball team in Biloxi – but those take time.
Gold Strike in Tunica recently opened its new $8 million Buffet Americana, and Caesars Entertainment is wrapping up its four-month Millionaire Maker promotion, which gave visitors a chance to win $1 million in weekly giveaways.
Tunica is trying to have more events like its Balloon Bash, Aug. 9-11; the Smokin’ Aces Festival & BBQ Championship, Sept. 20-22; the Delta River Cruisin’ Car Show, Sept 27-29; and the Delta Country Jam, Oct. 4-5, which will be headlined by Tim McGraw and will feature Billy Currington, Thompson Square, Brantley Gilbert, Kellie Pickler.
“These events are designed to bring people here and to try to protect our gaming tax revenue,” said Franklin.
Before the flood, Tunica County hired PricewaterhouseCoopers to do a study on the county and what it needed to do
“They said Tunica is relatively new as a travel destination. There wasn’t much here 20 years ago, and now we have over 6,000 hotel rooms and a great gaming product and infrastructure. The study impressed on us that we’re still in our infancy and they stressed that we need more amenities. We need to give people a reason to come.
When the flood hit, casinos were closed and it sidetracked their marketing efforts. “What we have done collectively as a market is reinforce our marketing efforts within a 150-mile radius,” said Franklin. “We’ve just completed a campaign in the Memphis area that stresses our dining and events that we have to offer.
“Even now, two years later, people still wonder if we’re open from the flood.”
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