Gutsy casino entrepreneurs helped launch Mississippi into the gaming business more than 20 years, and today a new breed of entrepreneurs are buying up properties for their portfolios.
One constant in the casino market’s maturation process: lawyers. At the beginning, there were regulations to learn and transactions to clear for brand new clients. Now firms have teams of lawyers dedicated to handling gaming issues.
Tommy Shepherd, Gaming Industry Team co-leader with Jones Walker, and Danny McDaniel, chair of Baker Donelson’s Gaming Industry Service Team, were among the first to learn the ropes of the new industry.
“After that, some of the entrepreneurs took their companies public, like Lyle Berman and his company, Grand Casinos. Then we entered a period of consolidation and acquisitions by private equity groups,” Shepherd said.
With the downturn in the economy, he said, some companies are taking stock of their Mississippi casino holdings and are looking at whether they should keep them in their portfolios.
“That evaluation process and the bankruptcies of several Mississippi gaming companies may result in sales of some properties to new entrants to the gaming industry, such as Golden Nugget Gaming in Biloxi,” Shepherd said. “In other words, we may be going back to the future with entrepreneur ownership of Mississippi casinos.”
They’ll still need their lawyers. So will the makers of slots and table games, casino suppliers and the banks that are involved in gaming.
“Whenever there’s a change in ownership, that triggers gaming approvals or when there is a new financing, we play a role in the transactions,” Shepherd said.
Shepherd, who spends “90 percent plus” of his practice devoted to gaming, put together a legal team that’s considered one of the state’s largest gaming practices. The law firm publishes the widely read Mississippi Gaming Law Blog at www.msgaminglaw.com.
Danny McDaniel practices exclusively in gaming law in Mississippi and Louisiana. He has been involved with Mississippi’s casino “since day one.” He recalled the developers of the state’s early riverboat industry as “really dynamic, independent entrepreneurs like Lyle Berman and John Connolly” who became so successful “they had investment bankers throwing money at them.”
Now gambling has spread throughout the country and it’s back in the hands of independent entrepreneurs, he said. Nowadays McDaniel works mostly with wealthy independent entrepreneurs who are developing projects “when most publicly traded companies are facing competition and focusing on the East Coast and other places” besides Mississippi.
That’s a far cry from the early days that McDaniel describes as the build-it-and-they-will-come era.
“Back then you put up a casino and people waited in line and paid $5 for the privilege of gambling,” he said.
The new independent casino entrepreneurs aren’t bound by corporate restrictions or bureaucracy.
“They can move quicker and more decisively,” said McDaniel.
Shepherd and McDaniel both say they, like most everybody else, had no idea that gambling would grow into such a large industry has it has in Mississippi.
Shepherd said his first gaming client in 1992 had a small project on the Coast that “didn’t go anywhere,” but it introduced him to the new statutes and the Gaming Commission members.
“I didn’t think many people except a few visionaries thought we would have anything like this in Mississippi today,” said Shepherd.
“We thought we would have a decent practice in it and many good clients. I don’t think any of us who do regulatory work thought it would be as much or as consistent as it is.”
The statutes and regulations have stayed substantially the same for many years, Shepherd said, but there’s some tweaking from time to time.
McDaniel had recently left a job in the U.S. Attorney’s Office civil division and joined Heidelberg and Woodliff in 1991. Five years later he moved to Phelps Dunbar where he began its gaming practice. He’s been with Baker Donelson since 2010.
“When gaming came in, I ended up representing one of the first gaming companies on the Coast and it just went from there. I thought it was just something else I would do in my practice. But once I started doing gaming work it was hard to go back to my previous practice.“
Shepherd said the most memorable person he has met in the gaming industry was Bill Boyd, founder of Boyd Gaming.
“He was remarkable in that he is not what you might have expected a gaming executive to look and act like.,” said Shepherd.
“He is a genuine person, a kind and decent man.”
Today’s crop of entrepreneurs aren’t like Bill Boyd, who came up in the gaming industry, McDaniel said. They’re businessmen like Carl Icahn and Landry’s Restaurant founder Tilman Frittata, who see casinos as a part of their holdings.
“The reason this is so much fun is because I’m dealing with some of the wealthiest and most dynamic people in the world,” McDaniel said. Six clients have been on Forbes’ World Billionaires List.
“They’re all extremely bright and dynamic and have this self confidence that is just amazing,” McDaniel said. “It’s a fascinating way to make a living.”
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