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Best of Liz Benston

Gaming Guru

Liz Benston
 

Casino Firms Worry About Employees

1 September 2005

LAS VEGAS -- While Mississippi's Gulf Coast sifts through the wreckage wrought by Hurricane Katrina, the director of the state's casino regulatory agency is already making a direct appeal to Las Vegas-based casino companies and other gaming operators to rebuild their properties.

"This state is going to do whatever it can to keep them," said Larry Gregory, executive director of the Mississippi Gaming Commission. "We can't afford to lose them."

Gregory took a helicopter tour of the devastation Tuesday and saw first hand what many around the country have seen on television: wrecked casino barges thrown ashore, broken highways and flattened homes.

"The impact is just going to be devastating," he said. "I broke ground on most of those casinos. I put my foot on the shovel and the blueprints are in my office. I've seen these magnificent properties come to this poor state of ours."

Mississippi -- the country's third largest gaming market behind Las Vegas and Atlantic City -- has long been friendly to Las Vegas casino giants. The state's dozen Gulf Coast casinos employ about 14,000 people and pay about $500,000 per day in tax revenue to the state, Gregory said.

That doesn't include non-gambling spending by casino customers in the region, he said.

A 13th hotel and casino, the Hard Rock Biloxi, was scheduled to open for the first time at midnight Wednesday but was decimated in the storm. Today, the company said it was "adequately insured and intends to rebuild."

The property isn't affiliated with the Peter Morton-owned Hard Rock Hotel and Casino in Las Vegas.

"The Mississippi Gulf Coast was in dire straits" before casinos, Gregory said. "The casino industry has been a blessing not only to the Gulf Coast but to the entire state. We want them to rebuild -- but that's going to be a business decision."

In Louisiana, which wasn't as badly damaged, the three riverboats affected by the storm employed about 2,700 people and won about $292 million from gamblers last year. The state gets about $62 million per year in casino taxes, or about $172,000 per day, from those properties. Those figures don't include Harrah's New Orleans, the state's only land-based casino.

"It's going to be months before the full extent (of damage) is known and access is going to be questionable for some time," said Wade Duty, executive director of the Casino Association of Louisiana.

Of the Las Vegas gaming companies operating in Mississippi, Harrah's Entertainment Inc. has been the most forthcoming about what it intends to do next.

In an interview with CNBC, Chief Executive Gary Loveman said that the company remains committed to the region and intends to rebuild its two, badly damaged Grand Casino riverboats in Biloxi and Gulfport.

A best-case scenario for the Biloxi property, which was hurled several hundred feet ashore from the coast, would be to build a temporary casino on land rather than another boat, Loveman said in the interview.

The company's third property in the region, its land-based casino in downtown New Orleans, only has modest damage and would be able to reopen relatively soon depending on whether the city would be able to sustain it, he said.

In a press conference earlier this week in Las Vegas, Loveman said the storm damage to riverboats would encourage Mississippi legislators to allow land-based casinos -- something the state has fought in the past.

The state allowed riverboat casinos under the premise that the boats would not grow into Las Vegas-style gambling palaces. But companies have built ever larger barges in recent years that have essentially become permanent buildings attached to large hotels.

Gregory, who has argued for land-based casinos in the past, said the prospect is likely to become "the most critical issue facing our legislature next year."

Lawmakers have debated the issue in Mississippi since riverboat casinos were legalized in 1990 and the first properties opened in 1992.

"We've always feared this day coming and prayed that it wouldn't," Gregory said. "We knew that if a Category 4 or 5 storm hit the Gulf Coast, there would be a chance that we'd see casinos (strewn across) Highway 90. And it's happened."

Last month the state legislature allowed future casinos to be built atop pilings to make them more secure. The pilings still have to be over water. Gregory said his agency has so far reviewed three casino applications under the new rule.

Other Las Vegas companies haven't yet confirmed that they will rebuild their resorts as before, though Boyd Gaming Corp. has said its Louisiana property doesn't appear to be badly damaged.

Officials said they still haven't been able to get a close look at the damage to their casinos because flooding and road damage make them difficult to access except by helicopter. Officials have yet to declare some regions safe for entry, they say.

Companies say they are focused on the immediate relief effort and are trying to reconnect with employees.

"We have no desire to think about anything in the long term," MGM Mirage spokesman Alan Feldman said. "We are much more concerned about trying to find out where our employees are."

The company employs about 3,000 people at its Beau Rivage property in Biloxi, which was still left standing after the storm but reported significant damage.

Wednesday, MGM Mirage said it was working to make sure employees receive their regularly scheduled paychecks Friday, either by direct deposit or paper checks.

The company has set up a call center in Las Vegas and a toll-free number -- 866-368-7399 -- so that employees can check in with the company and provide contact information. The reservation number for Beau Rivage has been rerouted to this hotline, where customers with existing reservations can get information about cancellations and refunds.

Harrah's also is working to get in touch with its workers and is attempting to find jobs for them at its other casinos.

Loveman said his company intends to pay workers affected by the storm for the next 90 days and has donated $1 million to an employee relief effort. All three properties closed Sunday before the hurricane hit.

Harrah's is housing more than 400 people, mostly non-employees, in the convention center at its Grand Casino in Tunica, Miss and also has a relief center at its Lake Charles, La. casino for displaced workers and their families.

The company has offered to let guests at its six Las Vegas properties who are from the regions affected by the storm stay on for two nights at no charge.

Officials with Ameristar Casinos of Las Vegas said they reopened the company's Vicksburg, Miss. casino Wednesday afternoon and that the property suffered "minimal" damage.

The company believes that none of the casino's roughly 950 workers were unjured through some may have had some property damage. Workers will be paid for work time missed while the property was closed, Ameristar said in a statement.

An executive with Pinnacle Entertainment said Tuesday that none of the company's employees are believed to be hurt.

The Las Vegas company owns Casino Magic in Biloxi and Boomtown New Orleans, which employ about 2,000 people.

"We're quite worried about them," Chief Financial Officer Steve Capp said. "Land lines are down and cell phone service is spotty. We're doing the best we can."

Pinnacle Chief Executive Dan Lee was on his way down to the Gulf Coast with other officials earlier this week to assess the damage.

"He's a hands-on kind of guy," Capp said. "But I'm not sure what they can do at this point."