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Best of Liz Benston

Gaming Guru

Liz Benston
 

Details About Damage to Casinos Sketchy

30 August 2005

Officials at several Las Vegas casino companies say they have little to no information about the damage their shuttered properties on Mississippi's Gulf Coast have sustained from Hurricane Katrina, which hit Monday and pounded the region with driving rain and winds reaching 120 miles per hour.

Virtually all of Harrah's Entertainment Inc.'s 8,000 employees have been evacuated from the company's New Orleans, Biloxi, Miss. and Gulfport, Miss. casinos, Chief Executive Gary Loveman said late Monday.

The company has kept in touch with a skeleton crew on hand in New Orleans that has reported some damage to that property, Loveman said. A section of the roof has blown off, causing some water damage inside. Some of the doors to the casino, which were chained shut, have blown off their hinges, he said.

The New Orleans casino has sustained "moderate damage" from Hurricane Katrina while the condition of the company's two casinos along Mississippi's Gulf Coast remains unknown, Loveman said.

News reports indicate that power will be out in New Orleans for close to three weeks.

Power, water and infrastructure will need to be restored, the water will need to recede and the streets cleaned before the casino can reopen, Harrah's spokesman Alberto Lopez said.

"These people have been blown back into the stone age," he said.

But Lopez said that all of the company's casino chips and cash "have been secured."

Damage in New Orleans is estimated in the hundreds of thousands of dollars and will be covered by insurance, Loveman said. The three casinos, which generate about 8 percent of the company's total revenue, are each losing an estimated $1 million per day while closed, he said.

Meanwhile, MGM Mirage officials say they have little information about Beau Rivage, the company's luxury resort on the coast of Biloxi.

Buildings in the area were shut down and evacuated so the company has been unable to assess the damage, MGM Mirage spokesman Gordon Absher said.

The resort was built several feet above sea level so that floodwaters would be routed away from the main building and through the underground parking garage, he said. About 3,000 people work at the property.

Boyd Gaming Corp. also has been unable to assess damage to its Treasure Chest riverboat casino near New Orleans, which employs about 1,000 people.

"We haven't been allowed back in," Boyd spokesman Rob Stillwell said. "We've been waiting to fly the area with one of our planes. We have no idea when we can do that but we're hopeful we can fly it today."

Wall Street analysts said Pinnacle Entertainment Inc. might take the worst financial hit from the hurricane of any major gaming company. The Las Vegas company owns the Boomtown casino in New Orleans and Casino Magic in Biloxi. Both properties generate about 30 percent of the company's operating cash flow -- a measure of casino profit, CIBC World Markets stock analyst William Schmitt said in a research note to investors Monday.

Pinnacle representatives weren't available by press time today.

In a "best case scenario," gaming companies could take a hit to revenue of 17 percent in the third quarter, Schmitt said. In the worst case scenario, revenue could decline by 50 percent. Harrah's earnings per share this quarter will likely experience a double digit decline while MGM Mirage earnings per share could decline by as much as 10 percent, he said.

Hurricanes are a regular occurrence in the Gulf. Hurricane Dennis, the first storm in the Atlantic hurricane season, blew past the region in July and left the coast unscathed. But an evacuation order caused those casinos to close over a busy weekend and led to a decline in revenue of $11.4 million at the region's casinos that month compared with a year ago.

Loveman said the company will pay for days employees can't come to work and is offering bottled water, tarps and tents at assistance centers in Shreveport, La., Bossier City, La. and Tunica, Miss. The company also has made its other hotels and convention centers in the region available to evacuees and the Red Cross.

Details About Damage to Casinos Sketchy is republished from Online.CasinoCity.com.