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Gaming Guru

Howard Stutz

G2E Eases Some Fears

16 September 2005

LAS VEGAS -- A few months ago, Mississippi Gaming Commission Executive Director Larry Gregory mapped out his plans for this week's Global Gaming Expo, arranging his week around his scheduled participation in a Wednesday morning panel discussion on communication between regulators, casinos and suppliers.

Gregory spent three days in Las Vegas. But he never made it over to the Las Vegas Convention Center and G2E.Advertisement

Instead, Gregory and Mississippi Gaming Commission Chairman Jerry St. Pe' met with representatives of seven gaming companies whose casinos and slot machines were destroyed or heavily damaged more than two weeks ago by Hurricane Katrina.

The toll from the hurricane's 145-mph winds and 30-foot storm surge devastated the economies of the Mississippi Gulf Coast communities of Bay St. Louis, Biloxi and Gulfport, closing all 12 casinos, displacing more than 17,000 casino workers and depriving the state of roughly $500,000 a day in tax revenue.

Rather than browse the trade show floor and network with his gaming industry counterparts, Gregory decided to meet with representatives of MGM Mirage, Harrah's Entertainment, Isle of Capri, Pinnacle Entertainment, Penn National Gaming, Imperial Palace and International Game Technology to discuss rebuilding efforts.

"Having these meetings was more important than taking part on that panel," Gregory said late Wednesday. He and St. Pe' flew back to Mississippi early Thursday morning.

St. Pe,' who heads the three-member commission, had not planned to attend the G2E but decided to come along to personally tell gaming leaders about his desire that the Gulf Coast casino industry be restored.

"We were able to accomplish in 24 hours what would have taken us a week thanks to everyone being here during the conference," St. Pe' said following a meeting with representatives of MGM Mirage, operators of the heavily damaged Beau Rivage in Biloxi. "The state of Mississippi and the gaming commission are full partners in supporting and expediting the rebuilding process.. The feedback we received from the casinos was positive. Everyone we talked with expressed an intent to return to the coast in an even bigger way. That was important for us to hear."

Pinnacle Chairman Dan Lee, whose company lost its Casino Magic property in Biloxi, said the regulators coming to Las Vegas was a positive sign of support.

"I commend them for coming out and seeking everyone's opinion, because everyone has a different opinion," Lee said.

In 2004, Mississippi's 29 casinos reported almost $2.8 million in gaming revenue -- third highest behind Nevada and New Jersey -- and contributed $334 million in tax revenue to the state. Nearly half the state's gaming revenue, $1.23 billion, were generated by the 12 coastal casinos.

St. Pe' said Mississippi is committed to bringing the gaming industry back to its pre-hurricane status.

"Clearly, the major elements that attracted the industry to the Gulf Coast 12 years ago will come back," St. Pe' said. "Mississippi is a pro-business state, and the gaming industry is tremendously important to our economy."

One change that St. Pe' expects is removal of the restriction against land-based casinos. Under current state law, gaming must take place on floating barges anchored to a dock where a property's hotel, restaurants, convention space and other amenities are located.

Hurricane Katrina's storm surge lifted many of the barges off their moorings, depositing the casinos far away from their original sites and damaging the boats beyond repair.

Mississippi Gov. Haley Barbour is expected to call a special legislative session shortly to address that issue.

St. Pe' and Gregory said in their discussions with casino leadership that the move toward land-based casinos was a major concern.

"There was no way to have a discussion without land-based casinos coming up," St. Pe' said. "It didn't get to a point where it was an absolute prerequisite, but a move toward shore-based casinos will be a major part of the rebuilding program."

St. Pe' said that when the law is finally written, Mississippi may allow the rebuilt casinos to be located within a general proximity of their former locations.

Lee said rebuilding is not an issue, but he and his counterparts want to know what the playing field will be. If the state allows casinos in other areas, possibly in Biloxi along Interstate 10, which is about three miles north of the main casino strip, there could be some issues.

"They've assured us that they will figure it out pretty fast," Lee said. "I hope they don't do anything that changes the traffic pattern (into Biloxi), but we've been assured that won't be the case."

Rebuilding the gaming industry will also help restore the damaged communities, the Mississippi executives said. If the casinos come back, other businesses wiped out in the hurricane will return.

American Gaming Association President Frank Fahrenkopf said the governor told his board of directors this week the state would fast-track the process for rebuilding the infrastructure in the Gulf Coast communities, including roads and highways.

"The interest of the commission is to get the jobs back and get back the lost tax revenues," St. Pe' said.

How long the rebuilding will take is anyone's guess. MGM Mirage Chairman Terry Lanni said the reconstruction of the Beau Rivage could take more than a year.

Fahrenkopf said the governor broached the idea of allowing temporary casinos in while the communities are rebuilt, possibly inside undamaged convention space at the casinos' locations.

"He was somewhat surprised to learn that most of the convention space was also destroyed," Fahrenkopf said.

Added Lee, "I think temporary casinos are a bad idea. Temporary has a way of becoming permanent."

St. Pe' said slot machine giant IGT told him the company could replace 10,000 machines lost or damaged in the hurricane in eight to 12 weeks.

"Everybody we met with made us feel good about rebuilding the communities," St. Pe' said.

G2E Eases Some Fears is republished from