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Best of Howard Stutz

Gaming Guru

Howard Stutz

Looking Ahead With One Eye on Gulf

15 September 2005

LAS VEGAS -- With attendance up almost 14 percent from a year ago and the trade show floor space at a record 290,000 square feet, the fifth annual Global Gaming Expo is being dubbed a success by its sponsors from the American Gaming Association.

But one dark cloud hangs over the gaming industry's largest annual gathering-- the devastation Hurricane Katrina brought more than two weeks ago to the casinos in coastal Mississippi and New Orleans.

About a dozen casinos in the Mississippi communities of Gulfport and Biloxi were either destroyed or severely damaged, putting employees out of work and delivering a substantial blow to the Mississippi economy. In New Orleans, the city's four casinos were moderately damaged by the storm but are shut down along with the rest of the city.

"There are about 17,000 gaming employees in that region and we estimate that about 10,000 may have lost their homes and have no place to live," American Gaming Association President Frank Fahrenkopf said Wednesday during his annual state of the industry roundtable.

"This is truly a national tragedy and the biggest challenge our industry currently faces," he added.

Fahrenkopf said he discussed the next steps for the region with members of the gaming association who had casinos lost in the hurricane. He said the initial efforts have been directed toward employees, making sure the displaced workers are receiving paychecks and benefits for an extended time period. Some have been offered positions at casinos in other markets.

"The primary focus has been with the employees, and that's where it should be at this time," Fahrenkopf said. "The gaming companies affected by Katrina have gone above and beyond in taking care of their employees."

As a whole, the gaming association's leader, who is celebrating the organization's 10th anniversary this year, said the gaming industry is enjoying unprecedented success across the United States. In addition, many inroads have been made internationally, which is reflected in the G2E trade show, at which 20 percent of the showroom floor houses international companies.

In Washington, D.C., Congress is focused on other matters, such as confirmation hearings for a new U.S. Supreme Court chief justice and, now, hurricane relief. Gaming issues are not on anyone's radar screen.

Which leaves the gaming industry focusing on how to rebuild its base in Mississippi. The state, which was third behind Nevada and New Jersey in total gaming revenue in 2004, is one of the industry's crown jewels.

The gaming association has sponsored its own relief effort for casino employees affected by the hurricane. A spokesman for the organization said about $500,000 had already been raised from association members and from donations by G2E attendees collected in drop bins around the Las Vegas Convention Center this week.

Fahrenkopf said the industry's Washington, D.C., lobbyists were intent on making sure any congressional aid package, which Congress wants to model after the relief package passed after the Sept. 11, 2001, terrorist attacks, gives damaged casinos some of the federal dollars that are distributed for rebuilding efforts.

All association members who operated casinos in the region -- MGM Mirage, Harrah's Entertainment, Boyd Gaming Corp., Penn National Gaming, Isle of Capri, Pinnacle Entertainment and President Casinos -- have committed to rebuild their properties.

The question of whether the casinos will be land-based or remain on water is expected to decided in the Mississippi Legislature in the coming weeks.

"I think the general feeling about putting gaming on barges over water is not really the way to go," Fahrenkopf said. "If Katrina has taught us anything, I think that's it."

Fahrenkopf said Mississippi Gov. Haley Barbour addressed the association's board members this week by telephone and committed to fast-track the rebuilding of the area's roads, highways, and other infrastructure needs to help speed the casino companies' rebuilding efforts.

"The governor committed to getting the Gulf Coast cleaned up, and we think its important for the industry to make a strong return to the area," Fahrenkopf said.