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Best of Liz Benston

Gaming Guru

Liz Benston

Pinnacle to Rebuild in Biloxi

6 September 2005

After spending three days touring Mississippi's hurricane-ravaged coastline, Pinnacle Entertainment's top executive said he is optimistic that the company's Casino Magic riverboat can be rebuilt within two years.

Chief Executive Dan Lee said the company intends to draft casino workers into helping rebuild the property and will set up training classes for people with little to no construction experience.

"We're trying to set up training classes so dealers can learn how to swing a hammer," he said.

Echoing recent comments made by Harrah's Entertainment Chief Executive Gary Loveman, Lee said the company wants to rebuild its casinos so that workers can start earning money as quickly as possible.

"It came home to me that what our employees need to know more than anything else is that they are going to have jobs," Lee said.

To rebuild Casino Magic, Pinnacle is gathering the same team it used to build its luxury resort in Lake Charles, La., to rebuild in the Gulf. Those include Las Vegas architects and designers Bergman Walls and Associates and Avery Brooks and Associates.

The general contractor will give preference to hiring Pinnacle employees, Lee said.

The company's other casino in the region, Boomtown New Orleans, wasn't as hurt by the storm.

"We had some employees who stayed on the boat because it was a lot safer than their homes," Lee said. "There was very little damage to the property but a little bit of the roof came off. It didn't flood and wasn't looted."

Lee said the Biloxi casino's customers mostly come from Florida, which wasn't ravaged by the storm. Nearby, residents are already beginning to start over.

"There wasn't a house standing within a mile of our property," he said. Further afield, "thousands of homes" remained standing, he said.

"I saw homes with water damage that were habitable. There were people hanging their clothes out on the line in the yard to dry out," he said.

"A lot of money will flow into this region to rebuild. That is a large sum of money to come into a region. Now things are very bleak but in two to five months, the power will be back on and there will be some good-paying jobs rebuilding."

The company has pledged to continue paying workers while its two casinos are closed.

Not every company has done so.

In an angry letter distributed to reporters and signed by "all surviving employees of the Beau Rivage," workers at MGM Mirage's Gulf Coast resort blasted the company for not following the lead taken by some of its peers to pay wages to workers displaced by the storm.

"No food, no place to live, no personal possessions left, some even missing, and maybe dead, now have to face the fact that their company has left them with no pay or help," the letter read. "Beau Rivage employees have only been told that they are welcomed to fly to Las Vegas on their own non-existent funds and apply for other jobs."

MGM Mirage representatives could not be reached by press time to respond to the letter. On Friday, the company announced a program to help displaced workers get medical coverage through their health plans. The program will allow workers to get prescriptions filled at a variety of pharmacies and visit "out of network" doctors and hospitals.

Meanwhile, Station Casinos Inc. -- which doesn't own any properties in the South -- is holding a donation drive at its 13 Las Vegas casinos and will match up to $250,000 in contributions made by customers and employees. The money will go to the Salvation Army to aid in the relief effort.

The company also has forwarded information about job openings in Las Vegas to casino companies in Louisiana and Mississippi. At any one time the company has a couple of hundred jobs open in a variety of categories, spokeswoman Lori Nelson said.

One Wall Street analyst said the hurricane will result in a "slight positive" for the Las Vegas tourism economy.

In a research note to investors today, CIBC World Markets stock analyst William Schmitt said. Most notably, Las Vegas is likely to pick up a "fair share" of the estimated year's worth of conventions that could be relocated from New Orleans.

"Given the regional nature of conventions, we would expect the first preference for many of the scheduled New Orleans conventions to relocate in the Southeast" in cities such as Atlanta, Orlando, and Dallas, Schmitt said.

On the other hand, Las Vegas may feel some short-term pain as higher gas prices and jet fuel shortages in the Southeast curb travel plans, he said. Long-haul flights east of the Mississippi accounted for about 36 percent of passenger seat traffic last year.

Higher fuel costs will also start to cut into how much gamblers spend at Las Vegas casinos, especially among low-rent players, he said.

Three of the roughly 40 convention groups that have approached the Las Vegas Convention and Visitors Authority to reschedule their New Orleans gatherings have so far booked conventions in Las Vegas.

Those include the Distribution Business Management Association, ACTE Convention and Career Tech Expo and National Association of Convenience Stores. The groups are expected to fill more than 13,000 hotel rooms, according to LVCVA sales data.

The LVCVA continues to monitor fuel costs and tourism activity. The group has never found a correlation between visitation and rising fuel prices, though the latest spike in prices has been unprecedented.

"Their motivation has proven strong in that (tourists) will find a way to get here," spokeswoman Erika Yowell said.