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Mississippi Approves Onshore Gambling as Biloxi Looks to Rebuild

BY Admin  October 17, 2005 at 2:02 PM EST

So as public officials, residents and gaming operators mulled what to do with Biloxi in the wake of Hurricane Katrina, which hit the coastal community on Aug. 29, 2005, the big question was not whether, but where to rebuild the huge casinos that have made the region the country’s third-largest casino market.

And with the risks to the city’s economic engine in clear view along the battered beachfront, the debate over allowing onshore gambling quickly made its way to the state’s capital.

What emerged in a special legislative session in early October was a new law allowing casino operators to build on land — albeit only within 800 feet of the waterfront.

Republican Gov. Haley Barbour, in his opening statements to lawmakers on the session’s first day on Sept. 27, urged them to make such a change.

“You’ve seen the catastrophic destruction of the casinos and the destruction wrought by those behemoths when they crashed into buildings and vehicles,” he said on the first day of the special session. “We can’t return the casinos to the way they were. It would be irresponsible.”

He continued: “A small adjustment of a few hundred feet, but consistent with the original law of being tied to the water, is the best change, not only for getting the thousands of employees back to work sooner, but to have even more employees later and make our coast a world-class destination resort.”

Lawmakers approved the measure to bring the casinos onshore, and Barbour signed it into law on Oct. 17, 2005.

The proposal, made by a governor who had campaigned in 2003 on preventing the spread of gambling, represented how integral a part of the state’s economy the casinos have become in just 15 years.

Damaged casino

When the Mississippi Legislature legalized dockside gambling in the early 1990s, Biloxi was in need of an economic revival.

The city’s large seafood industry had been suffering for years and tourists were bypassing Biloxi for New Orleans across Interstate 10.

The region around Biloxi, which includes Gulfport and Pascagula, had experienced a meager 4 percent population growth during the 1980s, according to U.S. Census data. Unemployment in the state was a rampant 8 percent in 1990, according to the Bureau of Labor Statistics.

Casino operators swooped in, using the new gambling laws and the required referendums by coastal communities to build mammoth casino barges on stilts along the shore with hotels feet away on the mainland. Tourists responded, showing up by the millions every year, throwing tens of millions of dollars at the casino tables and slot machines.

By 2005, there were more than a dozen casino barges along the Gulf Coast, helping Biloxi to double the size of its economy and generate $20 million in annual tax revenue — a third of the city’s budget. The effects trickled down through the community, helping Biloxi double the size of its police and fire departments, build a new $35 million school and open its sports leagues to kids for free, according to an Atlanta Journal Constitution report.

Population in the region jumped 16 percent during the 1990s. Biloxi alone employed 14,000 people in the city’s casinos.

“Some people say casino gambling is the engine driving the economy,” city spokesman Vincent Creel told the Journal Constitution. “It’s really the whole train.”

Biloxi wasn’t the lone beneficiary of the casino revenues. By 2005, the region’s casinos were pumping nearly $200 million in tax revenue to the state. The state’s unemployment rate, while still the highest in the country, had fallen to 6.8 percent by 2005.

Immediately after the storm, casino operators rushed to show allegiance to their lucrative new home, with most pledging to rebuild. And while most have said a change to the state’s gambling laws wouldn’t have influenced their decision, there was a heavy push to allow onshore betting among some casino operators and lawmakers.

“It’s not simply an inconvenience” to have to build offshore, said Gary Loveman, chairman and chief executive of Harrah’s, which runs the Grand Casinos in Biloxi and Gulfport, according to the Associated Press. “It’s a public safety problem.”

Both Grand casinos were extensively damaged in the storm, with parts of each ripped away.

Some casino operators have pushed harder than others.

“If we don’t get this, I will be one that will not be back if we can’t get to a safe location,” Bernie Burkholder, president of Treasure Bay Casino in Biloxi, told the Biloxi Sun-Herald.

Allan Soloman, executive vice president of Isle of Capri Casinos Inc., whose flagship casino is in Biloxi, said casinos would have probably sustained the hurricane if they had been on land and he expected state lawmakers to work with casino operators to come up with a regulatory plan that made “economic sense,” according to Reuters.

CasinoSome casino operators say moving the casinos onshore would not only make them less susceptible to storms, it would speed the rebuilding process because investors and insurers would be more likely to lend their support.

The Isle of Capri Casinos’ president and chief operating officer, Tim Hinkley, said the casino could reopen this year if the legislature allows it to rebuild on land.

“Timing is critical. If the state acts quickly and aggressively, it will make my decision easier,” Hinkley said, according to the Pensacola News Journal. “[The legislature] needs to send a message: ‘We love you and we want you.’”

Not everyone was happy about the proposal to allow onshore gambling. Religious leaders swarmed to the capital, carrying signs and shouting about the evils of gambling, according to a Sun-Herald report.

Also, several casino operators and lawmakers initially urged caution about hastily remaking the state’s gambling law.

“It is absolutely not the time to be framing public policy,” MGM spokesman Alan Feldman said in mid-September, according to Reuters. MGM Mirage owns the Beau Rivage resort in Biloxi.

“Discussion should take place in the coming months once the situation has stabilized,” he added. “The advantage of offshore casinos is that there is a very unique character to the Gulf Coast. That would be destroyed if you allow casinos to move anywhere else in the state.”

Others were outright opposed to the industry and any changes that would give casinos more options.

“I’m opposed to that industry and how they make their profits by other peoples’ misfortunes,” said Rep. Deryk Parker, D-Lucedale, according to the Sun-Herald. “[The coast] built their foundation on gaming and found out that wasn’t a solid foundation. Mississippi can do better.”

The fate of casinos and whether they can reopen also relies on other factors, including rebuilding of the surrounding communities and services.

The coastal infrastructure has to be ready to handle an influx of tourists, said Larry Gregory, executive director of the state gaming commission, the Pensacola News Journal reported.

“There are public safety issues,” he told the News Journal. “Is there fire protection? Is there water service? All that would have to be in place before they would be allowed to reopen.”