Mississippi shows way as a hotbed of casinos

THE BALTIMORE SUN

GULFPORT, Miss. -- It's a jolt to drive down U.S. 49 through this small town of shrimpers and fishermen, take a right turn when the main street dead-ends at the beach, and run smack-dab into one of the most ornately impressive gambling casinos you will ever see.

The Grand Casino-Gulfport and its sister 10 miles away, the Grand-Biloxi, would be strong competition for anything in Atlantic City or Las Vegas. But the competition is down home.

There are 14 casinos in Biloxi, Gulfport and Bay St. Louis and another 18 at sites inland along the Mississippi River. Applications to build a dozen more are pending.

In only two years, Mississippi has become one of the most torrid hotbeds of casino gambling in the country. As such, it can provide valuable lessons for Maryland, or any state, considering gaming as a tourist draw or an alternative to raising taxes.

Especially with the other side of the gambling coin having flipped in Mississippi -- revenues are down, some casinos have closed, and others are at the financial brink.

Lester Herrington, Mississippi's deputy revenue commissioner, says the downturn in casino revenues hasn't hurt state and local governments, which together collect 12 percent of revenues in taxes. They took in more than $44 million in casino taxes in fiscal 1992 and more than $128 million last fiscal year. In the first two months of this fiscal year, the state has collected $20.7 million. Sixty-five percent of the money goes into the education fund.

"I don't think anyone expected it to blossom as it has, and tax revenues have continued to grow," Mr. Herrington said. "Most fiscal people involved are wondering how high it's going to go or when the bubble will burst. We don't have history to depend on, so it's a guessing game."

There are Marylanders who would like to see their state join those where an estimated 92 million Americans spent $253 billion at casinos last year.

But some see Maryland as already trailing a large pack. Casino referendums will be held next month in Missouri, Florida, Arkansas, Rhode Island, New Mexico and Wyoming. And casino bills are pending in Virginia, West Virginia, Pennsylvania, Alabama, Massachusetts and Connecticut, according to Casinews magazine.

Maryland already has a lottery and Keno as well as horse racing. Fire companies and fraternal groups are allowed to hold casino nights in Prince George's County, and slot machines are run by )) fraternal groups on the Eastern Shore. No one knows exactly how much the charity games are raking in, but one estimate is $500 million.

Both Gov. William Donald Schaefer and Baltimore Mayor Kurt L. Schmoke have appointed commissions to study casino gambling. But Maryland's first casino may not depend on state approval if a proposal to locate a $100 million Native American-run gaming facility on Wills Mountain in Western Maryland reaches fruition. Federal law already allows casinos on Native American lands.

The beleaguered horse-racing industry is also a player. With more and more tracks adding slot machines to increase attendance, Laurel and Pimlico owner Joseph A. DeFrancis would support such legislation to help cut losses of $7 million at his tracks last year.

Delaware Park near Wilmington, Del., is installing 1,000 slot machines now, and a referendum is on the Nov. 8 ballot in West Virginia to allow video gambling machines at the Charles Town ** Races.

Not everyone in Mississippi has fallen in love with the casinos. Residents of Henderson Point, a small subdivision near Bay St. Louis, wrote 1,500 letters and attended meetings for two years to get the state gaming commission to rule that a proposed casino near their neighborhood was unsuitable.

"This area is made up of the most diverse, socio-economic, racial mixture you have ever seen in your entire life," said Nonie DeBardeleben, who led the Concerned Citizens to Protect the Isle and the Point. "Everybody kind of kept to themselves until the neighborhood was threatened, then we all came together."

Boat owner a critic

Lewis Skrmetta, a charter boat owner who originally pushed for casino gambling along the Mississippi coast, lately has become a critic.

"It has stimulated a lot of jobs. Record visitors are coming to the area. But our business has suffered," Skrmetta said. "Our cruise to Ship Island is nature-oriented. People who visit national parks are not interested in casinos, and people who come to gamble are not interested in a three-hour ship ride to an island."

The French Connection restaurant in Biloxi, a cozy, little linen-tablecloth and polished-silver bistro is famous for its open-hearth cooking. But it has not opened for lunch since April 1993: not enough business.

"The restaurant and beverage people worked hard to get the vote for casinos," says Nina Schwartzman, a co-owner of The French Connection. "Now there's not a casino that has less than two restaurants inside it. We're not hit too hard yet, financially, but we have a right to expect more customers, not less."

Robert Dreher, a Sierra Club Legal Defense Fund lawyer in Washington, says that organization has been working with residents to protect the Gulf of Mexico environment from the proliferation of casinos.

"They're losing bay bottom habitat because of the placement of gambling barges," he said. "The cumulative impact could be the loss of a whole range of wildlife, vegetation and sea grasses that are key to the Gulf of Mexico's production of shellfish and marine life."

Mr. Dreher said the U.S. Army Corps of Engineers must do a better job of assessing the long-term impact of casino construction along the gulf. He said he had similar environmental concerns about other possible coastal casino sites such as Ocean City in Maryland.

Bob Waterbury, executive director of the Mississippi Coast Crime Commission, says the number of violent crimes, auto thefts and burglaries is up about 28 percent compared with last year. "But you can't put all the blame on casinos. The first 63 percent of crimes around here involve stealing to get cash to buy crack cocaine. That is our main problem," he said.

Jim Simpson, who co-authored Mississippi's casino gambling bill before retiring in 1992 after 28 years in the legislature, says he talks to police officials regularly to keep up with the crime situation. "There is an increase in crime, but there has been an enormous increase in the number of people here," he said. "You don't have crime around the [Louisiana] Superdome if there's no

game there."

Study is published

Robert Goodman, a University of Massachusetts professor who this year published a study of gambling in the United States, says four events in recent years led to the gambling boom in Mississippi and other states. They were: The legalization of slot machines in Montana in 1985, federal approval of Native American-run gambling in 1988 and the legalization of Iowa casino riverboats and electronic Keno gambling in Oregon in 1991.

Louisiana, Missouri and Mississippi soon followed with their own riverboat ideas and similar floating casinos have since cropped up in Massachusetts, Pennsylvania and several other states. In addition, more than 70 Native American tribes are running more than 100 gaming operations, including bingo, in 20 states.

Mr. Simpson said Mississippi's initial flirtation with gambling was modest. "At first we discussed it just for the river counties," he said. "But we had this seagoing ship that expressed an interest in Gulfport. It was going out into international waters once a month. But that was too much down time. So we changed the law to allow gambling in the sound, between the islands and the mainland, then we amended that to allow dockside gambling."

Few of the dockside casinos on the Mississippi Gulf Coast look anything like riverboats. The President does, so does the Biloxi Belle, and the Treasure Bay was built to look like a pirate ship, while the Copa Casino is actually an old luxury liner docked permanently at Gulfport at a pier next to the Grand.

The rest of the casinos don't even look like they're floating when viewed from land. And they barely are. The huge Grand-Gulfport -- three stories tall and two football fields long -- displaces so much water that the four linked barges it sits on are only about a foot off the bottom.

These modern casinos try to offer gambling in a family-oriented environment where almost anyone would feel comfortable. Casino Magic in Biloxi even has a McDonald's inside. And the Grand casinos have big arcade rooms offering the latest in 3-D video games and a "Kid Quests," imaginative, well-equipped day care centers for children from ages 6 weeks to 12 years old.

"A lot of people say we shouldn't be doing this," said Joe Giardina, the Grand-Gulfport's director of public relations. "Well, you have situations where people with children are going to come in anyway. So we're going to provide them a nice place for

their kids."

Programs developed

Mr. Giardina said the Grands are also developing programs for people who have gambling problems because there is not much that regard available in the Gulf area yet.

There's always a huge contingent of the over-50 crowd at the casinos, retired people with time and money to spend. The retirees come by the bus load to put their quarters into the slots and eat from the inexpensive buffets.

Myrtle Caristy, 67, of Seminole, Ala., says she and her husband often visit the casinos. Recently collecting her second slot machine jackpot at the Gold Shore in Biloxi in six weeks -- both about $1,200 -- she was told she must be lucky.

"Oh, no, I haven't won half what I've put in," the silver-haired woman said.

The Gulf Coast gamblers come from several of the surrounding states -- Alabama, Florida, Louisiana, Tennessee -- and also from as far away as California. But a look at their car tags reveals most are from Mississippi. As evening comes and the folks in Gulfport and Biloxi get off work, many while away a few hours and dollars casino-hopping down U.S. 90.

The casinos are dependent on this local clientele and fight hard for it through special promotions. The Copa Casino, for example, gives patrons scratch cards along with their pots, providing them a chance to get their mortgage or rent paid for six months.

Despite such promotions, the Mississippi casinos have had revenue declines each of the past two months. They only earned $128 million in September, down from $132 million in August, which was down from $144 million in July.

'A telling winter'

"We're getting closer to the shoulder portion of the season, colder weather," said Neil P. Narter, assistant general manager of Copa Casino. "This is going to be the first winter with 13 competitors. This will be a telling winter."

The competition has already proved too stiff for the Biloxi Belle, which in August filed for bankruptcy protection. The Southern Belle in Tunica County closed Aug. 31, and several other casinoes are trying to remain afloat by making layoffs.

Narter, who won't discuss Copa Casino's employment figures, contends the layoffs are nothing to worry about. Noting the casinos have created nearly 20,000 jobs, he says that when people are laid off at an existing casino they are likely hired at one that's just opening.

But Rob Wyre, general manager of the Grand-Gulfport, says the layoffs are a sign that too many of the Mississippi casinos simply weren't prepared for so much competition.

"We've got a lot of companies that did a good job of selling a concept, they did a good job of developing their idea, but they didn't forecast properly and didn't do a good enough job of putting enough money aside to weather some rainy days. And at the first sign of a business downturn, and after layoffs, they're talking reorganization," said Mr. Wyre.

He said he doesn't expect more casinos to close. "There may be some name changes, but not much else will happen." Mr. Wyre said the revenue declines have caused the cost of loans to become too high for some expected new entrants in the Gulf casinos market.

New York developer Donald Trump, for example, has an option on some Mississippi property to build a casino. But it wouldn't surprise some observers if Mr. Trump instead raised the money to purchase one of the existing casinos in financial trouble.

The answer to the downturn may lie in the construction of hotels that will bring in more tourists, particularly high rollers. Two run-of-the-mill Holiday Inns provide about the best rooms in Gulfport and Biloxi now. But both the Grands are building luxurious 500-room hotels and the Imperial Palace, still under construction in Biloxi, will include a 1,000-room hotel.

The Mississippi Gaming Commission voted Oct. 31 to require every casino to make an infrastructure investment equal to 25 percent of its original cost of construction. To many, that means building a hotel, but parking decks and lounges will also be built.

Critics of the directive say the commission is overlooking the infrastructure problems that all the hotel building will create by placing a greater burden on small-town sewer systems and by traffic problems that will demand new access roads.

"We have a problem with drainage, said Dorothy McLemore, a Bay St. Louis resident. "It gets to the point infrastructure can't handle it, then whatever money a community can make because of gambling has to be put back into the infrastructure. Is it worth it?"

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