Las Vegas Sun

September 18, 2014

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Subsidized air service helps Mississippi gamers

Capitalizing on a strategy of duplicating Nevada's regulatory system, the Mississippi gaming industry is turning into a formidable competitor for Las Vegas and Atlantic City.

Borrowing several Nevada regulations and operating philosophies, the industry has transformed one of the nation's poorest regions into an amenity-filled vacation destination, a panel on Mississippi markets at the American Gaming and Lodging Summit agreed.

"The future of the Gulf Coast (of Mississippi) is so bright," said Chuck Patton, deputy executive director of the Mississippi Gaming Commission, "that we have to wear shades."

Tunica, Miss., in the northwest portion of the state along the Mississippi River, has grown to become the No. 3 gaming destination in the nation. Gaming tax revenues have climbed, allowing local authorities there to reduce property taxes from 11.4 percent to 4.2 percent in five years. A region that had 4,182 families on food stamps in 1992 now has 1,827.

Meanwhile, development continues on Mississippi's Gulf Coast, where Las Vegas-based Imperial Palace will open a 1,000-room resort next week. Construction also continues on Beau Rivage, a 1,800-room property being built by Mirage Resorts Inc. Between the two resorts, 6,000 new jobs will be created in the Biloxi-Gulfport area.

Patton attributes the success of Mississippi to the free-market approach of state gaming regulators. Unlike many new gaming jurisdictions, Mississippi did not put a limitation on the number of licenses issued. So, while some operators have tried and failed in Mississippi, those that have survived have become stronger competitors. In addition, the success of the market has lured some of the big industry leaders, like Mirage and Circus Circus, which is in the process of developing a site on the coast.

Panelists said the nearly $2 billion casino market thrives along the coast because prior to gaming, the area was a popular tourist destination with its favorable weather, golf courses and 26 miles of sandy beaches.

Panelist Jeffrey Lowenbar, senior vice president of Las Vegas-based Ameristar Casinos, which operates a property at historic Vicksburg, Miss., said the failure of a land-based casino in New Orleans also sparked the Mississippi market. Many analysts predicted Mississippi would falter when the New Orleans casino opened its doors.

Although panelists concurred the state's outlook is good, Tommy Shepherd, a partner in a Jackson, Miss.-based law firm, said a number of legal issues are confronting state gaming authorities.

Imperial Palace's bid to open a race and sports book at its new resort was rejected by regulators after they interpreted that state law did not permit its operation. The casino won a declaratory judgment that the book was allowable and the Mississippi Gaming Commission appealed the judgment, seeking a thorough legal interpretation of the statute.

Environmental fights also are in the wings for new resorts planned along the gulf.

Panelists also explained how Biloxi solved the problem of how to beef up visitation from other states -- a topic always of concern in Las Vegas.

Bruce Nourse, senior vice president of Casino Magic Corp., said about 200 businessmen, including the casino operators, established the Harrison County Jet Air Service trust fund.

Once the fund was established, the merchants recruited and subsidized an air carrier that would stock Biloxi with jet service. The carrier that ended up winning the Biloxi bid: Reno Air. It now flies a triangle route, between Atlanta, Biloxi and the Tampa Bay area.

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