Choctaws’ Golden Moon and revenue rise in a risky field

Lynda Edwards

Wednesday, April 14, 2004 | 8:53 a.m.

PHILADELPHIA, Miss. -- When Mississippi Choctaws fretted that building a $750 million casino resort in a dirt-poor section of Mississippi was a gamble, Chief Phillip Martin reminded them of how a strip of neon-splashed gambling palaces in the middle of the Mojave Desert evolved into Las Vegas.

When the tribe issued $200 million in bonds to build the $177 million Golden Moon casino with its 571 hotel rooms three years ago, Martin reassured investors again. The casino now soars 28 stories, topped by a honey-hued globe containing the posh Galaxy Restaurant and Luna Lounge. Diners inside get 360-degree views of the Choctaw Resort Development Enterprise's handiwork: a $25 million water park, the Silver Star casino-hotel, the Hard Rock Beach Club and the Dancing Rabbit Golf Club.

Dancing Rabbit is also the name of the infamous 1830 treaty that removed Indians from their land and onto the Trail of Tears, a fate the Choctaws eluded and defied. The Mississippi Band of Choctaw Indians currently numbers about 9,100 nationwide. About two thirds of those members live on the reservation, and 813 work at the resort.

Choctaw Resort Development Enterprise president Jay Dorris says the gamble in the red clay hills of Neshoba County is paying off.

"Our revenue rose for the quarter ending March 31 but we are carrying a lot of debt," Dorris said.

CRDE's net income for the quarter ending Dec. 31 was $14.8 million. That's up from $9.4 million for the same quarter in 2002.

But the $8.8 million that CRDE spent on marketing that quarter was also up from $8 million for the same period the previous year. And income from table games was so low that 87 workers were laid off two weeks ago.

The layoffs reduced the number of table game workers to 85. Dorris anticipates no further layoffs of the resort's other 3,500-plus workers.

"We just haven't reached that critical mass of people who bet on blackjack and poker, but we are not going to become a slot house," Dorris said. "We need to focus marketing to get mid-rollers, people who bet $25 to $50 per hand, to the tables."

The bond offering comes due in 2009.

"We're actually ahead of our debt payment expectations," Dorris said.

Other casino tycoons, including Donald Trump, would love to make the same boast in this sluggish economy. Auditors filed a warning letter with the Securities Exchange Commission stating that Trump's Atlantic City casinos are $1.8 billion in debt, barely able to cover operating expenses.

And revenue at Tunica's nine casinos, located along the Mississippi River south of Memphis, slumped last year by $20 million from the previous year. Operators blamed the decline on a jittery job market that made consumers cautious about gambling as recreation.

Martin's strategy is to create attractions that make the Choctaw resort a destination for non-gamblers. Advertising and marketing targeted the 300 miles around Pearl River Resort last year. Now the tribe touts draws like restaurants serving Beluga caviar and filet mignon, hoping they will coax tourists from further away.

"It isn't necessary for the Golden Moon's upscale restaurants to be profitable if we can use them as a marketing device to draw bigger spenders," explained Mike Donald, vice president of resort finances.

Every weekend night, the Silver Star casino offers a free film and fireworks extravaganza called Star-tacular. Tourists stand in the center of a ring of 40-foot steel stars to watch a video love story projected onto the stars. Fireworks and streamers shoot from the points of each star.

To lure families into overnight stays, a 250-room hotel is planned at the water park. Geyser Falls Water Theme Park's bid for fame is a maze of water slides with drops as steep as a 4-story building and twists as drastic as a roller coaster's. There's also a 1,200-foot manmade river. Laser light shows are presented nightly.

A 185,000-square-foot fitness center is under construction adjacent to the Geyser Falls. The resort's main draw for sports enthusiasts is the Dancing Rabbit golf course designed by Tom Fazio and Jerry Pate. A bed and breakfast encircled by azaleas overlooks the greens.

Further up the road, the Hard Rock Beach Club offers a pool surrounded by white sand imported from Florida. Two huge crimson cats that were Aerosmith's stage props flank the door. Johnny Cash's six-gun and Christina Aguilera's tasseled white tank top are pressed under glass.

"I really do think that a few years from now, income from food, beverages and family attractions will equal our gaming income," Dorris said.

The tribe got $67 million from casino gaming revenue in the quarter ending Dec. 31. Food and beverage put only $8 million into tribal coffers. That's an 8 percent increase in food sales from the same quarter in 2002. The sales of snacks sold at the resort are tracked closely by computer by Lloyd Glaze, who oversees concession and merchandise sales.

"This summer, we'll be testing Cool Dogs, vanilla ice cream shaped like a hot dog inside a shortbread roll" Glaze said. "Children will nag parents to go to parks for the food, so it's a very competitive revenue niche."

Gambling remains the resort's financial engine. The Choctaws want to inject new fuel by widening Pearl Resort's demographic. Golden Moon aims to recruit young gamblers to the resort.

It was built across the road from the more sedate Silver Star Hotel and Casino, which was built in 1994. Tony Bennett croons through the Silver Star sound system. A Jay Z rap is the soundtrack at Golden Moon.

The new casino was designed by Arquitectonica, whose edgy skyscrapers became icons in the opening credits of "Miami Vice." A circular marble-topped bar that glows like a spaceship is in the center of the casino. Along with the budget buffets, Golden Moon has a nightclub trimmed in purple neon and pistachio-colored coffee bar near the slots.

It's gambling for the Starbucks generation.