Mississippi raises stakes in post-Katrina game

New Orleans and Louisiana are enjoying a gaming boom while Mississippi casinos rebuild. But once the Magnolia State regains its footing, Louisiana's boom may go to bust.

Published July 4, 2006

NEW ORLEANS - Minus stout competition from the Mississippi Gulf Coast and with thousands of recovery workers with time and money on their hands, Louisiana's casino industry is enjoying its biggest boom - thanks to the double punch of hurricanes Katrina and Rita.

But Mississippi, with a reconstruction plan featuring shoreside casinos that are attracting billions of dollars in investments, will be back in the hunt soon and positioning itself to reclaim its gambling dominance in the South, industry analysts say.

Flocks of gamblers have provided a revenue boost for Louisiana, which faced dire predictions of deep cuts in spending after the storms. Through the first 11 months of this fiscal year, the state's take was $473.8-million, up from $413.9-million a year ago.

That's despite the closure of three casinos since Katrina and Rita, and the exodus of many south Louisiana residents.

"The people who have come here to rebuild the city have a lot of money in their pockets and not a whole lot of entertainment options," said industry analyst Nick Danna of Stern, Agee & Leach in New Orleans.

In May, gamblers left behind $220.2-million at the state's 16 casinos, a jump from $199.5-million in May 2005. In April, gamblers lost $213.9-million, compared with $189.4-million lost in April 2005. The month before, casinos pulled in $239.1-million, compared with $198.6-million the previous March.

Most of the increase has been centered in New Orleans and Baton Rouge, which saw big population shifts because of Katrina, and in Lake Charles, where an influx of workers repairing Rita damage has joined regular throngs from nearby Texas.

How long the boom will last, however, is anyone's guess.

Analysts and industry figures suggest the planned $5-billion of investments to rebuild Mississippi's coastal casino resorts will again relegate Louisiana's gambling outlets to second-class status.

Some picture the Mississippi coast, one of the nation's top gambling markets before Katrina, ranking behind only Las Vegas and Atlantic City in terms of prestige, size and the number of gamblers within a few years.

Nationally, gambling has picked up after a period of slow growth after the 9/11 attacks that sharply cut travel. According to the American Gaming Association, state-licensed casinos won $30.3-billion in 2005, up from $28.9-billion in 2004, $27-billion in 2003 and $26.5-billion in 2002.

"The Mississippi Gulf Coast will emerge as the third-best gaming market," Danna said. "The amount of capital being spent there makes that market comparable with the best markets."

Despite catastrophic damage from Katrina, business in Mississippi has made a stunning rebound.

The three coastal casinos that have reopened since Katrina grossed $246.6-million from January through April, according to the Mississippi Gaming Commission. That's more than half of what 12 coastal casinos took in during the same period of 2005.

"It's really amazing," said Biloxi Mayor A.J. Holloway. "A lot of people say this is FEMA money and insurance money, but I don't believe that. We're getting a lot of people from out of town coming here. The casinos tell me their base is coming back."