The Big Blow
Hurricane Katrina demolishes Gulf Coast casino business
by Casino Connection Staff
Up until the end of August, the touchstone for residents of the Mississippi Gulf Coast had been Hurricane Camille, which hit the region with deadly force in 1969, killing more than 250 people. Camille now seems like a gentle breeze compared to the devastation wrought by Hurricane Katrina when it blasted the Gulf Coast from New Orleans, Louisiana to Gulf Shores, Alabama on August 29.
In addition to killing what may become thousands of people and destroying tens of thousands of homes and lives, Katrina has dealt a death blow to the gaming industry in the region, particularly on the Mississippi Gulf Coast. Although the coast had been brushed by several hurricanes and tropical storms in the past two years, no one could have predicted the fury and destruction brought by Katrina.
The floating dockside casino barges, some more than 200 yards long, were tossed like so many toys onto and across the main highway on the coast, Highway 90. Winds reportedly blew more than 140 miles per hour, accompanied by a storm surge that reached or surpassed 30 feet in places.
Several casinos were total losses. In Biloxi, Harrah's Grand Casino, Pinnacle's Casino Magic, Treasure Bay, the President Casino (which was slated to close in October anyway) and Penn National's Boomtown may not be salvageable. The Hard Rock, Palace Casino and Isle of Capri (which was slated to bring in a new barge next year) sustained serious damage, but may be salvageable. Beau Rivage sustained serious damage, but fared better than the others, according to MGM Mirage. The main reason is that the Beau's casino barge was not floating on the gulf itself. The Imperial Palace suffered the least damage and in fact was being leased by FEMA to coordinate relief efforts on the coast.
In Gulfport, Harrah's Grand Casino lost a section of its barge, but the hotel and Oasis resort, located across Highway 90, remain standing. The Copa casino floated off its moorings and was deposited in the casino's parking lot, a total loss for a property that had no hotel or land-based facilities to speak of.
In Bay St. Louis, Penn National's Casino Magic was in the eye of the hurricane and suffered major damage.
Harrah's Casino in New Orleans sustained minor damage, avoiding even the devastating flooding that afflicted the city since it sits at one of the city's highest points. But even its future was in question as the government planned to completely evacuate the city for an indeterminate time. The evacuation would prevent visitors from entering the city until the damage was cleaned up and residents allowed to return.
Pinnacle's Boomtown casino in Harvey on New Orleans' West Bank reportedly suffered minor damage and could reopen within weeks. The same is true for Boyd Gaming's Treasure Chest in Kenner, near the Louis Armstrong International Airport, where the relief effort for New Orleans was centered.
While most companies vowed to rebuild, there is some doubt as to whether they would do so on barges again.
Harrah's Entertainment President and CEO Gary Loveman called for temporary casinos to be permitted on the coast, and a change to the legislation to allow permanent land-based facilities.
"I've just never understood that," Loveman said. "It's not simply an inconvenience, it's a public safety problem."
The executive director of the Mississippi Gaming Commission, Larry Gregory, said legislators would have to seriously consider allowing land-based casinos if they wanted to get the level of investment that the casino companies seem to want to make.
"I've had conversations with five CEOs of major casino companies, including Harrah's and MGM and Casino Magic," Gregory said in an interview with CNN/Money. "They tell me they're reluctant to rebuild if the other factors (the dockside laws) still exist."
Despite all the concern over rebuilding, most companies' thoughts and actions were directed toward their employees. With 14,000 people out of work, some companies vowed to continue paying them for a period of time. Harrah's pledged at least 90 days of wages, will pick up all health care premiums and have removed pre-authorization for all medical care for all of its 8,000 Gulf Coast employees. In addition, the company contributed $1 million to an employee relief fund and encouraged its employees in jurisdictions to contribute.
The American Gaming Association also set up a fund—the Gaming Industry Hurricane Katrina Relief Fund—that will allow anybody to contribute to a fund that will be dedicated to gaming employees impacted by the storm.
"This disaster is much more than about casinos—it is about people and communities and the struggle to rebuild lives," said AGA President and CEO Frank J. Fahrenkopf Jr. "Our hearts go out to the thousands of gaming employees affected."
Many member companies joined the effort, some of them matching their employees' contributions dollar-for-dollar, including Argosy Gaming, Wynn Resorts, Aztar Corp., Ameristar, JCM American, the Association of Gaming Equipment Manufacturers (AGEM) and others. Other companies, particularly those with properties in the region, have set up internal organizations designed to aid those impacted.
To contribute to the Gaming Industry Katrina Relief Fund, go to the aga website at www.americangaming.org.
As with most disasters, there are many poignant and heartbreaking stories with Katrina. Bernie Burkholder, the president of Treasure Bay, not only lost his hotel and casino, but also his house, car and all his possessions. He survived only with the clothes on his back.
The Hard Rock Hotel, next to Beau Rivage, was just one week from opening. The facility was supposed to mark a new era for the Gulf Coast, attracting a younger, hipper gambler. Officials of Premier Entertainment, the owners of the property, and the Hard Rock organization vow to rebuild.
Churchill Downs, just recently approved to operate slots at the Fairgrounds racetrack in New Orleans, now sees its opportunity pushed back indefinitely.
Estimates of the time casinos could be back in business in both New Orleans and the Gulf Coast vary wildly. The reopening of Harrah's New Orleans will not occur until the city is ready to reopen. The suburban riverboats may be open much sooner, since they received minimal damage.
In Biloxi, the Imperial Palace and Beau Rivage could re-open soonest, but to what market? New Orleans is devastated, so the only market would come from the east, Alabama, Georgia and Florida. But do gamblers want to play in a destination where so many suffered and the trip to the casinos will only be a reminder of the tragedy?
And if land-based gaming is approved in Mississippi, what might be the parameters? Would they still be limited to waterfront sites, or would the legislature see the wisdom of pulling them back off the waterfront in the cities where gaming already operates?
So many questions continue to haunt this region, one can only return to the human tragedy that befell the residents of Mississippi and Louisiana and hope that the gaming industry can play a small role in making it right again.
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