Casinos bring a change of fortune for 'Redneck Riviera'
By Andrew Ward
Published: August 28 2006 03:00 | Last updated: August 28 2006 03:00
It is 10am at the Isle of Capri casino in Biloxi, Mississippi, and Don Williams has been gambling since breakfast. In his hand is a credit slip showing $15 of winnings but, rather than cashing out, he inserts it in a slot machine in the hope of bigger returns.
Two goes later and his credit is down to $13 as the reels fail to deliver matching symbols. "I've been back five times since Katrina," says the 65-year-old from Alabama. "I haven't won a thing."
While Mr Williams is short of luck, the future of the Mississippi casino industry has never looked brighter.
Many doubted the state would recover its crown as gambling capital of the south after Hurricane Katrina destroyed or badly damaged all 12 of its seafront casinos last year.
But, 12 months later, gambling revenues have bounced back to three-quarters of their pre-Katrina level and gaming companies are pouring billions of dollars into an expansion expected to more than double the number of casinos.
MGM Mirage, the world's second-largest gaming group, will mark the anniversary of Katrina tomorrow by reopening its Beau Rivage casino in Biloxi following a $550m (€433m, £290m) refurbishment - the seventh to return since the storm.
Revival of the casinos is crucial to broader recovery along the Mississippi coast because gambling was one of the most important pillars of the state economy before Katrina, generating $500,000 in daily tax revenues.
In Biloxi, the main gambling centre, about 30 per cent of the population worked in casinos and half the city's annual budget was funded by gaming and associated restaurants and hotels.
Gambling was legalised in Mississippi 16 years ago to provide a fresh source of growth for coastal communities hit by a decline in their traditional fishing industry.
Until Katrina, casinos were restricted to floating seafront barges to appease opponents of gambling in one of the Bible Belt's most God-fearing states. But the law was relaxed following the storm to allow casinos on land within 800ft of the shore, as state legislators sought to make sure the industry returned.
Almost immediately gaming companies began buying former residential land swept clear by Katrina, with at least four new casinos planned in addition to existing ones being rebuilt.
A.J Holloway, mayor of Biloxi, says he expects his city alone to have 18-22 casinos within 10 years, making it a rival to Atlantic City, New Jersey, as the second-largest US gambling destination after Las Vegas.
Casino operators are part of a broader rush of private capital into the Mississippi coast as investors seize the opportunity created by Katrina to redevelop a stretch of sandy coastline once derided as the "Redneck Riviera".
Property developers were already eyeing the coast's potential as nearby Florida became more expensive and crowded, but the storm provided a catalyst for them to move in.
More than $600m worth of new seafront apartment blocks have been proposed in Biloxi alone since the storm, with several already rising from the ground even before all damaged buildings have been demolished.
Mr Holloway says the number of new apartment units planned for the city has increased from 3,500 before Katrina to more than 9,000 today.
Heavy private investment in the coast helps explain why Mississippi has made more progress towards recovery than neighbouring Louisiana. While many streets in New Orleans remain strewn with debris and half its population is still absent, the clean up in Mississippi is nearly complete and 98 per cent of its people are back - albeit with 100,000 still living in trailer homes.
"When I went with the police chief to survey the wreckage after the storm, I did not have much hope," says Mr Holloway. "But we're coming back quicker than I expected."
Not everyone is enthusiastic about the influx of casinos and apartment complexes. Critics fear the coast's rich southern architecture and fishing heritage risk being obliterated and complain that the interests of gaming companies and property developers are being put ahead of ordinary people.
Land prices in Biloxi have soared from about $15-$25 per sq ft before Katrina to $50-$100 following the storm as developers swarm, delivering a bonanza for land owners but making it harder for low-income residents to return.
Many of Biloxi's poorest residents, mostly African-Americans and Vietnamese fishermen, lived in the district that was flattened by Katrina and is now earmarked for redevelopment by casino operators.
But Michele Chamberlain, one of 3,800 employees about to return to work at the Beau Rivage, has no complaints. "I don't know anyone in Biloxi that is opposed to the casinos," says the 27-year-old. "They are the only businesses creating jobs."
Copyright The Financial Times Limited 2006
Comments