CASINO GAMI NG ON THE MISSISSIPPI GULF COAST by Klaus J. Meyer-Arendt, Ph.D.

Introduction The Mississippi Gulf Coast has been a tourist destination since prior to Mississippi being admitted into the United States of America. The popularity of the Coast for tourism has waxed and waned over the years in response to economic cycles, hurricanes, and alternative trendy destinations. In the 1990s, a new wave of tourism in the form of legalized casino gambling 1 swept the state, especially the Mississippi Gulf Coast. In late 1998, there were eleven operating casinos on the Coast and several more under construction. The development of the casi no industry has not been without controversy in the coastal counties, and the impacts have been mixed. Economically, there has been a rejuvenation as new jobs were created and the demand for housing increased tremendously. In terms ofenvironmental impacts- highway traffic, hurricane evacuation planning, and socio-cultural impacts-casino development has borne a cost. Traditional patterns of tourism have been altered , and no comprehensive land-use analysi s offuture casino development exists. This chapter is written to : I ) provide a brief background of gambling on the Mississippi Gulf Coast, 2) discuss the Mississippi Gaming Control Act of 1990, 3) present a chronology ofcasino development, 4) evaluate the economic impacts, 5) assess how casino development has altered historic patterns of tourism development, and 6) examine some of the implications for urban planning and coastal management.

Background of Gambling along the Mississippi Gulf Coast In spite of its reputation as a conservative "Bible 13elt" state, Mississippi has a long heritage of gambling activity. Gambling houses ex isted in nearby New Orleans prior to the 1803 Louisiana Purchase, and by the early 1820s America's first large 24-hour-a-day casino opened in the heart of New Orleans' French Quarter (Asbury 1938). With increasing restrictions upon gaming in the late 1820s, gambling diffused out from the city, both upriver along the Mississippi River and eastward along the Gulf Coast toward Mobi le (Asbury 1938). In addition to the riverboat gambling towns of Natchez and Vicksburg, the Mississippi Coast- notably Biloxi-became a venue for open gambling. This legacy survived into the 20th century, and the colorful history is one ofaltemating tolerance and prosecution of gambling establishments. D uring Prohibition in the 1920s, an offshore sand shoal ten miles south of Biloxi-Dog Key- was renamed the Isle of Caprice and developed into a gambling resort by local entrepreneurs (Powe ll 1988; Rucker and Snowden 1988; Sullivan et al. 1985). An enterprising ship captain, Pete Skrmetta, ferried visitors lo and from the casino on the boat, the Pan American, until the island disappeared below the sea in the 1930s. Also, transportation to the island was provided by two other converted schooners, the Jolly Jack and the Silver Moon. 1

The tenn "gambling" refers to the activity of wagering, whereas "gaming" refers to the industry. Because this article focuses upon gambling as an activity (i.e., a form of tourism), the term "gambling" is mostly used. Where reference is made to the casino industry, or regulation thereof, the term "gaming" is used. 29 1

Another schooner, the Tivoli, provided transportation when needed . On May l. 1925, W. H. I lunt received a quit-claim deed for Dog Key, and it is interesting to know that the Hunt family has continued to pay taxes on the Isle of Caprice. In the event this submerged shoal will one day reappear, the Hunt family wi ll once again be the legal owners. Illegal gambling resurfaced along the mainland fol lowing World War II, but in the late 1950s and early 1960s. raids by authorities more or less closed the illicit industry in the coastal counties. As coastal tourism began to wane in the 1980s, plans fo r land-based casinos and "gambl ing cruises to nowhere" were proposed. Some cruise sh ip s lips were constructed, channels were dredged, and several boats actually began operation in the late 1980s. Although portions of M ississippi Sound technically lay beyond Mississippi's 3-mi le territorial limit, court rulings stated that gambling excursions had to enter the open Gulf of Mexico. This in effect lim ited comfortable cruises to heavier, seaworthy ships such as the Pride of Mississippi, which began steaming into the Gulf in 1989. Fo r several reasons, including U.S. C ustoms investigations of violatio ns of the federa l Gambling Ship Act of 1948 and low passenger counts, the Pride r?f Mississippi moved to Texas and became the Pride of Galveston (Morris 1989). Anticipating local approval of land-based casinos. the old Bil ox i Hilton (now the Broadwater II Hotel) in the late 1980s constructed a building-named the Casino- fo r gam ing purposes. A lthough legalization of land-based casinos was rejected by voters, gambling cruises (such as the LA Cruise) sailed into the early 1990s.

The Mississippi Gaming C ontrol Ac t of 1990 Fol lowi ng a severe economic crisis in Mississippi during the late 1980s, state legis lators drafted what became the Mississippi Gami ng Control Act of 1990. T his act paved the way for legalized gaming as long as certain provisions were met: l) no gambling was permitted on Mississippi soil but only on "vessels" which could be docked along a shoreline, and 2) these docks ide sites were restricted to counties along the Mississippi Ri ver and along the Coast of Miss issippi Sound, so long as most county residents did not object (Meyer-Arendt 1995). For the Gulf Coast, the l 990 Gaming Act specified that gaming si tes were restricted to "south of the three (3) most southern counties ... ", the intent being to augment beach touri sm with beachfronl casi nos. Voters in Jackson County rejected docks ide casino gambling, so only Hancock and Harrison Counties were affected by the s ite requ irements. T he s horeline of those two counties which face south onto Mississippi Sound consists mostl y of public artificial beaches, including the famou s "longest man-made beach in the world" fronting Harrison County for 26 miles (Graber 1986; Meyer-A rendt 1992). Because j urisdiction over M iss issipp i's "tidelands'' (land below the natural high-water line) fell under the office of the Secretary of State, that offi ce advised limiting casi no sites to non-sand-beach segments of the sho refront. This severely restricted potential s ites to existing ports and harbors and a few areas where (often illegal) nears hore rec lamation activity had occun-ed in the past. Land speculators quickl y scouted and optioned potential casino sites at places such as Biloxi's dec lining seafood district (at what used to be known as ··front beach of Point Cadef'), Bilox i's downtown waterfront area, deve loped shorefront areas along 13iloxi' s West Beach touri s t strip, and port and harbor facilities in other Harrison and Hancock County communities (M eyer-A rendt and Abusalih 1994). Subsequent more liberal interprl:!tations o fthc 1990 Gaming Act permitted the siting of cas inos along bayshorcs of the two coastal counties. e.g., St. Loui s Bay and Back Bay of Bi lox i, and again land

292

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I speculators scouted out potential sites. And although navigable rivers flowing into the bays (or the Sound) were al so interpreted as technically permissible sites so long as tidal influence exists, proposed sites in such locales have been controversial for a number of reasons, including potential negative impacts upon fringing wetlands. Patterns of Casino Development

When dockside gaming finally became a legal industry in 1992, the Mississippi Gulf Coast was quick to embrace it (Meyer-Arendt. 1998, in press). The first three casinos in the state opened in I3iloxi in August 1992: the Isle of Capri, the President, and the Biloxi Belle- and a fourth (Casino Magic) opened the following month in Bay St. Louis (Table I). Three of these four pioneering casinos were actual riverboats, and Casino Magic was built on a barge. All four were relatively small, with less than 40,000 square feet of gaming space; but all four were to spearhead a rejuvenation of the Gulf Coast's economy. The fifth casino on the Coast (and the seventh statewide) was Gul fport's Grand Casino, which opened in May 1993. With over I 00,000 square feet of gaming space, 2000 employees, 2000 slot machines, and an entertainment section for children, the Grand set a new standard for casino constniction on the Coast as well as in the state. Geographically, the five pioneer casinos were in different locales, all of which were to set the pace for further casino development and land-use change (Figure I). The following paragraphs discuss the casino development patterns and impacts associated with the Coast" s five pioneers. 1. The development of Casino Row. The Isle of Capri, which soon replaced its vessel with a barge-mounted casino, was the first to locate in Biloxi• s declining oyster-canning district, where over sixty acres ofland had been reclaimed from Biloxi Bay over the past century (Meyer-Arendt 1995). Except for the J. L. Scott Marine Education Center of the Gulf Coast Research Laboratory, which had been built on the site of a former U.S. Coast Guard Station, the remainder of the site was optioned as casino properties. The name ·'Casino Row" quickly replaced " front beach of Point Cadet", and by January 1994, three more casinos (Casino Magic Biloxi, Lady Luck Biloxi, and Grand Casino Bilox i) had opened. Two additional casinos (Baily's and Castle One) had property options at Casino Row, but development never occurred because of title and financi al problems. Casino Rov..- had still become the biggest casino strip bet\veen Las Vegas and Atlantic City, and even the J. L. Scott Marine Education Center offered its fac ilities for lease. The Palace Casino, which opened in April 1994, is two blocks north of Casino Row at the foot of the old bridge over Bilox i Bay, never quite succeeded at selling itse lf as a northern extension of Casino Row. It has been on the verge of closing for many months. 2. Casino development in downtown Biloxi. The downtown Biloxi shorefront contains a mixture of commercial, touristic, and public recreational fa cilities, just as it has since the early nineteenth century. Historically tourists arrived in Biloxi by steamboat or train (later trolley and car) and stayed in downtown shore front hotels. During the Roaring Twenties, the grandest of these was the Buena Vi sta Hotel ("the grande dame of the South"), at the western edge of downtown. By the 1950s, the shorefront had changed greatly as a result of the widening of U.S. Hi ghway 90 (Beach Boulevard)

293

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I I

I

I I I

N \0 ~

I

"·f:;('·

''?'."""''

:,;.;::.

1, 151

42

1,363

956

46

807

39,500

1,103

53

1,169

(05/14/93)

105,000

2,005

95

2,197

Harrison Casino Magic - Biloxi

(06/05/93)

47,200

1,206

43

912

7 Gulfport

Harrison Copa Casino

(09/10/93)

26.000

711

26

463

8 Biloxi

Harrison Lady Luck Biloxi

(12/13/93)

22,000

647

23

554

9 Lakeshore

Hancock Bayou Caddy's Jubillee Casino

(01/07/94 -- MOVED 10/23195)

9a Lakeshore

Hancock Bayou Caddy's Jubilation Casino

(12/21195 •• CLOSED 07/16/96)

27,500

10 Biloxi

Harrison Grand Casino - Biloxi

(0 1/17/94)

110.000

1,940

103

2,311

11 Biloxi

Harrison Palace Casino

(04/11/94)

32,040

718

34

535

12 Biloxi

Harrison Treasure Bay Casino

(04/28/94)

56,000

1, 189

56

1.163

13 Biloxi

Harrison Gold Shore Casino

13 Biloxi

Harrison Boomtown Casino

1.0111

371

(06/20/94 •• CLOSED 05/14/95) (07/18/94)

39,200 33,6321

901

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Table 1. Casinos in Coasta l Mississippi, l 992- 1996. Data courtesy Mississippi Gaming Conuni ssion.

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W•ter Interstate Highway U.S. Highway

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Casino - Open Casino - Proposed Casino - Under Construction Casino - Closed but Si te atilt Uoena.d Airport Federal Installation Stennia Space Canter Buffer Area

Figure 1. Gulf Coast Casino Development.

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which was accompanied by several hundred feet of land reclamation. The Buena Vista Motel, Baricev's Seafood Restaurant, and more touristic and commercial businesses were constructed here in the 1950s and 1960s and stood until 1992 (except for brief destruction by Hurricane Camille in 1969). In the early 1990s, the Biloxi Belle Casino owners bought many of the eastern downtown shorefront properties, converted the Buena Vista Motel to a casino resort motel, and razed most of the remaining structures (including the stately but now irreparable Buena Vista Hotel) to turn them into parking lots for the small paddlewheel casino. There were mixed feelings among local residents as old historic urban landscapes were shaped into a new casino landscape. A second casino-the Gold Shore-opened nearby in June 1994 after much opposition to a giant glittering neon sign at its entrance. Both casinos declared bankruptcy in 1995 because of smaJI sizes and inability to compete with Casino Row and other large casinos. The pattern begun by the Biloxi Belle continues, however, as Las Vegas casino mogul Steve Winn 's Mirage Resorts Corporation is presently constructing the $500-miJiion Beau Rivage Casino, the largest hotel/casino complex yet, expected to open in early 1999. There are also options to construct a neighboring casino to the east. 3. Casinos as part of the traditional tourism landscape. Since a primary objective of legalized gambling was to offset a decline in tourism, it seemed logical that casinos would be sited in tourism zones. However, most post-World War II tourism infrastructure (motels, restaurants, and other entertainment facilities that comprise the "recreational business district," or RBD) had been built up along the sand beach which had been declared off-limits to casinos by the office of the Mississippi Secretary of State. Th us the only potential sites along RBDs such as Biloxi 's West Beach were those like the Broadwater Marina, which had been constructed in front of the Broadwater Hotel. The President Casino steamed into this site in August 1992. Recently sold to the Primadonna Corporation, the Broadwater complex includes two hotels (the Broadwater and the Breakwater II, the fom1er Biloxi Hilton), the casino, and an eighteen-hole golf course. (The larger, bankrupt, barge-mounted Gold Shore casino was moved in to replace the smaller, popular President casino in 1995.) Similar non-sand beach sites existed nearby at the Sea-n-Sirloin complex and an adjacent marina next to the Rodeway Inn. The former became the site of the Treasure Bay casino, which also acquired the popular Royal d'lbcrville Hotel in April 1994. The adjacent marina site, acquired by the Lone Star Corporation, was later sold and may yet be developed as a casino. Because of limited site availability, this trend of building casinos in traditional tourism zones may be reaching its limit. 4. Casino development in ports and harbors. A fourth trend, pioneered by the Grand Casino Gulfport, is the siting of casinos in existing ports and harbors. In Gulfport, where nearly half of all residents were opposed to gambling. the Grand Casino negotiated a deal with the Mississippi State Port Authority, an autonomous state body which oversees shipping and commercial operation at the state port. A small fishing boat harbor was relocated to make room to float the giant barge-mounted Grand close to Beach Boulevard. A four-story parking garage was built adjacent to it, on state port property. The annual lease that the Grand pays the state port is in the millions of dollars. In September 1993 a second casino-the Copa, formerly the steamship Pride of Mississippi- was leased space in the port. Unfortunately for the Copa, which required deep-draft access, the lack of good sites left it tied up among the banana boats arriving from Central America. A closer site and new road access were negotiated, but the Copa' s small size and restricted site (the port does not lease land for hotel construction) did present some problems in the early stages of its establishment.

296

Efforts to allow casinos on Gulfport city property adjacent to the state port (such as Marine Life, where Donald Trump held an option until 1996) have been met by much local opposition. At other port and harbor facilities, such as Long Beach and Pass Christian, local residents so far have resisted efforts by developers to bring in casinos, but that could still change in the future. The only other example of a port/harbor casino was at Bayou Caddy (near Lakeshore) where the Jubilee opened in January 1994. Billing itselfas the "closest casino to New Orleans" and hoping to intercept arriving Louisianans, the Jubilee nonetheless suffered from a poor location. In spite of"do

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While automobiles are still the dominant choice of transportation for arriving visitors, charter buses and charter flights have increased greatly since 1992. The Mississippi Gulf Coast received 1J,601 motorcoach tours (79 percent of the state's total) in fiscal year 1995 (MS DECO 1996). These charter buses carried nearly 450,000 passengers, who spent approximately $35 million. Furthermore, 2,432 of the tours (or 21 percent) spent the night on the Coast (MS DECO 1996). At the Gulfport-Biloxi Regional Airport, the few local commuter flights have now been augmented by up to 20 charter flights daily, mostly from the Tampa, Florida area. The airport is making improvements worth $4.5 million in 1996 and 1997 in anticipation of additional growth, including the addition of jet service. By the end of the decade, the Airport Authority anticipates spending another $4.5 mi Ilion on an international terminal (McKinney 1996). The number of permanent residents on the Mississippi Gulf Coast has increased, and this has also stimulated the economy in many ways. At least 20,000 new residents were added to the coastal counties between 1990 and 1995 (Rychak 1995), and a growth rate of 1.5 percent-or 1,500 new residents annually-is projected into the near future (McKinney 1996). The total civilian labor force rose 17 percent from 1992 to 1994 alone, from 136,250 to 159,270 (Myerson 1996), although this growth rate has now leveled off (HCDC 1996). The number ofautomobile registrations in Harrison County alone increased 10 percent from 1992 to 1994 ( 140,622 vs. 128, 102), although this growth rate has also slowed in 1996 (HCDC 1996). Similar increases have been noted for Hancock County and Jackson County, as many casino employees took up residence in the Ocean Springs area. The average house price on the Coast jumped from $68,500 in 1992 to nearly $90,000 in 1996. Additional measures of direct and indirect impacts of casino gambling upon the economy are employment statistics. The coastal casinos currently employ 12,375 workers (MS Gaming Commission, 1996), most ofthem residents of the coast. According to standard "multiplier" indices, their take-home pay may "double" as it trickles through the Coast's businesses and services. In 1993 the average casino worker's wage was $ 16, 115, according to the South Mississippi Planning and Development District.

Casino Development vs. Historic Patterns of Tourism Development Coastal tourism development generally follows certain set patterns, and such patterns have been characteristic of historic tourism development along the Mississippi Gulf Coast (Abusalih 1994; Meyer-Arendt 1992). ln a typical seaside city, tourism development takes place along the waterfront closest to the central business district (CBO) and then gradually expands laterally along the waterfront if tourist demand is sustained (Meyer-Arendt 1990). In Biloxi, Gulfport, and-to lesser degrees-Bay St. Louis, Pass Christian, Long Beach, and Mississippi City, tourism development followed such a scenario. With the construction of Keesler Air Force Base and a postwar boom in tourism (stimulated in large part by construction of the 26-mile-long artificial sand beach in 1951 ), tourism and entertainment facilities expanded laterally along the beachfront. In Biloxi, for example, West Beach quickly became the core area of Biloxi's recreational business district (RBD) (Figure 4). Smaller RBD strips developed between stretches of residential zones throughout the Harrison County shoreline (see Figure 1).

301