Located offshore to conform to quirky state laws outlawing gambling on land, some casinos on the Mississippi Gulf Coast, perched precariously atop barges, suffered heavy flooding and other hurricane damage. A lengthy shutdown for repairs could cost casino companies and local tax coffers tens of millions of dollars, The Wall Street Journal online reported.
Mississippi's $3 billion gambling industry, the third-largest in the U.S. after Las Vegas and Atlantic City, N.J., employs more than 35,000 people and pours nearly half a billion dollars of tax revenue annually into local coffers. The state stands to lose about $500,000 a day in tax dollars while the Gulf Coast casinos are closed.
Twelve of Mississippi's 29 casinos are along the coast in Biloxi and Gulfport. That area was hit with some of Katrina's strongest winds, and several of those coastal casinos suffered extensive flooding, according to preliminary reports from the state. It didn't appear any of the floating casinos had broken away from the dock. The big Harrah's casino in New Orleans escaped major damage, according to the company.
Bill Thompson, a professor at the University of Nevada, Las Vegas, and a casino-industry expert, said Katrina's devastation will likely shine a light on the offshore gambling establishments themselves.
Mississippi Gov. Haley Barbour said in a telephone press conference that he expected "catastrophic damage" in the coastal areas but that state officials were still unable to reach the area late Monday due to severe flooding.
After plowing through the coastal areas, Katrina remained a hurricane well inland, barreling through Hattiesburg with 100-mile-an-hour winds. About 200,000 residents of the state were without power.
Under Mississippi law, casinos must float along the Gulf coast or Mississippi River. The gambling houses are built on barges anchored just off land while the adjoining hotel, restaurants and nightclubs are typically built on land.
To improve safety and reduce the threat of flooding, a new law went into effect July 1 that allows Mississippi casinos to be built on pilings in the water. The proposed $235 million Havana Casino in Biloxi would go on pilings 16 feet above sea level.
Gary Loveman, chairman and chief executive of Harrah's Entertainment Inc., said the company was struggling to get detailed damage reports Monday on its casinos in Biloxi and Gulfport.
Loveman said that reopening the casinos in Mississippi depends on when electricity is restored and state and local authorities decide about building safety.
He also believes the effects of Katrina will spur the Mississippi government to re-examine the laws barring land-based casinos.
Harrah's New Orleans casino and the two others along the Gulf Coast account for about 9 percent of the company's annual operating earnings, according to Goldman Sachs.
Larry Gregory, executive director of the Mississippi Gaming Commission, said "the barges are not the safest facilities in the world," noting that they are prone to corrosion and cracking over time.
MGM Mirage has one property on the Mississippi coast, the large Beau Rivage casino in Biloxi. Mr. Gregory said there were reports that flooding had reached the second or third level of that casino.
Casino operators typically have insurance for business interruption and structural damage. In Florida, a year after a string of devastating hurricanes there, many beachfront hotels and condominiums remain shuttered awaiting extensive repairs.
The wall-to-wall television coverage of any hurricane can also scare off travelers even if the actual damage wasn't that extensive.
