Opened two years ago, Margaritaville Casino & Restaurant in Biloxi, Mississippi will close by September 19, putting more than 350 workers out of jobs. It will be the second Mississippi casino to close this year; Caesars Entertainment closed Harrah’s Tunica Hotel & Casino in June due to falling revenue and the company’s debt load. Casino officials said the Sims family, which owns the land on which the Margaritaville was built, has refused to renegotiate the lease and therefore the owners, MVH Holding LLC, could not secure financing to build a hotel.
Attorney Michael Cavanaugh, representing the casino owners, said, “The best outcome would be that something could be worked out with them and one of the investor groups that we’ve been talking to comes in and goes forward.” Cavanaugh said that the 40-investor ownership group has no plans to seek bankruptcy protection. He noted singer Jimmy Buffett does not share ownership but licenses the Margaritaville name. Buffett has waived licensing fees the past two years to help out the casino, Cavanaugh said.
Chief Executive Officer Doug Shipley said, “The story here is without a hotel, we cannot operate in a competitive market. You need to have the amenities to be able to compete. It’s a fact that people play where they stay,” Shipley said. One of the smallest of 12 Gulf Coast casinos, Margaritaville is one of only three lacking a hotel, although owners previously announced plans to start construction next spring on a $63 million, 250-room hotel that would complement the casino and offer time-share units, and also to renovate and expand Margaritaville’s gaming floor.
Shipley said Margaritaville will operate normally through August, but hours could be reduced or the casino could close earlier if business drops sharply. H said casino employees will be paid for the next two months’ work, even if the facility closes before September 19 and if they don’t voluntarily accept another job before then. All current casino promotions will continue, he added.
Mississippi Gaming Commission Executive Director Allen Godfrey said of Margaritaville management, “We are in close contact with them on a daily basis concerning their day-to-day operations. Gaming will be conducted in the same manner it was before the announcement and if not we will take action.”
The $62 million Margaritaville was the first new casino to open on the Mississippi Gulf Coast since 2007. Soon after the gaming commission allowed it to be built without a hotel, the commission changed its regulations, Commissioner John Hairston said. “The commission was concerned from Day One, but found ourselves in a difficult situation given the operation satisfied regulations at that time. We began discussing a change in regulation requiring larger scale, amenities and hotels shortly thereafter, culminating in the regulation put in place in 2014.” Those new rules require any new casinos to build hotels with at least 300 rooms in order to offer visitors an experience beyond the gaming floor.
Noted Godfrey, the closing of Margaritaville “is a pretty good example of why we put that rule in place. I think it probably was more of an instance that, coming out of the gate, they struggled a little bit to find their niche,” despite the fame of Jimmy Buffet. “Even a name brand that strong is not enough in this market,” Godfrey said.
The opening of the casino was celebrated with a concert by Buffett, attended by thousands and broadcast live worldwide on Margaritaville Radio.
The casino was built by former Grand Casinos President Tom Brosig, who envisioned a full resort with the Parrothead theme attracting thousands of Jimmy Buffett fans each month. But the lack of other amenities became a drag on the property, and Brosig’s role was eliminated last year.
Godfrey added besides lacking a hotel, Margaritaville had an out-of-the-way location, high management turnover and a delayed player’s club introduction. In addition, the land along U.S. 90 is owned by competing casino companies, so Margaritaville had to advertise its entrance on bus stop benches rather than on a flashy marquee sign. Within the first three months, about 200 employees were laid off, the marina and waterside bar were damaged by a hurricane and a performer was injured in a fall. Also in March 2013, the gaming commission fined the casino $10,000 for not having enough money on hand to pay its patrons and bills.
Still, Godfrey pointed out, “All along the Gulf Coast, there are hotels going up, hotel renovations. The Gulf Coast casino market is in the midst of a construction and expansion boom, unlike the Tunica cluster of casinos in northern Mississippi, which has been struggling.”
He noted owners of the Golden Nugget, Silver Slipper, Hard Rock Hotel & Casino and Island View are investing in the properties, proof that the Gulf Coast remains a gaming destination. In addition, Godfrey said, a new casino in D’Iberville, the Scarlet Pearl, will include a 300-room hotel and world-class miniature golf courses, and Hollywood Bay St. Louis is putting in a lazy river. A new minor league baseball stadium in Biloxi also will attract visitors. ?
“The more amenities the better,” Godfrey said, because they will encourage people who come to South Mississippi for a conference to bring along their families and stay an extra day.
A Margaritaville casino in Bossier City, Louisiana, is owned separately.
June numbers from the state Department of Revenue indicated the 12 Gulf Coast casinos posted their best month in years, winning $95.7 million, up 13 percent from a year ago–enough that overall state casino revenues rose from June 2013 by almost 1 percent to $174 million. It was the coastal casinos’ best June since 2008.
Revenues fell 12 percent to $78.7 million in the state’s river region in the first month since the closing of Harrah’s Tunica Hotel & Casino on June 2, putting nearly 1,000 people out of work.
Over the past 12 months, revenue statewide has fallen 4 percent and casino winnings are down about 25 percent from the peak in 2007. Monthly overall revenue has fallen year-to-year in 21 of the last 24 months.
In Tunica County, Convention & Visitors Bureau Chief Executive Officer Webster Franklin said June receipts dropped to $53.6 million from $62.3 million a year earlier. But the downturn from 2013 was about the same as in April and May, indicating business from Harrah’s already was declining. Harrah’s closing “didn’t disperse gaming revenue within the market. It shows an overall decline in the market itself,” Franklin said.
