Harrison County, Mississippi Circuit Judge Roger Clark recently ruled Golden Nugget Casino is not entitled to a refund or and may not lower its annual lease payment or .733 million to the city of Biloxi. Clark said people are free to enter into contracts, “even unfavorable ones.”
Under the original lease, Riverboat Corporation of Mississippi, the operating name of Isle of Capri and now Golden Nugget, paid $2.5 million in lease payments to Biloxi annually through July 31, 2003. That amount increased to $2.733 million in 2003 after a hotel was built and the resort expanded. It rose to $3.483 million in 2005 and to $3.733 million in 2008, and remained the same when Landry’s bought the property and renamed it Golden Nugget in November 2012.
However, Riverboat claimed since 2009 the company has been entitled to a refund and an annual lease payment reduction of $500,000, to $3.233 million. If the judge had agreed, the city and state could have owed $5-$10 million over the life of the lease, which runs up to 50 years with options.
Brett Singletary, attorney for Riverboat, Golden Nugget Casino Biloxi and Landry’s said, “This lease is way out of fair market rent now. It was negotiated during the early days of gaming before competition and poor economic conditions set in. We feel we have a strong argument and may well prevail on appeal. Nowhere in the lease does it state the rent cannot go down if market conditions go down.”
Ron Peresich, attorney for the city of Biloxi, said, “It was a case the city had to win. They sued to get the money back that they had paid under protest.”
The ruling stated the court “is not concerned with what the parties may have meant or intended but rather with what they said, for the language employed in the contract is the surest guide to what was intended.”
According to the contract, the casino’s lease payment will drop when annual gross casino revenue in South Mississippi falls below $1.25 billion. However, the contract also states the lease payment amount only will drop if Riverboat’s Biloxi property revenue drops to a point between $100 million and $90 million. The lawsuit noted from 2009 to 2015 the overall casino market generated less than $1.25 billion and Riverboat’s gross gaming revenues were less than $90 million, while revenue remained below $1.25 billion in 2015. Riverboat argued it is not reasonable to pay more rent if revenues decrease below $90 million.
