Even though Margaritaville Casino in Biloxi will close in September, gross gaming revenues for the Mississippi coastal casinos remain strong.
Following the announcement that Margaritaville Casino will close September 19, attorneys for landlords Clay Point LLC filed a motion for a temporary injunction in Harrison County Court, asking that MVB Holding LLC, operators of the casino, turn over the keys to the property immediately and be prohibited from removing any contents. The landlords said MVB Holding owes nearly $4 million in rent and $500,000 in unpaid taxes.
In addition, attorneys Lawrence Gunn Jr. and Donald Dornan Jr. said any suggestion that Clay Point is responsible “for Margaritaville’s financial and management woes is completely untrue. Clay Point and numerous other public and private entities made significant concessions to assist Margaritaville during the last 18 months. It is regrettable that the well-intended efforts of those parties was insufficient to keep Margaritaville afloat.”
MVB attorney Michael Cavanaugh earlier said the landlords would not renegotiate the lease, causing the company to be unable to get financing for a hotel which would overcome the casino’s out-of-the-way location and lack of amenities. According to court papers, the lease requires MVB to pay $1 million in rent a year and plus percentage of Margaritaville’s sales. The rent was deferred until May 2013, one year after the casino opened. The suit said MVB owes $3, 868, 225 through July, the total of unpaid and deferred rent. Clay Point also said MVB “failed and refused to pay” taxes on the leased property, totaling $501,690.02.
“The Clay Point property owners have repeatedly attempted to reach a workable agreement that would help Margaritaville by making their rent lower. These efforts failed because Margaritaville has consistently been unwilling to recognize any obligation to make past or future rental payments,” Dornan said.
Cavanaugh said forcing the casino to close early would cause a loss of revenue to the company, the city, county, state and school district. “As the MVB board said on Monday, they are unable to resolve the litigation with landowners, and although MVB believes it would ultimately prevail, the inability to refinance and build the hotel and amenities during that extended period prevents them from going forward,” Cavanaugh said.
MVB is required to pay employees for 60 days. After that, the U.S. Department of Labor may have to step in, as it recently did with a $2.5 million grant to help the nearly 650 workers who lost their jobs when Harrah’s Casino Tunica in Mississippi closed in June. U.S. Secretary of Labor Thomas E. Perez said, “The closure of this resort will have a significant economic impact on the lives of families in the area. This funding will help provide a wide range of reemployment services to prepare these former workers for good jobs in high-demand industries.”
Meanwhile, a new report from the Mississippi Gaming Commission indicated casino resorts’ investments in amenities and expansions are showing results. From March through June 2014, gross casino revenues up, compared with a year ago. Casino hotel occupancy is at 95 percent and 552 new hotel rooms are under construction, even though revenue, visitors and employees remain below pre-Katrina numbers. June’s 13 percent increase in Coastal casino revenues helped move revenue for the first six months from behind last year’s pace to $1.5 million ahead of 2013 winnings.
The industry celebrated its 22nd year in Mississippi on Friday.
Despite the closure of Harrah’s Tunica Casino in June and last week’s announcement that Margaritaville Casino Biloxi will close by September 19, Allen Godfrey, executive director of the state gaming commission, said, “They’re two completely different circumstances why they closed.”
He said monthly casino-revenue reports are just one way to see how casinos are doing. Godfrey said he recently visited three Coast casinos and saw people in the pools and at the restaurants. Casinos are investing in new hotels, restaurants and other amenities, and construction has begun on Scarlet Pearl Casino in D’Iberville. “The casinos wouldn’t do it if they didn’t think they could make money at it. You’ve got to have a reason to come to the Coast. Gaming is not the reason anymore,” Godfrey said. He noted casinos are “thriving” in Las Vegas where the mix of amenities to casinos is 60/40 percent.
Richard Bennett, chairman of the House Gaming Committee, said, “I think that the right casinos have to come along and the amenities have to be correct. I think Margaritaville was the perfect example of why casinos need hotels and amenities.”
State legislators need to address the casino industry the same way it would other major industries and provide similar tax incentives and tax breaks, said former state representative and Tourism Committee chairman Diane Peranich.
“If casinos invest and bring jobs in Mississippi, they need to have as much consideration as any other industry,” she said.
And Webster Franklin, president and chief executive officer of the Tunica Convention and Visitors Bureau, said, “Mississippi has never truly acknowledged the gaming industry. Leadership has never done anything to hurt it, but they haven’t done anything to help it either. We need to sit down and figure out what we can do so this doesn’t happen again. That’s got to happen.”
