Up to 1,300 workers will lose their jobs when Caesars Entertainment closes its Harrah’s casino in Tunica on June 2. Caesars’ other two Tunica casinos will remain open: Horseshoe Tunica and Tunica Roadhouse Hotel and Casino (formerly the Sheraton Casino). Spokesman Gary Thompson said employees will have preference for openings at those operations and at Caesars’ properties under development in Las Vegas. However, with 1,700 workers, it’s unlikely the other two local casinos can absorb Harrah’s employees.
Thompson said the taxes on the property are “onerous.” He added, “What we do have are a number of loyal players in the market, but not enough to support three properties.”
With $21 billion in debt, Caesars lost $2.9 billion in 2013 and has been cutting costs as it tries to refinance. Some properties have been spun into other corporate entities.
Harrah’s is the largest casino resort in Tunica County, once the nation’s third-largest casino market. Opened in 1996 as the Grand Casino, it offered a convention center, golf course and 1,356 hotel rooms. Tunica Convention & Visitors Bureau Chief Executive Officer Webster Franklin said, “The overhead at Harrah’s is much more than at other casinos, I would have to believe.”
Caesars officials said the company would work with local authorities to find a new use for the building.
Harrah’s is the second casino in the Robinsonville area of Tunica County to close. In 2002 Isle of Capri closed a casino and hotel that still are unoccupied.
Gambling revenues have been falling at Tunica County’s nine casinos for seven years. Tunica casinos won $1.16 billion from gamblers in the 12 months ending September 2006, but that amount fell 38 percent to $723 million in the 12 months ending September 2013, according to Tunica Convention & Visitors Bureau figures. Attendance is off by two-thirds since the peak in 2007. In the last three months of 2007, the nine Tunica casinos and one in Lula had 4 million total visitors; in the last three months of 2013 they had 1.3 million, according to the Mississippi Gaming Commission.
Statewide, since 2008, total casino revenue dropped 17 percent and visitor count declined 32 percent. The Mississippi casino market ranks eighth in the nation, but it used be the third largest behind Vegas and Atlantic City.
The industry employs more than 23,000 people and provides about 5 percent of the state government budget.
Substantial new investment and renovation is boosting the Gulf Coast casino market. But that too could be threatened by legalized online gambling and possible casinos opening on the Florida Panhandle.
Why the dramatic decline? One reason is new competition in Oklahoma, Missouri and elsewhere. Also, Tunica never fully recovered from the consequences of the 2011 Mississippi River flood, when some gamblers switched to two Arkansas racinos, including one in West Memphis. The economy also has had an impact. “The biggest problem is the proliferation of gaming in feeder markets for Tunica as well as the overall impact of the recession,” Thompson said.
To increase visitors, Tunica has opened a Mississippi River museum with boat rides and a welcome center that doubles as a blues museum, Franklin said. But the closing of Harrah’s will leave Tunica County and the state with less tax money. “They are closing the casino that has the most tourism amenities,” Franklin said.
Meanwhile, Mississippi’s tourism budget is $6 million a year, with only $1.8-$2 million dedicated to advertising. Surrounding states spend millions of dollars more; Florida’s tourism marketing and advertising budget is $65 million a year. When casino taxes come up in the legislature, the discussion usually centers on whether to raise casino tax rates from the current 12 percent.
Efforts to substantially increase tourism marketing haven’t gone very far in the Legislature in recent years. And when casino taxes have come up in the Legislature, it’s usually been discussion of whether to raise their rates from the current 12 percent.
The dire situation in Tunica that led Harrah’s to decide to close does not seem to have had an impact on Las Vegas-based Full House Resorts, which announced it will buy Fitzgerald’s Tunica from Majestic Star Casino in for $62 million. The deal is expected to close during third quarter 2014.
Andre M. Hilliou, chairman and chief executive officer of Full House said, “This property fits our acquisition strategy perfectly. This transaction is consistent with our long-stated growth strategy and we believe it will create long-term shareholder value. The property has historically been well run and maintained under the current management team; however, we believe that we can leverage our knowledge and proven track record of managing properties catering to local customers in competitive environments to further improve the profitability of the Fitz Casino.”
The Fitz Casino has 38,000 square feet of gaming space with 1,100 slot and video poker machines and 20 table games. The property includes a 506-room hotel with 68 suites, a fine dining restaurant, a buffet, a quick service restaurant, two casino bars and 8,100-square-foot multipurpose event center. The Fitz Casino generated $10.1 million in 2013 and attracts visitors from the Memphis, Tennessee market, with approximately 14 million people living within a 250-mile radius of the property.
Full House Resorts is a regional casino company that owns, develops and manages gambling facilities.
Also in Mississippi, the Mississippi Band of Choctaw Indians Tribal Council recently voted 10-6 against building a casino in the Red Water Community in Leake County. A disappointed Chief Phyllis J. Anderson said, “We spent 15 months on the Red Water casino. You are saying no to $20 million in funds and 170 jobs.”
She added, “I’m not sure if politics got in the way. But you all need to take a hard look.”
Council member Randy Anderson said the Red Water Casino might not have been a success due to the state of the economy. Last December, the tribal council approved a resolution to borrow up to $145 million to renovate the Silver Star Hotel and Casino, reactivate the Golden Moon Casino and possibly build a new casino in Leake County.
