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Casinos: Gambling Bonanza

by Eliza StricklandSpecial to CorpWatch
August 27th, 2007

Standing inside the Beau Rivage Resort and Casino in downtown Biloxi, Mississippi, you’d never guess that you are at the epicenter of a town that lost over 5,000 homes in the flood.(107)  In the crowded lobby, guests drift past lush banks of flowers toward the retail promenade, where a store called the “Jewelry Box” displays Rolex watches, gold chains and flashy rings. Inside the gaming rooms, business is booming: Players pack the high stakes poker rooms and the aisles lined by 25 cent slot machines.

Just blocks away, the working class neighborhood of East Biloxi is still a wasteland of bare concrete slabs, where homes were washed entirely off their foundations. On many lots, front steps lead to nowhere. Local activists say that government assistance has been very slow in coming to this community, which was primarily populated by low-income African-Americans and Vietnamese.

Across the Gulf Coast, examples of the uneven recovery are everywhere. In most towns, families and businesses with private resources are rebuilding, while the poor are often still waiting for the government assistance they were promised. Nowhere is this contrast more glaring than in Biloxi, Mississippi.

Before Katrina, Biloxi’s casinos were confined to the water; built on barges that floated in the Gulf. This arrangement was a political compromise designed to assure religious organizations that legalized gambling would not spread beyond Mississippi riverboats and barges on the Gulf. But the storm ripped the barges from their moorings and sped them across the beach and highway, where several crashed into buildings. After surveying the wreckage, several casino operators refused to build new barges that would be vulnerable to future storms, and urged the state to find another solution. [The legislature] needs to send a message, “We love you and we want you,” the president of Isle of Capri Casinos Inc., told the Clarion Ledger.(108)  

One month after the storm hit, Mississippi governor Haley Barbour called a special legislative session to plan for the state’s recovery. One of the first items of business was the passage of a bill allowing casinos to move their gaming rooms onto dry land as long as they stayed within 800 feet of the water’s edge. This legislation allowed Biloxi’s casinos to move their gaming operations into the hotels and resorts that stood across the waterfront highway. The casino companies reached into their deep pockets and made speedy renovations; three casinos reopened for business before the end of 2005.

Meanwhile, Biloxi residents were waiting to hear how Mississippi would parcel out the $5.1 billion federal block grant. But the first grant program the state announced left out most of the people in East Biloxi. It only applied to homeowners located outside the flood plain who had homeowner’s insurance. “They didn’t address the immediate needs of the common people, who had the fewest resources to help them recover,” says James Bui of the Vietnamese activist group Navasa.(109)  Faced with persistent criticism, the state began a second phase of the grant program in June 2006, which offered grants to all low-income homeowners with flood damage.

State legislators have said that they gave immediate attention to the casinos in order to boost Biloxi’s economy. No one argues with the gaming industry’s importance to the local and state economies. Before Katrina, the Biloxi and Gulfport casinos employed about 14,000 people and were providing state tax revenues of $500,000 per day.(110)  But critics worry that economic development policies that favor casinos end up hurting locally-owned small businesses.

“The casinos are the root of this urban sprawl inducing, big-box-building period of economic growth that brings along environmental damage and small business dislocation,” says Derrick Evans, who helped found the Steps Coalition, a network of activist groups that came together after Katrina.(111)  “You can’t even buy a real, home-cooked barbecue sandwich in Biloxi. You have to go to the casino and get it at the buffet,” he says.

The Biloxi casinos have made record profits in the past year, as contractors with money to burn spend their evenings at the new Hard Rock Casino, or the deluxe Beau Rivage.(112)  But the industry clearly thinks there’s still plenty of room in the market. In mid-August, construction workers broke ground on the new Margaritaville casino and resort, a 46-acre complex of shops, restaurants and entertainment facilities. The project, which is expected to cost upwards of $700 million, is a joint venture between pop star Jimmy Buffett, a favorite son of Mississippi and Harrah’s Entertainment. Based in Las Vegas, Harrah's earns billions in revenues from casinos, hotels and golf courses around the country. According to the company website, the $700 million Margaritaville Casino and Resort project "is the first phase of a development that will represent an investment of more than $1 billion when completed."

Margaritaville is going up in East Biloxi, at the foot of Oak Street, the heart of Biloxi’s Vietnamese community, and home to both its Catholic Church and its Buddhist Temple. Yet Biloxi city council members and Harrah’s officials have recently discussed the possibility of closing Oak Street to cars, in order to offset the new traffic brought in by the casino.

Bui says the small businesses along Oak Street don’t know how much energy they should put into trying to rebuild. “They want to stay, but the signals they’re getting from the government is, “We’re waiting for Harrah’s, which will be our savior. Don’t talk to us,’” he says.(113)  Bui says most small business owners are waiting nervously to see if the new, rebuilt Biloxi still has a place for them.

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