Tunica Casinos Experiencing Hard Times Due to Recession and Market Saturation
The recent closing of Harrah’s Casino is a sign of tough times for Tunica County, Mississippi. The owners of the casino, Caesars Entertainment Corporation, believed the operation made too little money for the trouble it was to operate.
An outsider might see the closing as simply indicative of the troubles Caesars Entertainment is underdoing. Caesars has $23+ billion in debt, so the company is reshuffling its assets to climb its way out of an unfortunate debt situation. The closing of Harrah’s is a sign of greater troubles in the area, though. Revenues have declined by nearly 40% over the past 8 years. The closing of the Grand Tunica Casino on June 2, 2014 will cause those numbers to reach a full 50% loss since 2006.
What’s more, some experts believe they have not seen the worst yet. Niklas Rytterstrom is the general manager for MGM Resort’s local Gold Strike Casino, one of the strongest businesses in the market. Yet Rytterstrom says, “Tunica, as a market, I don’t know if we’ve seen the bottom.”
The Tunica Miracle
When gambling came to Tunica in 1992, it created what the locals called “The Tunica Miracle“. The casinos were placed in the far corner of the state, in a traditionally depressed area. Tunica was within proximity to Memphis, drawing in customers from one of the biggest cities in the Deep South.
Within a short time, riverboat casinos were dotting the Mississippi River landings. In the first full year of operation, the casinos drew in $776 million in revenues. Over the next fifteen years, Tunica became the biggest gaming destination between Las Vegas and Atlantic City. 2006 was the peak year, when Tunica County gaming operations netted $1.2 billion.
Regional Gaming Hub
In those days, gamblers from nearby states flocked to the area. People in Missouri made the transit, and some gamblers from as far away as Oklahoma and Texas liked to visit.
Rivals Appear on the Scene
Over the years, rival casinos started to be built. Oklahoma mega-casinos like the Winstar Casino in Thackerville and the Choctaw Casino in Durant caused most Oklahomans and Texans to stay nearer to home. Missouri had land casinos open. In time, Tunica’s reach shrank.
In 2013, Tunica casinos collected about $700 million–less than the first year in operation. In the 1990’s, such numbers would have been considered a nice windfall. In the 21st century, the casino floor and associated attractions have been expanded. In some cases, renovations and expansions have been financed with long term debt, loans which assumed continued growth.
A Saturated Gaming Market
Instead, saturation hit the regional gaming market and a recession hit the American economy. Those two dynamics ruined all calculations. The casinos which had committed big money to improve their product now faced major debt implications, with no realistic way to make up the difference through revenue boosting. The answer was layoffs, and those have been significant.
At its height in 2006, Tunica’s gambling industry created 13,000 jobs. The number has decreased to about 6,000 jobs, after Harrah’s closing (which cost 1,000). Some of the jobs still in existence are no longer full-time positions. Sabrina Johnson, who has worked the last 16 years in the casino, says her hours were cut.
Employees Thrown out of Work
The 45 year old gaming employee says she would like to find a full-time job elsewhere, but she despairs of finding a position which would pay the $13.80 an hour she makes at the casino.
When asked about the search by Arkansas Business, Johnson said she is likely to continue working at the casino for fewer hours. Johnson replied, “I’ve still got to have some kind of income coming in. The bills aren’t going to stop.”
Secondary Effects on the Economy
The closing of Harrah’s Casino has a ripple effect on the local economy. Not only are a thousand more residents without a job, but the local city government will have to do with fewer revenues while trying to support the infrastructure it built to support the casinos: roads, a new airport, a bigger fire department, and a public recreation center.
Meanwhile, the Tunica Convention & Visitors Bureau, which promotes tourism to the area, will have fewer advertising dollars. Harrah’s also had the largest convention center, so the city might have a harder time luring conventions to locate in their city.
Gulf Coast Casinos Look Strong
The picture is not so bleak throughout Mississippi. The Gulf Coast casinos in Gulfport and Biloxi are doing well. With the closing of Harrah’s, the Gulfcoast region is set to have a bigger revenue total than Tunica County for the first time.
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