Casino Companies to Rebuild in the Gulf and Move Inland

BILOXI, Miss._Putting casinos on ugly barges and sticking them in the water handicapped Mississippi casinos from the start.

The big gambling companies never could construct anything along the Mississippi coast grand enough to rival Las Vegas, Atlantic City or even large reservation casinos. Building on the water was inconvenient and put the buildings at more risk to hurricanes.

But now that Mississippi lawmakers have decided to allow casinos on solid ground, the Gulf Coast tourist industry could be at a watershed moment. Gov. Haley Barbour planned to sign the casino legislation Monday afternoon.

Hurricane Katrina has given casinos a chance to rebuild as megaresorts _ with more entertainment, shopping and dining options _ perhaps turning the Mississippi coast into a national tourist destination.

"I think one of the more significant advantages of this disastrous, miserable event is the fact that you're going to have much more exciting resorts developed that will attract more people," said Terry Lanni, chairman of MGM Mirage Inc., which owns the Beau Rivage in Biloxi.

All 13 hotel-casinos on the Mississippi coast were damaged or destroyed when Katrina hit, prompting the gambling companies to question whether they should rebuild in a hurricane zone.

But industry leaders will give the Mississippi coast another chance, because lawmakers voted to allow the state's coastal casinos to build up to 800 feet inland.

"I think being able to build on land, you can do so many other things," said Rick Quinn, chief executive of the Copa Casino that is slated to be scrapped. "And I think insurance would have been a problem if we had stayed on water."

Religious conservatives had fought successfully to keep the casinos off dry land. But after Katrina ravaged the industry, a divided Mississippi Legislature voted to allow them to move inland.

Some casino companies haven't announced their plans publicly, but others have hinted that they intend to invest a lot more than $100 million _ the value of some of the casino barges that were washed across U.S. 90.

Harrah's Entertainment Inc., the world's largest gambling company, has already said it will construct a "very impressive" hotel-casino in Biloxi. So far, it has not committed to resurrecting its Gulfport resort, a signal that the company could put its vast resources into a one major resort.

"There is a silver lining in all the destruction that happened, and we plan to be a part of it," said Anthony Sanfilippo, president of the company's central division that oversees the Gulf Coast.

Bigger casinos and hotels with high-quality entertainment would draw some visitors _ especially those from the South _ who normally go to Las Vegas.

Montgomery, Ala., residents Johnnie Early, 69, and John Bitter, 76, went to Las Vegas last year, but said they would welcome bigger and better casinos in the next state over.

"It's a lot cheaper to go there (Mississippi), but I would want really big casinos that have the big brand shows so that it's not just gambling," Early said.

MGM Mirage has already begun repairing the $800 million Beau Rivage. When the resort reopens in 12 to 16 months, MGM Mirage will have invested more than $1 billion in the property _ on par with Las Vegas Strip hotel-casinos like Mandalay Bay and The Mirage.

But MGM Mirage can't move the 1,740-room Beau Rivage hotel tower or its casino barge across the street. The structures are firmly entrenched.

George Corchis, the Beau Rivage's new president, said engineers could raise the barge another five feet, allowing the main floor to withstand a surge similar to the one Katrina triggered.

"There is only so much that any of us can do to try and lessen the damage," he said.

In addition to the Beau Rivage, Pinnacle Entertainment Inc. intends to revive its Casino Magic in Biloxi.

It's not only casino operators looking to capitalize. One company, Sandmark Bay, has announced plans for a luxury condominium project on a waterfront site of the Biloxi Back Bay.

City Councilman Bill Stallworth said the development could jump start a Biloxi renaissance.

Biloxi has a long way to catch up with the top gambling markets. Last year, Nevada generated $11 billion in gambling revenues, with the bulk coming from Las Vegas. Atlantic City had $4.8 billion and Mississippi $2.7 billion.

Larry Gregory, executive director of the Mississippi Gaming Commission, said he believes Mississippi could rival Atlantic City in the coming years.

"We're going to come very close to reaching or exceeding Atlantic City. These aren't going to be cut-and-paste barges like we had in the past," Gregory said.

Not everyone agrees.

"We believe operators building new land-based resorts in Biloxi should be at a competitive advantage to the older properties that were spared total destruction," said John Mulkey, a gambling analyst with Wachovia Securities. "We don't see a market anywhere close to Atlantic City, however, given the obvious population disparity in each's feeder markets."

Gregory suspects some of the casino companies might decide the cost of competing with the new, larger resorts will be too high and abandon the area.

"I think there will be some attrition," Gregory said. "Competition is going to be fierce in the early days."

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Associated Press Writer Desiree Hunter in Montgomery, Ala., contributed to this report.

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