Mississippi Tax Revenue Sinking

Mississippi's tax coffers suffered the lingering effects of Hurricane Katrina as the state's tax revenue from gaming fell almost $10 million during September.

With 13 casinos from the Gulf Coast communities of Biloxi, Bay St. Louis and Gulfport knocked out of commission by the hurricane on Aug. 29, the state collected gaming tax revenue from only the Mississippi River communities of Greenville, Natchez, Lula, Tunica and Vicksburg.

In August, when all of the state's 29 casinos were operating, Mississippi collected $17.3 million in gaming taxes. The figure dropped to $7.6 million in September, with casinos operated by such companies as MGM Mirage, Harrah's Entertainment and Pinnacle Entertainment closed.

A year ago, Mississippi casinos contributed almost $12.4 million to the state's general fund and $168.5 million for all of fiscal 2005. That amount is expected to decline as long as the Gulf Coast casinos are not operating. The state's gaming commission estimated Mississippi is losing $500,000 a day in state and local taxes with the casinos not operating.

Gaming taxes make up about 5 percent of the state's general fund, said Kathy Waterbury, a spokeswoman for the Mississippi Tax Commission. However, the biggest impact could come from lost sales and income taxes from closed businesses and destroyed housing.

"We just don't know yet how this will affect the state's economy in the overall sense," Waterbury said. "As long as the Gulf Coast casinos are closed, the state won't receive any tax dollars from those places. We've never experienced anything like this."

The nonoperating casinos also affect taxed revenue to local Mississippi governments. In August, the casinos were responsible for $10.1 million to local tax treasuries. That figure was cut to $5.5 million in September because of Katrina.

Mississippi Gov. Haley Barbour on Monday signed a new law allowing the Gulf Coast casinos to move off water and rebuild a short distance onshore. But it is still unclear how long it will take the gaming companies to reopen their damaged buildings.

Barbour has asked the casino operators to open temporary gaming halls to help restore the jobs of some 17,000 workers who were employed by the coastal casinos.

A spokeswoman for Isle of Capri said Thursday the company is considering opening a land-based interim casino at the site of its destroyed Biloxi property by New Year's. About half of the facility's 750 hotel rooms have reopened.

"We haven't made any formal announcement, but it's something we're exploring," Isle of Capri spokeswoman Jill Haynes said. "It a fluid situation that's always changing."

Isle of Capri is headquartered in Biloxi and operates casinos in Vicksburg, Lula and Natchez.

Mississippi's casinos reported gross gaming revenue of $119.3 million in September, all from the river counties. That total was still off 3.5 percent from September 2004, when the river county casinos collected $123.6 million.

The Gulf Coast casinos, which reported gross gaming revenue of $103.5 million in August before Katrina and $86.5 million in September 2004, didn't show any revenue for the month and aren't expected to for a while. No one is sure how long that will be.

The Mississippi numbers come two days after Louisiana reported a nearly 20 percent drop in casino revenue in September because of hurricanes Katrina and Rita. Louisiana said riverboat casinos earned $96.2 million in September, compared with $119.9 in September 2004. The state's only land-based casino, Harrah's New Orleans, had no revenue because it was closed for the entire month, compared to last September's $25.4 million in revenue.

Last year, Mississippi, with $2.77 billion in gaming revenue, was the nation's third-leading market behind Nevada and New Jersey. Through the first nine months of 2005, Mississippi reported gaming revenue of $2.05 billion.

Several of the river county casinos closed temporarily early in September following Katrina and many of the state's linked slot machines, such as Megabucks, were shut down during the month. But one Wall Street gaming analyst was still encouraged by the Mississippi gaming industry's resilience.

"As supported by anecdotal evidence, we believe that play levels in the Mississippi River Counties have been solid and are likely capturing a portion of the demand that would have gone to the Gulf Coast," Deutsche Bank gaming analyst Marc Falcone said in a note to investors.