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Memphis pulls casinos northward.

Arkansas Entities See Good, Bad From Saturated Tunica Market

When splash casino opened in October 1992, gambling fans stood in line and paid $10 a head to get in. Splash, which recently announced it has given employees 60 days' notice, is scheduled to close July 11.

It is one of a growing list of casinos - showy versions of their big brothers that offer table games and slot machines - whose luck has failed along the east bank of the Mississippi River.

The casino operations across the river have produced a mixed bag for Arkansas. Oaklawn Park in Hot Springs and Southland Greyhound Park in West Memphis have suffered attendance declines and were unsuccessful in attempts to bring casino wagering to the west side of the river. At the same time, Arkansas media have benefited from advertising revenues, residents have crossed the river in droves for entertainment and employment, and communities like Helena have prospered economically.

The popularity and success of the neighboring casinos, supported by visiting Arkansans, have been impacted as the market became saturated with competition. Two casinos that sprung up in Tunica County have moved out altogether, and three others have moved northward.

It was Horace Greeley who said, "Go west young man." In Mississippi's Tunica and Coahoma counties, the phrase is "Go north."

"Their goal is to be the closest casino to Memphis," says Chris Watson, Tunica County's assistant engineer. "Naturally, the closer they can get to Memphis, where their customers are, the less travel for their customers."

Robinsonville, tucked into the northern fold of Tunica County, looks to be the beneficiary of the exodus from Tunica and other sites to the south.

Casinos in Tunica and Coahoma counties employ about 12,000 people, and finding the workforce have been a problem for the operations. On an average day, an estimated 45,000 people - including many Arkansas - will visit casinos in the area. Casinos in Tunica County have paid more than $20 million to the county since opening.

Splash, which was built for $16 million, is in the same boat as other casinos have been or could be. To stay open, Splash would have to find investors and a hotel developer or move its barge.

The problems start with geography.

"Tunica County is not a destination area," Watson says. "We need more development. We've got to get features like outlet malls, tourist attractions, golf courses.... Everyone, as far as I know, is doing a decent business. Some casinos have declared bankruptcy and sold to other partnerships. I think we have all the casinos we need. The market just needs to stabilize."

Watson says he has heard rumors of a large factory outlet mall coming to the county, but no construction permits for such a project have been issued. In fact, Watson says he's somewhat surprised by the scant number of applications for construction permits.

"We haven't issued any permits lately," Watson says. "We issued one for the Mississippi Grand in the very northwest comer of Tunica County. There's a rumor that another one is going to move. Bally's, of course, is not in operation, and it's rumored to be going north."

Small Workforce

Another problem that has become more evident as larger casinos have been built is Tunica County's small workforce.

"The casinos have a pretty good turnover rate and there's only so many people in the employee pool," Watson says." Let's say Sam's Town [Hotel and Gambling Hall] comes in and then Horseshoe [Casino and Hotel] opens. A certain percentage of employees move to Horseshoe. The casino employee market is saturated. We can only support so many."

Evidently, financial institutions can support only so many casinos also. These are huge buildings with huge price tags. The defunct Southern Belle, for example, was built for more than $70 million and has been purchased by Harrah's for about half that. Banks have been reluctant to stuff more money into the growth of gambling in Tunica County.

Joe Stafford of Lucky River Development in Tunica has been trying to find backers for a hotel venture. He says he's been to banks all over the region.

"You have the infrastructure of a dirt-poor county catching up with a billion-dollar industry," Stafford says. "Bankers are typically concerned about any new market."

Stafford says bankers want a two- or three-year track record.

"Tunica County doesn't have a track record in anything but cotton and soybeans," Stafford says. "The two or three independents brought a lot to the table, huge collateral."

Stafford says he hasn't given up. He's looking into a mobile home park on 96 acres in southern Tunica County.

Trouble with sewer services also has ruffled some feathers. Sewer service is supplied by River Bend Environmental Energy Inc., created by John Almond. Developers say Almond quotes outrageous fees that make it hard to continue construction. The Mississippi Public Service Commission has scheduled hearings on the matter.

A River Bend employee who refused to be quoted said the fees wouldn't be as high if Almond could borrow money at commercial rates. A utility district set up through the county could borrow at a lower rate and have more time to repay the loan. The source said Almond and County Administrator Ken Murphree, who could not be reached, have talked about a joint utility venture.

Despite the setbacks for casinos, Horseshoe Casino and Hotel has been successful in a shaky market. The strategy of offering odds in craps greater than a patron's original bet ("10x" or "20x" odds) has forced other casinos - Sam's Town, Sheraton and Harrah's, at least - to follow. The method allows patrons to take a smaller risk on a larger return.

Southland Damaged

Casinos, battling each other to survive, have hurt attendance at bystander Southland Greyhound Park.

Barry Baldwin, who became general manager at the track Nov. 15, makes no bones about the damage casinos have done to his dog-racing business.

"We've had a 25 percent decline in business each year since casinos started," Baldwin says. "You know, horses were slow with a race every 30 minutes, then greyhounds, with a race every 12-14 minutes, became slow. At casinos people can bet as often as they like."

That's why patrons can bet 'til the cows come home at Southland.

With the addition of simulcasting, Baldwin says, on a typical Saturday patrons can come in Southland's door at 7 a.m. and bet on 113 dog and horse races before the doors close at about 11:30 p.m. They may even wager on a Thursday-Saturday mixed card of horse and dog races from Birmingham, Ala.

"That Birmingham card is different," Baldwin says. "They started mixing races [holding a dog race, then a horse race, then a dog race...] about two years ago, and they've had good success."

Southland, besides more opportunities for patrons, got a boost from the Arkansas Legislature when it dropped pari-mutuel taxes from 7 percent to 3 percent. Baldwin says Southland began offering free parking and free admission Feb. 16, the day the bill was signed.

Baldwin says Southland is working on customer service and a general refurbishing of the track grounds to battle casinos.

"The physical appearance hasn't changed in decades," Baldwin says. "We've got about $600,000 in improvements to be done soon. It looks like an old building from the outside, we'll work on that. The parking lot will be redone. Then we'll head inside the track. It's a vigorous plan for the next 36 months."

Baldwin says Southland, which dropped to about 170 employees during its slowest days, is back up to about 200. he says people have begun coming back to the track and enjoying it.

"I don't think you'll see it grow too much more," Baldwin says. "I think you'll see different players come and go. The number [of casinos] won't decline. [U.S.] Highway 61 is becoming a four-lane, we'll see golf courses, more hotels, more of everything."

RELATED ARTICLE: Lady Luck Shines on Helena

Mississippi's Lady Luck Rhythm and Blues Casino and Hotel, at least economically, has been good to Helena and Phillips County.

"We have the best of all worlds," says D.L. Bailey, editor and publisher of the Phillips County Progress. "We don't actually have gaming in Arkansas, but we have all the benefits of Lady Luck."

Helena Mayor Joann Smith agrees, although she says she wouldn't mind some of the tax benefits, too.

"They've been a good neighbor, just as if they were within our city or state," Smith says. "They work with us, they refer people from their motel when they're overbooked - they bring a lot of people to the community."

Smith says it's hard to say how large an economic impact Lady Luck and other casinos have made. She says sales taxes have increased since Lady Luck, at the foot of the U.S. Highway 49 bridge over the Mississippi River, opened in July 1994. Free advertising (Lady Luck billboards mention the Helena Bridge), she says, has increased awareness of Helena.

Bailey, who also managed the defunct Twin City Tribune, has been in the newspaper business in Phillips County for more than 20 years. He is joking when he says he hasn't made any money, but he's serious about the economic benefits casinos have brought to the Delta.

"We [Helena] have a pretty good relationship with them [casinos]," Bailey says. "[Lady Luck] is doing well and is pumping some money into Helena. They have a payroll of $6 million a year. As far as I can determine, a good percentage of those people are people who really needed those jobs."

Smith agrees.

"There are between 200 and 300 people from Arkansas working for them," Smith says. "They took untrained people and trained them."

Bailey and Smith say Lady Luck has contributed to the community with cash.

"They contributed $50,000 to the King Biscuit [Blues Festival] last year," Bailey says. "They've also given to the Warfield Concerts [a series of six musical events]."

If one casino across the river is good, could two be better?

"The rumor is they [Lady Luck] are thinking of building another one" Smith says.

Though Lady Luck is prosperous, some other nearby casinos have had hard times.

"Apparently they overestimated the number of people that would come to casinos," Bailey says. "This ain't no Las Vegas, no matter what they say."

Bailey says not everyone in Phillips County has been a gaming fan.

"I've got nothing against casinos," Bailey says. "It's mostly the church people who are against them. They say [casinos] are taking money out of the county. I feel like they're putting it in. They have their moral reasons. Some people say others shouldn't be going over there because of economics."

Casinos won't do well, Bailey says, until there are reasons for people to come to the Delta.

"They have absolutely saturated the market," Bailey says. "I believe they had up to 16 on the drawing board at one time [there are 13 now]. Unless you have a metro airport and something to draw families - like theme parks or some kind of other recreational activities - you can't compete. They'll bust a gut and go under."

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Title Annotation:includes related article
Author:Williams, Jeff
Publication:Arkansas Business
Date:May 22, 1995
Previous Article:Global trade comes calling.
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