For more than two decades, the state of Mississippi was a gamblers haven, boasting some of the best and most popular casinos in the United States (see more here). With a huge number of old-fashioned riverboats, it attracted players from states who had their own state licensed casinos because of the level of sophistication, luxury, and that famous Southern hospitality they have been famous for. Fast forward to the present and it appears that the beginning of the end has been under the surface for awhile, but is now finally showing its head.
One of the areas major casinos still in operation, Harrahs Tunica located in Tunica Hills, Mississippi (map it) is closing forever. There are the obvious reasons to cite. The lack of local money to feed the large number of available casinos and the general economy. There were floods that kept casinos closed for about a week. New attractions were built in the areas of casinos with the hope of drawing visitors – but failed. Ironically for Mississippi, the biggest reason seems to be it is losing the battle of state operated casinos.
The job loss is estimated to be about 900. The actual losses are about 1,300 but will be offset by the casino assisting or hiring back some of the laid off employees. What is interesting is what the pro-casino advocates have brought to the table. The actual amount of wages being lost is more than off-putting.
These were good jobs. A cook at the casino was making $13.80 an hour for example, a wage that will be very difficult to match in another industry. The same holds true for other displaced employees.
One important factor that needs to be kept in mind is the cost of living in Mississippi, one of the lowest ranked states in average state income. That $13.80 can easily be thought of as $23.80 for the same job in a state with a higher average annual income like Las Vegas or New York.
With the loss of jobs that kept people out of poverty and of the streets, these same people will now likely plunge back in to poverty and will likely need assistance to get back to a good job. Assistance that tax payers pay for.
But Mississippi, who was one of the pioneering states to show that state-operated casinos can be financially beneficial to both the state and its residents, now is feeling the result of being the first with a good idea.
There are some “partial truths” about state operated casinos to be found
A low income state cannot be expected to have casinos as a major source of revenue – unless players can be wooed from other states.
A state can expect consistent revenue from casino operations for a limited time. Few states – New York and California come to mind – have both the population and personal income numbers to expect state operated casinos to consistently generate meaningful revenues for the state. Mississippi has seen a reduction of about 25 percent in annual revenues over the last two years from its gaming operations.
The loss of revenue and the closing of a casino have a ripple effect across the state economy. Not only does the state lose expected revenue, but that loss needs to be made up elsewhere. The anti-gambling advocates have benefited from the years of income but will now make the case that if the casinos were not built in the first place, a longer term solution to the revenue shortfalls would have been found. They are going to be out of business real soon.
But that is of little comfort for the former employees who move from a decent wage to poverty level with no compensation. Add to that, the lost revenue for the state in the form of state income and sales taxes. In the case of Mississippi’s Tunica Hills closure, its losses are expected to have a statewide impact, reducing the $140 million general fund increase along with the $89 million distributed to Mississippi counties and municipalities in 2013.
What is unique to the setting of this casino closing is that it is in a state that has benefited from casino operations, but its deeply religious culture consistently opposes the existence of the casinos. The Republican governor has opposed any attempts to assist the existing casinos with legislative tax breaks, in part because he is up for re-election in 2015. Again, politics invades the possible success of casino based revenue. Hosestly the only ones that are doing it right are the Pennsylvanians (see gaming in PA).
How does this story end? No one is happy or views the closing of the casino as a victory. Twenty years is a long time to essentially depend on a source of revenue, then to have it dry up on you without warning can be the end of something good and the start of something bad for a lot of people. If the state gaming industry is anything, it is a business, but to some it was a piece of the American Dream. According to one upset resident, “You didn’t have to go very far to find a place to gamble, but was fine with us since they paid our bills.”