Biloxi Greens: With Onshore Casinos Now Legal, Harrah's and MGM Mirage Start Building

by: Mick Weinstein

Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

Casinos Emerge as Winners In Wake of Hurricane Katrina

  • Summary: Casino operation and building in Biloxi, Mississippi has bounced back strongly from Katrina's devastation, as the gambling industry managed to push through legislation that would have been unimaginable before the storm. A longstanding ban on land-based casinos was lifted, giving the existing casinos room to grow and new ones an opportunity to launch. Giants MGM Mirage and Harrah's are building massive new luxury-casino complexes, and gamblers have flocked back to the existing offshore ones. While Harrah's lobbied for the onshore ban to be lifted immediately after Katrina, MGM, which didn't want to move its Beau Rivage facility, initially found itself aligned with religious groups that opposed the reform. Once the law passed on a public safety basis, Harrah's bought a Pinnacle Entertainment casino in the region to increase its stake. Regional operator Isle of Capri Casinos and Trump Entertainment Resorts are both building new gaming centers in the area.
  • Comment on related stocks/ETFs: With Harrah's and MGM most aggressively exposed to this market, their stock could float up and down with this hurricane season's severity; Harrah's is well-insured (by Warren Buffett) however. Trump will gain some regional diversification from the new Gulf Coast site, while Pinnacle's choice to abandon Biloxi may hamper its growth.

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