The Resorts Casino in Tunica, Mississippi is scheduled to close on June 30th. It will be the third casino to close in Tunica since 2014. The Roadhouse closed in January of this year and Harrah’s Tunica in 2014. Tunica has been on a long downward slide caused by competition from neighboring states. In 2006, there were ten casinos in Tunica with 14,000 slot machines, 400 table games and 12,000 employees. In February 2019 there were nine casinos with 7,000 slot machines, 200 table games and 4,000 employees. Casino revenue has dropped to less than half of what it was 13 years ago. The story of the decline of the casino industry in Tunica is the story of a mature and aging industry.
When Mississippi legalized riverboat gambling in 1990, legislators were interested in tax revenue, rejuvenating the poorest regions of the state and the economic boost that jobs, construction and tourism would bring to the Magnolia State. Twenty-nine years ago no one was thinking about competition from neighboring states or any of the other changes that occurred in those years. Mississippi lawmakers were not alone in their shortsightedness; lawmakers tend to think in the present tense. In general, they think of in terms of today’s problems and apply today’s solutions.
However, nothing in the economy or business stays the same over a period of decades. Certainly, the business environment is never static, and competition is one of the major forces in any industry. Like all states with gaming, Mississippi faces more competition in 2019 than it did in 1990 or even in 2005. For Tunica, the most recent competition is coming from Arkansas. Six months ago, Arkansas approved four casinos. Two racetracks opened as full-fledged casinos on April 1st.. Southland Gaming & Racing in West Memphis is the closest to Tunica. Even before it added table games, Southland had slot machines. It generated over $200 million in win in 2018. Now, Southland is undergoing a $250 million expansion and its revenue is certain to increase significantly. Tunica and the other river county casinos in Mississippi will lose even more of their customers to Arkansas casinos over the next year or two.
Tunica’s tale mirrors the fate of Reno and Atlantic City and other cities that depended on tourism to drive casino revenues. Tourist-based gaming markets have suffered more from the expansion of gaming than local-based markets. Gamblers, like all shoppers, prefer the casinos closest to home. Tunica will have to right-size itself to the available customer base and that probably means more casinos in Tunica will close. The process of adjusting to a decreasing market can take a very long time; Reno has been in that process for 25 years. And it is not over yet, this summer two new, large Indian casinos will open in Reno’s major feeder market, California. One of the casinos will be operated by Harrah’s and the one by Hard Rock. With the new competition, Reno once again has to adjust. Atlantic City is ten years into its market adjustment. Sports betting and online gambling have helped Atlantic City casinos in the last twelve months. But Pennsylvania is adding both of those to its menu of gambling options and Pennsylvania is going to add at least four-mini casinos and slot machines in truck stops and other locations. When all of the new gaming is open, the casino industry in Atlantic City will have to resize itself again.
There is no moral to this tale, nor is there any solution to the dilemma that faces Tunica or any other jurisdiction. Change is the rule, not the exception for all business. The casinos in Tunica had twenty good years before the customer base started to erode. No business or industry can expect to grow forever, and two decades is a long time in the world of business. When we watch Facebook, Google and Netflix it looks as if they might continue to grow endlessly. But that never happens. Who would have guessed in the 1960s that the American automobile industry was about to implode due to imported Japanese and German cars? Steel, coal, fossil fuels and probably plastics are going to face a comparable crisis; theirs driven more by changes in technology than competition. Those industries certainly had more than two decades of prosperity, but their future was not limitless.
The casino industry is maturing, aging; it is feeling the same forces that all industries experience as they mature. Like cars made it Detroit, casinos are experiencing the challenges of increased competition. But we can anticipate an even greater challenge from technology for the industry. Online casino games and sports betting are probably the greatest threat that brick and mortar casinos have ever faced. Tunica, Reno and Atlantic City will survive the pressures of competition in some fashion. However, if online gambling continues to expand, there is very little a conventional casino can do to compete with the “stay-at-home, play-on-your-couch and in-your-pajamas” casino. Of course, some casinos will survive. The major casino resorts are much more than places to gamble and they will continue to attract customers. The casinos most at risk are the smaller, one dimensional gambling palaces, like the Resort Casino in Tunica, Mississippi.
