USM Professor Says Tax Hike Would Hurt State Casinos

A private group called the Mississippi Gulf Coast Economic Development Council wanted documentation so they could fight future casino tax hike proposals.  So the council turned to Dr. Denise von Herrmann.  The USM professor got $55,000 to study Mississippi's dockside casinos.

"In general," she said, "they're still quite stable and still quite strong."

But Dr. von Herrmann's research concluded that the industry's strength would be diluted if Mississippi lawmakers raised casino taxes by as much as 3 percent.

"We expect that as many as seven casinos statewide would close," the professor said, "with a direct lost of over 5,000 jobs. Indirect losses could go to almost 10,000 jobs."

The economic development council asked for those numbers, so it could prove to lawmakers that a casino tax hike would hurt everybody in the state.

Mike Olivier represented the group at the news conference.

"That's what our business leadership is interested in learning," he said, "because we want to protect what we've got."

Casino Magic Bay St. Louis President John Jagunich is on the economic development council. His company is spending $37 million on its new hotel. The expectation is that when the high rise opens May 27, it will bring more customers to the resort.

Jagunich worries that a tax hike could keep some gamblers away.

"So it's more than just the increase in gaming taxes," Jagunich said. "It's the loss to everybody else."

Another part of Dr. von Herrmann's study was to look at how casinos survived in the aftermath of September 11th. And how they weathered the recession.

According to the professor's research, free food and free rooms cut into profits. But they kept gamblers coming in the door.

"What I found generally was that the gulf coast casinos particularly were spending a great deal of money to attract visitors," she said, "to keep visitation high in order to keep their revenue stream going."