Mississippi remains fifth-highest gambling state despite facing challenges

Posted on May 3 2017 - 8:00am by Jacqueline Knirnschild

Mississippi will maintain its ranking as one of the top five highest gambling states in the country, despite the lack of a state lottery.

Since Mississippi introduced gambling in 1992, it has steadily produced the third-highest gambling revenues in the nation, ranking behind only Nevada and New Jersey, according to the executive director of the Mississippi Gaming Commission, Allen Godfrey.

Mississippi gambling revenues since 2008 have stalled, and in some years, even decreased due to the expansion of gambling in other states.

“It’s highly unlikely we will move up further, but we should maintain our position in the fifth or sixth spot,” Godfrey said.

Mississippi’s total gambling revenue has dropped from its all-time high of $2.9 billion in 2007 to $2.1 billion in 2016.

“We’ve lost considerable amounts of revenue,” Godfrey said. “The majority of it coming from our north river region.”

Gambling’s growth across the South, especially in Arkansas, caused Mississippi’s Tunica market to lose more than 50 percent of its gross gambling revenue.

Ole Miss law professor Ronald Rychlak said the expansion of gambling in other states has had a negative impact on Mississippi’s gambling revenues.

“Mississippi has traditionally brought gamblers in from Texas, Louisiana, Florida, Alabama and Georgia. But as other states are expanding their gambling, it is becoming more and more challenging to draw non-Mississippian residents,” Rychlak said.

Not only has competition played a role in decreasing the state’s revenue, but natural disasters have also played left their mark on Mississippi’s 28 state-regulated casinos.

On top of that, there are three sovereign Choctaw-owned casinos in Mississippi that do not report revenues to the state.

“Natural disasters – hurricanes in Tennessee – tend to slow revenue down,” Godfrey said. “It seems like they always hit on weekends, which are busy times.”

Despite challenges, the state still ranks fifth in gambling revenues, which Rychlak attributes to Mississippi’s early success in the mid to late ’90s attracting out of state people to its non-sailing riverboat gambling.

“For a long time, if you went to Louisiana, you had to get on the boat at a certain time, and it was less convenient and harder to operate,” Rychlak said. “Mississippi boats didn’t sail – you go on it anytime; you leave anytime.”

Rychlak said the convenience gave Mississippi a head start on other states.

“We were able to turn some of our places more into destination spots,” Rychlak said. “That’s effectively how you want a casino industry to operate – not to market to locals but to bring people in from outside who will bring money into the state.”

According to the American Gaming Association, since 2013, Mississippi state regulations have required companies wishing to obtain a license for a new casino to also develop an accompanying high-end hotel, restaurant space and other tourism amenities.

Currently, there are discussions to build a state lottery in the future. According to the Jackson Free Press, Gov. Phil Bryant and lawmakers are pushing to introduce a state lottery, claiming it will bring in more revenue for the state.

Rychlak said there are potential issues to consider in regards to the adoption of a state lottery, the first being it will not be effective in reducing a budget deficit.

“Everybody thinks it’s a way to raise money, and yet virtually every state that does it takes the money and devotes it to some form of education – usually creating new programs,” Rychlak said.

Rychlak used Tennessee as an example. The state used gambling revenues to create a free junior college.

“They’re turning around and spending the extra money they’re making automatically on a new program, so if you’re trying to get out of a deficit or balance your budget or something, it’s not going to be effective,” Rychlak said.

Such programs sometimes only succeed in taking funds from typically lower-class people and reallocating them to middle- and upper-class high school graduates. Rychlak said a state lottery could also have a negative effect on people with gambling addictions.

“Those who currently have gambling problems can at least stay away from casinos, but lottery tickets would be much more unavoidable. If you get to the point where it’s the state pushing the product, that really is what a lottery is – the state becoming the house and encouraging people to gamble,” Rychlak said. “Anywhere you go, your kids are going to be exposed to ‘Hey, buy a ticket. Help the state.'”

Godfrey said he is not strongly for or against the introduction of a state lottery but would rather follow the demands of the people.

“If the governor and legislature enacts that, that’s fine,” Godfrey said. “Time will tell if it generates the amount of revenue that people have predicted.”