Hurricane Katrina is, as I write this, devastating parts of Louisiana and Mississippi, and, as is increasingly common these days, there is a connection to gambling: casinos in the area, particuarly on Mississippi’s Gulf Coast, have been hit hard, and the impact–in both the short and long run–will be felt nationally.
Here, for example, is a cold look at the market impact from CNN:
Hurricane Katrina may cause casinos in the affected areas to lose millions of dollars each day they are closed, analysts said Monday.Casinos on the Gulf Coast and in New Orleans were ordered to shut down on Sunday, as the hurricane approached landfall. Harrah’s Entertainment has the highest exposure in the affected region, with nine casinos there.
Goldman Sachs analyst Steve Kent estimates that Harrah’s, the world’s largest casino operator, will get nine percent of its 2005 earnings before interest, taxes, depreciation and amortization from its three casinos in the Gulf Coast — Harrah’s New Orleans in Louisiana, and Grand Casino Biloxi and Grand Casino Gulfport in Mississippi.
Kent also estimates that Harrah’s will get 12 percent of its 2005 EBITDA from six other casinos in the Tunica, Miss., inland riverboat region.
Harrah’s is also developing a $150 million hotel tower addition at Harrah’s New Orleans, expected to open in the first quarter of 2006.
Deutsche Bank analyst Marc Falcone expects Harrah’s to lose $1.8 million to $2.5 million in revenue for each day its casinos in the area remain closed. He expects them to stay closed into Tuesday and “potentially beyond.”
“While difficult to determine the financial impacts to operators with exposure to these markets … we would anticipate there will be some level of earnings impacts,” he said.
Falcone also expects MGM Mirage, which has two casinos in Mississippi, to lose $700 thousand to $1.1 million in revenue each day the casinos remain closed.
He also expects big daily losses at Pinnacle Entertainment,Boyd Gaming. and Isle of Capri Casinos.
A bit more on point is the Sun Herald’s coverage, with stories about buildings imploding and other horror scenes. I haven’t been able to read too much specifically about the impact on casinos, but there was mention of water on the first two floors of Beau Rivage, which I believe is one of the more solidly-constructed coast casinos. I hesitate to even think about what’s going with the Treasure Bay.
Thankfully, there’s no report of fatalities in the area, but with oil prices rising and the state of Mississippi out $500,000 a day in revenue taxes, this is going to be as much an economic catastrophe as a natural disaster.