JACKSON, Miss. (AP) – Biloxi’s Margaritaville Casino & Restaurant will waste away by mid-September, with the casino saying it can’t raise more money because the landlord won’t renegotiate the lease.
The casino, barely more than two years old, announced Monday that it will close on or before Sept. 19, although it says it will pay its 371 employees through then.
Margaritaville will be the second Mississippi casino to close this year, after Caesars Entertainment Corp. shuttered Harrah’s Tunica Hotel & Casino in June, citing declining revenue and the company’s heavy debt. Singer Jimmy Buffett licenses the name to Margaritaville, after his famous song, but doesn’t share ownership.
While gambling revenue in Tunica County has dived sharply, declines have been gentler on Mississippi’s Gulf Coast. Mississippi Gaming Commission Executive Director Allen Godfrey said Monday that he doesn’t think Margaritaville’s closure indicates a crisis, citing construction of the Scarlet Pearl casino in D’Iberville and investment by other casino owners.
“I don’t know this is going to say a lot negative about the Gulf Coast,” Godfrey said.
Margaritaville is one of the smallest of 12 Gulf Coast casinos, one of only three without a hotel. CEO Doug Shipley told reporters Monday that the lack of a hotel to anchor out-of-town gamblers, combined with an out-of-the-way location isolated from Biloxi’s other casinos contributed to the property’s losses.
“The story here is without a hotel, we cannot operate in a competitive market,” Shipley said.
Margaritaville’s owners announced plans to invest another $64 million to build a 250-room hotel and overhaul the casino. But attorney Michael Cavanaugh said the Sims family, whose Hattiesburg company owns the land under the casino, has refused to renegotiate. Cavanaugh wouldn’t say whether Margaritaville was trying to get rent reduced. Lee Sims could not be reached for comment.
“The best outcome would be that something could be worked out with them and one of the investor groups that we’ve been talking to comes in and goes forward,” Cavanaugh said.
Mississippi’s Gaming Commission allowed Margaritaville, a $62 million project when it opened in May 2012, to be built without a hotel. Analysts questioned its small size, leading to higher investment requirements for new casinos.
“The commission was concerned from Day 1, but found ourselves in a difficult situation given the operation satisfied regulations at that time,” Commissioner John Hairston wrote in an email. “We began discussing a change in regulation requiring larger scale, amenities, and hotels shortly thereafter, culminating in the regulation put in place in 2014.”
Cavanaugh said that the 40-investor ownership group doesn’t plan to seek bankruptcy protection. Cavanaugh said Buffett’s business had waived licensing fees for the last two years to help the casino.
A Margaritaville casino in Bossier City, Louisiana, is owned separately.
Shipley said the Biloxi casino plans to operate normally through August. Cavanaugh said hours could be reduced or Margaritaville could close earlier if business drops sharply.
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Copyright 2014 The Associated Press.