NEW YORK (CNN/Money) -
Before Katrina, Mississippi's Gulf Coast had evolved from a swampy backwater to a boom town of casinos, tourism and beachfront entertainment employing thousands.
Now, the Magnolia State is fighting to keep the lucrative travel industry alive.
Larry Gregory, executive director of the Mississippi Gaming Commission (MGC), hopes to do that, although he's not fully confident that the gaming companies are willing to come back and rebuild their businesses. And there are now some indications that his task is daunting -- particularly if there's no change in the state's 12-year-old gambling law that mandates casinos operate only on water in floating barges.
In a filing with the Securities & Exchange Commission (SEC) Tuesday, MGM Mirage (Research) said its Beau Rivage resort in Biloxi had "suffered significant property damage" and that the company was suspending its operations there "for an indefinite period."
An update on its Web site Monday said the Casino Magic Biloxi "will be closed indefinitely." Casino Magic's parent company, Pinnacle Entertainment (Research), said in a statement last week that the company "currently intends" to rebuild its casinos in the affected areas, including the extensive-damaged Casino Magic Biloxi.
Updated information on Harrah's Entertainment (Research)'s Web site said the company's two casinos in the region -- the Grand Casino Biloxi and Grand Casino Gulfport -- "are closed indefinitely." Harrah's had more than 8,000 workers employed in the Gulf Coast.
Harrah's spokesman Alberto Lopez said Monday the company's decision whether or not to return was reflected in "comments made by our CEO Gary Loveman that Harrah's will return to the Gulf Coast bigger and better," Lopez said. "But the state's legislature has to revisit the current laws."
The new $300 million Hard Rock Hotel and Casino Biloxi that was scheduled to open last week also suffered extensive damage, and whether or not it will rebuild is an open question, according to the MGC. Hard Rock Hotel could not be reached for comment.
If the casinos don't return, the state could risk losing thousands of jobs and billions of dollars in gaming revenue and taxes, MGC's Gregory warned.
"I've had conversations with five CEOs of major casino companies, including Harrah's and MGM and Casino Magic. They tell me they're reluctant to rebuild if the other factors (the laws) still exist," Gregory said in an interview with CNN/Money Monday.
In the aftermath of Hurricane Katrina, Gregory said casino companies will find it tougher to convince their own shareholders about once again operating offshore floating casinos either along the Gulf Coast or on the Mississippi River.
All 13 of the region's casinos in Biloxi, Gulfport and Bay St. Louis are closed and more than half were "completely destroyed" by the storm. The state is losing $500,000 in gambling tax every day as a result, Gregory said.
"The other challenge is that insurance companies won't want to cover them if they operate on water," Gregory said.
Mississippi's offshore gambling industry pours close to $3 billion a year into state's coffers, making it the third largest casino market in the country. According to the MGC, the three Mississippi Gulf Coast gambling hubs of Biloxi, Gulfport and Bay St. Louis together generated over $1 billion in revenue last year.
"This region twelve years ago was a ghost town," Gregory said. "The casinos and hotels have revitalized the area and added 14,000 jobs."
He gave an example: "Tunica, Miss., was one of the poorest counties in the U.S. in the early 90's. Now it's the third-largest gambling destination in the country with 10 casinos. The casino revenue went into building infrastructure, medical care, fire department, schools. Two months ago, it also saw the biggest boom in condos."
On July 1, the state amended its gambling law slightly to allow casinos to use "pilings," which are long steel structures driven into the seabed to firmly anchor offshore floating platforms.
Gregory thinks this is too little too late.
"The issue with the pilings is that they're still over water," he said. "If we experience another hurricane like Katrina, the water will wash over the pilings and the barges."
"We have a very serious situation facing the future of our casino industry," Gregory said, important enough for the governor to possibly call a special summit of the state's legislature to completely overhaul the gambling law and allow inland gambling options, similar to those in neighboring Louisiana.
"The first order of business is looking after the people that were affected," he said. "Then we have to get back on our feet because there are too many jobs at risk."