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Released May 9, 2005

RETAIL IN HARRISON, TUNICA COUNTIES BENEFIT MOST FROM GAMING INDUSTRY, STUDY FINDS

HATTIESBURG What’s good for gaming is also good for local retail, according to a recent study from The University of Southern Mississippi.

A 12-year analysis of Mississippi counties with casinos shows the two with the heaviest development – Harrison and Tunica – draw the most retail business from surrounding counties and beyond.

The study, conducted by economics professor Dr. Charles Cartee, examined retail and personal income data supplied by the Mississippi State Tax Commission and the Bureau of Economic Analysis from the period 1990-2002.

Unlike other studies that have focused on the economic impact of gaming on local economies through employment and income changes, Cartee’s study measured the changes in “retail pull factors” in gaming counties. Retail pull factors (RPF) are generally accepted measures of the extent a local economy serves as a retail trade center.

“Retail pull factors illustrate whether a local economy pulls shoppers and trade from another area, or if local residents shop outside their local area for goods and services,” Cartee said.

Calculating a county’s RPF is made possible using a simple formula: the ratio of a county’s retail sales as a percent of its personal income, which is then divided by the ratio of the state’s total retail sales as a percent of the state’s personal income. The state ratio serves as the baseline case, which is then divided into each county’s ratio.

An RPF greater than one indicates the county is serving as a retail trade center and is drawing shoppers and their dollars to the county from outside the area. An RPF less than one would indicate that county residents are shopping outside the county for certain goods and services.

Although similar studies have been conducted, Cartee said he wanted to look at numbers affecting the eight Mississippi counties with casinos over a longer term prior to and after the introduction of gaming.

The first casino in Mississippi opened in Harrison County in 1992, and since then, the number has grown to 31 casinos in eight counties. Although Harrison County has the most casinos with 11, Tunica County, with its 10 casinos, has experienced the most dramatic effect in retail sales, Cartee said.

“Before the introduction of gaming, Tunica County had a retail pull factor below one, meaning it was not a strong retail trade center. By 1997, the retail pull factor had jumped to a staggering 4.90, a 405 percent increase, which was the largest RPF in the state,” Cartee said. Part of Tunica County’s success can be attributed to its proximity to Arkansas and Tennessee, he noted.

“One would expect a large draw of out-of-state patrons, especially Memphis,” Cartee said. “These areas probably account for a significant portion of the out-of-county expenditures and the marked growth in Tunica County’s RPFs over the past few years.”

Although Harrison County has historically served as retail trade center, Cartee’s research shows that gaming has served as a catalyst to increase further growth along the Gulf Coast.

Cartee said, “Since a majority of patrons at Harrison County casinos are from out of state, this would appear to be an expected result.”

Chevis Swetman, president of People’s Bank in Biloxi, said one of the most important factors in the correlation between gaming and retail sales is room capacity at casinos.

“That’s one of the things we’ve always tried to get into the Gulf Coast market is the idea of ‘extended stay.’ The longer people are willing to stay, the more money they will spend on entertainment and at restaurants and retail shops,” Swetman commented.

Swetman said Las Vegas has benefited by balancing gaming and nongaming revenue, and he thinks casinos on the Gulf Coast should follow suit.

“What we’re seeing now is the more rooms a casino has, the more opportunities people have to stay a longer period of time. That has a lot to do with increased sales (in Harrison County),” he said. Swetman noted the addition of 400 new rooms opening this month at the Isle of Capri casino and the opening of the new Hard Rock Café Hotel and Casino as evidence of this philosophy.

In counties with less development -- in this case one to three properties – the impact on RPFs was mixed, according to Cartee. In fact, Neshoba County, which has only one casino development, had an RPF rating that moved from under one to over one in the 1990-2002 period. Hancock County had an RPF well under one in 1990, and although it moved slightly during that period, it did not break the barrier (1.0) to reach a retail trade center status by 2002.

For more information about the study, contact Dr. Charles Cartee at (601) 266-4809.

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July 20, 2005 4:00 PM