Released November 19, 2004

HATTIESBURG - Public officials considering bringing casinos to Galveston, Texas, are hoping to get a better understanding of the industry by examining the effects of legalized gambling in Mississippi.

On Nov. 11, Dr. Denise von Herrmann, associate dean for the College of Arts and Letters at The University of Southern Mississippi, was the featured speaker at the Galveston Chamber of Commerce, where she discussed the negative and positive impacts of the industry in her home state.

A casino expert whose research has been funded by the Mississippi Legislature, von Herrmann has studied the social, political and economic impact of the industry, which sprouted in the early 1990s. Her first paper, titled "Gaming in the Mississippi Economy," was published in 2000. Her second study, funded by the Mississippi Gulf Coast Economic Development Council and titled "Gaming in Mississippi: The Present and the Future," was published in 2001.

At the luncheon, von Herrmann told about 300 public officials and business leaders the facts concerning Mississippi's involvement with casinos, ranging from the positive-- like increased tax revenue and higher wages--to the negative-- like increased crime rates and traffic problems.

"This is a highly charged issue, and they are tired of having these emotional appeals on either side, which is why they asked for my help," said von Herrmann, who will act as a consultant in any future endeavors Galveston undertakes. "My job is to come in and say, 'Let me tell you what the research says are the upside and the downside to this.'"

"There was no value judgment -- I just stuck to the facts as I've uncovered them through my research. All I can tell them is what has been our experience here in Mississippi, the things to look out and plan for. In the '90s, we rushed in to some things without considering the regulatory effects of gaming."

A city of about 45,000, Galveston is less than 50 miles from Houston, giving it a potential customer base of about 4.5 million people.

Von Herrmann said that if Galveston proceeds with the plan, the market could bear as many as five or six casinos on the island of Galveston. In contrast, the state of Mississippi has 30 casinos, most of which are on the Gulf Coast.

"If they do this, I think they could have a tremendous market in three to five years," she said.

Casinos are not currently legal in Texas, although the state does allow a lottery and horseracing.

According to von Herrmann, officials are considering putting casinos on waterways, just as Mississippi has done. "They are looking at a whole bunch of options. Of course, there are a lot of political factors to consider."

Among those factors are opposition from religious groups who fear casinos will lead to the degradation of societal values. Another is the hospitality industry--restaurants, caterers, family entertainment businesses--all of which have historically suffered when casinos enter an area. "These entities are very worried that if casinos come, they will crowd out their retail potential," von Herrmann said.

A recent editorial in the Galveston Daily News urged readers to look at all sides of the casino issue before making a decision.

"Gambling may not be Galveston's salvation," the editorial said, "but it surely should not be dismissed out of hand as a source of new state and local revenue. It's clear now that some states have successfully developed and controlled gambling."

"What's needed in Galveston," it continued, "is a calm, thoughtful discussion. Those who want to shut down the discussion or plunge blindly ahead are wrong."

During the meeting, von Herrmann told members that if residents decide to pursue casinos, it should not make the same mistake that other states, like Iowa and Illinois, have made by imposing governmental controls. Instead, she said the city should let true market forces determine whether or not casinos will be successful.

"You have to have a fully open and competitive structure," she said. "The only reason Mississippi has been so tremendously successful is there are no limits on the number of casinos. The regulatory structure allows for the easy influx and outflow of casinos, strictly on the basis of financial gain."

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