Business January 2020 Magazine

Casino Expansion A Good Bet For West Memphis

Casino

by Jeremy Peppas

 

WEST MEMPHIS — Southland Casino Racing was hopping on a fall afternoon with a parking lot full of cars, mostly from Shelby County, Tennessee, and gamblers filling every nook and cranny on the betting floor, all in the hopes of getting lucky and going home, if not rich, at least better off than they were before.

 

For most, but not quite all, that wasn’t the case.

 

Casinos don’t make money because of what they pay out; casinos make money because what money comes in and doesn’t leave.

 

That’s the reason why slot machines have been nicknamed “one-armed bandits” since the invention of, well, slot machines. And while there’s plenty of gambling going on inside Southland Casino, the even bigger bet is happening on the outside as Delaware North, the parent company, laid down a cool quarter billion dollars in January 2019 for a $250 million expansion that should be finished sometime late in 2020.

 

What changed for Southland was Arkansas itself — an amendment passed in November 2018 to allow casino gambling in four counties — Crittenden, Garland, Jefferson and Pope.

 

Crittenden is, of course, West Memphis, while Garland is Oaklawn and Hot Springs. Those two cities were gambling already and had a foothold in the state with, respectively, dog and horse racing, while Jefferson and Pope were for brand-new facilities.

An artist’s rendering of the completed Southland expansion.

The change at Southland has been the one that’s been most remarkable.

 

Once a sleepy spot near the junctions of Interstates 40 and 55, the West Memphis location was best-known for the greyhound racing that allowed it to stay open. Then the dog track became better known as a “racino” or the hybrid dog track that also allowed for electronic games of chance.

 

Southland’s popularity soared in 2011 after flooding along the Mississippi River closed the Vegas-style casinos in Tunica, Mississippi. Delaware North followed with an $11 investment in 2012 and $39 million to follow in 2014. Now, Tunica is more tumbleweeds than casinos as gambling has decreased, while Southland has soared. It is certainly easier to get to Southland if leaving from Memphis. All it takes is a quick ride across either the new (I-40) bridge or the old (I-55) bridge and depending on traffic, that might just be a few minutes, compared to the jaunt across north Mississippi and the Delta to get to Tunica.

 

What was missing in West Memphis was the signature destination, the Vegas-style casino. But $250 million can bring Vegas most anywhere, and that’s the case in West Memphis as the expanded casino will feature a 20-story, 300-room hotel that will include rooms, suites and penthouses. On the gambling side, the betting floor will have an additional 113,000-square feet, along with 2,400 gambling machines and additional live tables which might number as many as 60.

 

A parking garage is also on tap along with expanded drinking, dining and entertainment options.

 

All those previous investments have been a wise one. Delaware North says that in 2007, the amount wagered at Southland was $240 million. But by 2015, it was pushing $2.7 billion and climbing.

 

David Wolf, Southland president and general manager, told the Memphis Business Journal that the casino’s direct economic impact, as in payroll taxes paid and community giving, was most recently estimated at $148 million annually. That number should only climb since Southland’s employee count will be more than 1,200 when work is complete this year or in early 2021.

 

What that economic impact doesn’t count is what it has meant to West Memphis and the rest of the county as hotels and restaurants are popping up on both sides of the two interstates, and the growth has also spread to nearby Marion as restaurants and hotels are also being developed there as well. According to Wolf, Southland’s advantages over Tunica are obvious.

 

“As they say in the real estate business: ‘location, location, location,’” he tells Arkansas Money & Politics. “We are closest to the greater Memphis metropolitan area.”

 

Wolf adds that the new slot machines, restaurants and hotel suites also give Southland a competitive advantage and will allow it to compete for customers regionally and from states like Missouri, Kentucky and Alabama. He expects Southland’s growth to be in the double digits as the country enters the new “Roaring” 2020s. Southland had 3.3 million visitors in 2018, so sustained double-figure growth would be very good indeed.

 

What visitors won’t be coming for is greyhounds. Dog racing, the thing that started it all, will be phased out starting in 2020 when races are reduced by 25 percent with no races by the end of 2022. Wolf said the timeline was necessary to best transition Southland’s 1,200 dogs.

 

“We know it’s going to take time to adopt out the greyhounds,” he says. “Our commitment is to make sure every greyhound that has raced at Southland finds its forever home.” 

 

Elsewhere 

 

The casino projects in Hot Springs and Pine Bluff are moving forward. The expansion at Oaklawn is underway. The same can be said of the new Saracen Casino as a small, gambling annex opened in the fall with the full casino still expected for later this year.

 

Where development isn’t happening is Pope County, as the proposed facility has been mired in legal trouble since the start. The clubhouse leader remains the Cherokee Nation Businesses and Legends Resort and Casino, which has office space in downtown Russellville and has employed mobile billboards to roam the roads and remind drivers of its importance.

 

Legends also has a local connection in Jerry Jones, who started the organization and is better known as the multi-billionaire owner of the Dallas Cowboys. That local connection goes deeper as his brother-in-law is John Ed Chambers III, the CEO of Chambers Bank, headquartered in nearby Danville with 18 branches across the River Valley.

 

Legal wrangling is ongoing, but local officials have estimated the Legends project could mean more than $10 billion dollars in economic development over the next 20 years. Pope County Judge Ben Cross projects actual tax revenues to local governments of $4 million to $6 million a year.  

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