The wisdom of building Margaritaville casino in Biloxi was discussed during a conference at Thursday's Southern Gaming Summit.
It came up during a panel discussion about casino investments and Wall Street's view of potential developments. And a majority of the panelists support the soon-to-open Margaritaville.
That new casino will open its doors in Biloxi in less than two weeks. It will be the smallest coast casino, and that had some analysts at the gaming summit raising questions.
"Is it the right thing to be doing, developing small casinos without having sort of a minimum capital requirements that sort of make these more integrated resorts, as opposed to more sort of gambling halls that don't have hotels and other resorts. Certainly, it calls into question when you have uncompleted resorts on the coast within eyeshot of the one that's under construction," said Christopher Jones, with Telsey Advisory Group.
Panel member Danny Davila works for Poydras Street Capital, a company that's invested in Margaritaville.
"We are going to be smaller than everybody else. But you know, we don't have six or seven hundred million dollars in the ground. We've got 60," he said.
Given the fact the casino industry is still recovering from a recession that brought new development to a virtual standstill, one financial analyst said he's not surprised that some investors are more inclined to support smaller developments.
John Maxwell is a financial expert with Jeffries & Company.
"And I think it's also kind of the new model for gaming. People don't want to invest in these big boxes anymore. They want you to start off. If you perform, if the demand's there, then people will fund an expansion. And I think that's going to be at Margaritaville and pretty much across the board," he told the panel.
Margaritaville in Biloxi is set to open on May 22nd.
Panelist Danny Devila said the smaller Margaritaville casino won't have to generate $40 or $50 million in cash flow. He told the group, "If we do 15 or 20, we'll be fat and happy."