Vegas on the Mississippi

Tunica, Miss., represents one of the gaming industry's great success stories. Back in 1990, Tunica County was the nation's second-poorest county according to the census, and had Mississippi's highest unemployment rate. But since the first casino opened in the market in 1992 -- the now-defunct Splash -- Tunica has been transformed into the third-largest gaming destination in the country.

With more than $1.1 billion in annual gaming revenues, Tunica is outranked only by Las Vegas and Atlantic City. The gaming industry has invested $3 billion in the market, creating 16,000 new jobs and more than doubling the average annual wage, from $12,700 in 1990 to $26,700 in 2003. Meanwhile, Tunica County's budget climbed from just $3.5 million in 1992 to $69.9 million in 2004.

Tunica, the site of both the Jack Binion World Series of Poker Circuit and the World Poker Open this month, is located about 30 minutes south of Memphis. Though it has yet to open its first movie theater, other large advancements have been made. 2004 saw the opening of the $26 million Tunica RiverPark -- an ecopark dedicated to the Mississippi River -- as well as the $12 million Tunica National Golf and Tennis Club. That year, 72,800 rounds of golf were played at Tunica's three golf courses. Tunica Airport also recently landed its first commercial aircraft.

The game, the rules, and the players
As I've often mentioned, the biggest factor in a casino's success is its location. The closer the casino is to the customer, the better it generally performs. In addition, properties operating in a cluster of top-quality competitors and attractions -- such as the collection of properties that comprise the Las Vegas Strip -- compete at an advantage to a solitary competitor. Size and visibility are also beneficial.

Six companies currently operate nine casinos in Tunica, with almost 15,000 slot machines, 426 table games, and 49 poker tables in more than 600,000 square feet of gaming space. In my view, there are three top competitors, and then everybody else with varying degrees of attraction. Let's take a look at them.

The Grand
The first in Tunica's front line of casinos is Harrah's (NYSE:HET) Grand Casino, a stand-alone resort operation that includes a golf course and RV park. The host of this month's Jack Binion World Series of Poker Circuit Event, the Grand is by far the biggest casino in Tunica, with 80 table games and 2,378 slots on 136,000 square feet of gaming space on two floors. Its hotel is also the biggest in the market, with 1,356 rooms.

Harrah's acquired the Grand in its $9.4 billion buyout of Caesars Entertainment last year. Despite being the biggest operation, the Grand in my opinion represents the second- or third-best competitor. That makes little difference, though, since Harrah's also owns the best competitor in the market.

The Horseshoe
Just up the road from the Grand is the leading cluster at Casino Center, which includes the Horseshoe, Gold Strike, and Sheraton.

The Horseshoe -- acquired by Harrah's a couple of years ago in a $1.45 billion deal -- is easily the best player in the market, as well as a gambler's best bet. The property features 76 table games and 2,109 slot machines on 63,000 square feet of gaming space. It does about $300 million in annual business, and accounts for about a quarter of Tunica's $1.1 billion or so in annual gaming revenues.

True to its brand, the Horseshoe offers the highest limits, the best odds, easy comps, and great food. The Horseshoe has the most classic single-deck blackjack games in the market. (Tunica's Horseshoe pays 3:2 for a player blackjack and a minuscule 0.15% house edge against the perfect basic strategy player, as opposed to the atrocious 6:5 variety with a 1.45% house edge against the same player.) The 14-table poker room runs a full slate of the biggest games in the market, including Limit Hold'em from $4/$8 up to $20/$40, a $2/$5 blind No Limit Hold'em game, Stud, Omaha, and a Pot Limit Omaha game that -- according to T.J. Cloutier in Championship Omaha -- is supposed to be one of the biggest around.

Buffet comps are a cinch, and the 24-hour buffet is probably the best I've had. In addition, the room rate for poker players playing five hours per day is a mere $25 during the week and $35 on the weekend. That's a steal if you plan to do most of your play at the Horseshoe anyway. (Both the Grand and Gold Strike offer the same rate.)

The Gold Strike
Adjacent to the Horseshoe, and rounding out the top three, is the Gold Strike, acquired by MGM Mirage (NYSE:MGM) last year as part of a $7.9 billion deal. The Gold Strike's 1,160 rooms make it the second-largest hotel in the market. The 12-table poker room offers mostly lower-limit games, including a $1/$2 No Limit Hold'em game. And if you're looking to play a tournament at 4 a.m. on a Sunday night, the Gold Strike is the place to be.

Last time I was there (a few weeks ago), the slot floor was in the midst of a complete post-acquisition makeover. As a result, the Gold Strike has the newest collection of penny- and nickel-denomination slots from IGT (NYSE:IGT), WMS (NYSE:WMS), and Motley Fool Inside Value selection GTECH's (NYSE:GTK) Atronic -- a feature which the Horseshoe next door mostly lacks.

On the downside, the Gold Strike also has replaced its old single-deck blackjack game with a 6:5 version of the game. With the Horseshoe offering a legitimate game next door, I don't recommend playing blackjack here.

This month, the Gold Strike hosts the World Poker Open. This year's competition is a series of two-a-day No Limit Hold'em tournaments, culminating in a $10,000 buy-in championship World Poker Tour (NASDAQ:WPTE) event. The World Poker Open goes head-to-head with the WSOP for the first time, which we discussed in last week's roundup (see Boyd's Big Plans).

Three down, six to go
We've now examined the top three players in Tunica, two of which are owned by Harrah's, and the other owned by MGM Mirage. In the future, we'll dive into the other six casinos in the market, which include Boyd Gaming's Sam's Town and Penn National's (NASDAQ:PENN) Hollywood Casino.

Until then, for more on the best bets in Tunica, check out A Card Player's Guide to Tunica on the Fool message boards (subscription required).

Take a chance on further Foolishness:

• Harrah's Gains, Gamers Lose
• When Competition Hurt the Game
• IGT: Time to Buy?
• The New WMS Industries: Part I and Part II

Fool contributor Jeff Hwang owns shares of International Game Technology and WMS Industries. Never bet against the Fool's disclosure policy.