In response to news that Vici Properties, a Las Vegas-based real estate investment trust, has a 5-year option to buy Harrah’s New Orleans’ casino, 450-room hotel and parking garage, U.S. Senator John Kennedy recently phoned Louisiana legislators asking them to slow down on HB553 which would extend the license to operate the city’s only land-based casino for another 30 years.
Kennedy said, “I talked to some legislators and asked them to reconsider, I won’t say which ones, but I told them if we do this, there’s a real good chance we’re going to regret it. I don’t know what the rush is. In light of the new information, the legislature needs to put the contract extension on pause. Once the sale goes through, the value of that casino will explode. We’re running the risk of leaving a lot of money on table. Harrah’s Vici agreement is a surprise that could shortchange the state.”
House Speaker Taylor Barras, sponsor of the bill, said he had no plans to stall action on the legislation, which has passed the full House in a 79-12 vote in March. However, state Senator Gary Smith, chairman of the Senate Judiciary B Committee, said the measure will not be considered for at least a week. He noted the previously unknown deal with Vici Properties raised a lot of questions.
Under the current contract, which will expire in 2024, Harrah’s pays the state at least $60 million per year for the right to operate the New Orleans casino. Under HB553, Harrah’s would pay the state an additional $7 million per year, with an increase of up to 2 percent every five years.
Harrah’s officials also are offering an upfront payment of $21 million to the city and state to encourage legislators to pass HB553. They also promised to invest $350 million, which would generate millions of dollars more in taxes and lease payments to New Orleans. Harrah’s leases the casino site at the foot of Canal Street from the city. The investment would create 600 construction jobs and 500 permanent jobs, the officials said, but HB553 does not raise the mandated minimum number of workers that Harrah’s must employ, currently 2,400.
Because of the $350 million investment, HB553 has won the support of the Louisiana Restaurant Association, Greater New Orleans Hotel & Lodging Association, Greater New Orleans Inc., New Orleans Chamber of Commerce and the Greater New Orleans AFL-CIO, among others.
Vici Properties has purchased other Caesars-owned casinos, including the Horseshoe Casino in Bossier City. According to Vici’s filings, under the deal would, Caesars would lease back the casino and operate it. Barras said Caesar’s arrangement with Vici is a common use of a real estate investment trust, and moving the real estate from Caesar’s to Vici would more accurately be described as a transfer of property. “With Caesars having the lease, the building could go black until 2054,” if they did not get the gambling license extension, Barras said.
Caesars has said it wants the New Orleans facility to become more Las Vegas-like, with a nightclub, spa, concert space, improved street entrances and landscaping and a state-of-the-art pool. Dining-wise, a “celebrity chef” restaurant and New Orleans-focused food hall would be added.
Earlier, the state Senate voted 22-14 for SB316, allowing the state’s 15 riverboat casinos to move ashore within 1,200 feet of their existing berths. The measure, which was sent to the House, also would change the gaming area limit of 30,000 square feet to 2,365 gaming positions.
State Senator Ronnie Johns, the bill’s sponsor, said, “It’s ludicrous that we require a $1 billion property like Golden Nugget to cut a ditch out of the side of lakefront, shove in some barges and put a paddle wheel that, in reality, can’t do anything because there’s no true boat there.”
The Criminal Justice Committee will be the first stop for the bill in the House. Noting riverboats generated $414, 469, 178 in net revenue in the 2015-2016 fiscal year, according to Gaming Control Board figures, Committee member state Rep. Stephen Dwight said, “I think gambling brings too much to Southwest Louisiana to oppose it. I don’t see it as an expansion of gaming. I see it as bringing regulations in line with 2018.”
Legislation that would have required a referendum to determine if voters in Tangipahoa Parish wanted DiamondJacks Casino & Resort to move from Bossier City to Hammond failed on an 18-15 vote.
The Senate Judiciary B Committee voted 4-1 to advance to the full Senate HB484, allowing voters to decide if online gambling apps should be legal in Louisiana. The House approved the measure last month. Sponsored by state Rep. Kirk Talbot, each parish would vote on fantasy sports gambling through a November ballot initiative.
If a parish voted against DFS, people could not legally play the games on their smartphones or computers while in that community. If a parish approved DFS, Talbot said additional legislation would be needed in 2019 to determine how to regulate and tax the games and the state Gaming Control Board would need to write the rules for how fantasy sports apps would be allowed to operate in Louisiana. Talbot’s legislation does not spell out fees or taxes fantasy sports operators may have to pay the state.
