Louisiana Senate President John Alario recently commissioned a study to provide an independent evaluation of the value of Harrah’s New Orleans Casino’s license. Last year an effort to extend Harrah’s operating license by 30 years failed on the final day of the legislative session because, Alario said, lawmakers didn’t have enough information for a realistic assessment of a deal proposed by Caesars Entertainment, Harrah’s owner.
Alario said, “We just want to know what’s the best deal for the state and how can we accomplish that. If it’s a good arrangement for the state, let’s move forward and get it going.” The deal was included in a measure sponsored by House Speaker Taylor Barras. His bill—promoted by 21 Caesars lobbyists–would have extended by 30 years Harrah’s casino’s license, which gives it the exclusive right to operate the only land-based casino in New Orleans. The proposal came six years before the casino’s license expired and did not call for any bidding process. It also removed hotel and restaurant restrictions.
The measure was supported by Governor John Bel Edwards and New Orleans Mayor LaToya Cantrell. It easily passed the House but stalled in the Senate when Alario and others questioned the terms. After a delay of several weeks, the Senate amended Barras’ bill to require Caesars to make a onetime $40 million payment to the state after the measure became law, plus a second $40 million payment if Vici Properties, a Las Vegas-based real estate investment trust, exercised its option to buy the casino and lease it back to Caesars.
The Senate bill also would have raised by one-third the minimum annual payment from Caesars to the state. The House version kept the casino’s minimum payment at the current $60 million, but the Senate raised it to $80 million, since Caesars officials said they would spend $350 million on upgrades once they won the license extension, generating $20 million more in annual taxes to the state for a total of $80 million. Caesars officials objected, stating they could not guarantee the higher amount of tax revenue. Ultimately the measure died.
The new Lane Sisung study commissioned by Alario will be due by February 15. State Senator Gary Smith Jr. said, “We’re hoping it will reveal just what sort of deal we should get or try to get. Hopefully, it comes back and says we were on target from the Senate version of the bill. We felt like that was a pretty fair estimate.”
State Rep. Jack Donahue, who agreed with Alario last year about the lack of data, said, “How can you make a decent decision on either the Senate or the House bill if you have no information? I don’t have anything against Harrah’s. I don’t mind voting for it as long as I can get some information to know that it was the right thing to do. Voting without that information, I’d call that a bad vote. That’s why I voted against the Senate bill.”
Sisung executive John Mayeaux said, “Our team has members who have done similar gambling studies in 10 other states. A large component of this is understanding the financial cash flows and contractual relationships between the state and the city.” Harrah’s New Orleans Casino General Manager Dan Real said he believes the study “will show that there is a good deal to be had. There’s a potential for a win-win here. If we can find the right deal, we would love to pursue it.”
Under last year’s offer, Caesars would have built a 340-room hotel, upscale food court, nightclub and mini-entertainment district at Harrah’s New Orleans. Real said the project would have created 600 construction jobs and 500 permanent jobs, plus generate millions of dollars in new tax revenue for the city and state.
Meanwhile, Caesars officials have put off major renovations at the New Orleans property. As a result, the casino’s win fell from a peak of $419 million in 2008 to $281 million in 2017. Gaming tax revenue, taxed at 21.5 percent, also dropped from $90 million in 2008 to $60 million in 2017.
Louisiana Economic Development also is in the process of choosing a consultant for a comprehensive study of the state’s gambling industry, which it hopes to present to legislators on April 8.