The Louisiana Riverboat Economic Development and Gaming Task Force recently held a hearing in Baton Rouge on how Louisiana casinos can become more competitive with those in nearby states. The task force is touring the state, taking comments from invested operators before it makes recommendations to the legislature next year about amending Louisiana gaming laws.
About two dozen riverboat and racetrack casinos, plus one land-based venue, Harrah’s New Orleans, operate in the state. Riverboats can offer slots and table games, and racinos only can offer slots and video poker.
Fertitta Entertainment Inc. Chief Executive Officer Tilman Fertitta, owner of the Golden Nugget in Lake Charles, made numerous suggestions. First, he said Louisiana shouldn’t limit the number of slot machines on riverboat casinos and at racinos. “It is shocking to me how much business we lose to tribal gaming here in the state of Louisiana. What in the world is the difference in me having 1,600 slot machines or 1,700 slot machines when they can have 2,500?”Fertitta asked.
He also said riverboats are outdated and questioned why non-racetrack casinos still must be built on the water. He said barge inspections cost $100,000 a year, and he has spent $10 million to comply with moored barge laws, which also require a visible but nonfunctional paddle wheel. “Let’s not kid ourselves. That barge is concrete. It’s not going anywhere,” Fertitta said.
He also asked that the Golden Nugget Lake Charles riverboat be allowed to expand to surrounding land. In addition, Fertitta said taxing promotional play that casinos give away hurts marketing efforts and reduces revenue as well as total tax money collected. He noted tribal casinos do not pay these fees. He said a tax cap on promotional play would allow casino operators to market more aggressively and produce additional gambling revenue. “Don’t tax me to death on that. We’re trying to bring people in from everywhere. We didn’t build that resort for locals,” he said. Currently Louisiana riverboat casinos pay a maximum effective tax rate of 27.5 percent on net monthly proceeds and also pay a $3 per-patron admission fee to the state.
Fertitta also said online casino gambling should be legalized. His Golden Nugget Atlantic City is number-one in online revenue in New Jersey, he said. Online casino gambling could generate $70 million in gambling revenue in Louisiana in its first year. Fertitta warned the Louisiana needs to be prepared because internet gambling will be legal in up to 25 states by 2022.
Additionally, Fertitta pointed out the state’s jackpot verification rules affect the casino’s bottom line. “A slot machine is inactive for at least 10 minutes to allow for verification after a $10,000 jackpot is won. Mississippi and Nevada don’t require that verification until a $100,000 jackpot is won,” he said. Another issue for Fertitta was the purchasing process for vendors. He said the 21-page document that vendors must fill out for products or services costing more than $200,000 is overwhelming and causes lost business. “It just scares them. They feel like it’s an invasion of privacy. You can do a simple background check on one page,” Fertitta noted.
Fertitta said since the Golden Nugget opened in December 2014, it has Nugget has helped Lake Charles’ gambling revenue increase from $684 million in 2014 to about $898 million this year. He said the Golden Nugget and L’Auberge Casino Resort have worked well together to help expand the casino market in Lake Charles and statewide. “We are still growing our gaming base while not really hurting other people that much. We know that we have something special,” Fertitta said. He noted his recommendations are designed to help “everybody in the gaming industry” in Louisiana, not just the Golden Nugget.
One major issue of concern, however, is a possible smoking ban. Smoking still is permitted inside riverboat casinos in Lake Charles, but clean-air advocates are moving to ban it in more cities. In April 2015, following New Orleans’ smoking prohibition, Harrah’s was forced to end it. Corporate owner Caesars said the company has lost $70 million in revenue since being forced to go smoke-free. New Orleans allowed the casino to install a smoking area, but, Fertitta said, due to antiquated riverboat laws, the Golden Nugget riverboat doesn’t have room to build a smoke-free area.
Taskforce member state Senator Ronnie Johns said Lake Charles probably will have to consider a smoking ban soon, too. Fertitta responded Golden Nugget patrons will take their business to tribal casinos or Las Vegas if that happens.
Meanwhile, the East Baton Rouge Parish Metro Council approved a smoking ban similar to New Orleans’ on August 9. The ordinance, which will not take effect until June 2018, prohibits all smoking in public places in the parish, including casinos and bars.
Pinnacle Gaming’s L’Auberge Baton Rouge, Gaming and Leisure Properties’ Hollywood Baton Rouge and Tropicana Entertainment’s Belle of Baton Rouge expect to feel the impact, losing 10-15 percent of their revenue “and the job force that goes along with that,” warned Wade Duty, executive director of the Louisiana Casino Association.
