The Louisiana Senate Judiciary B Committee recently approved House Bill 544, which would extend Harrah’s New Orleans Casino’s lease for another 30 years; it now would end in 2024. In return, Harrah’s would invest $325 million for a new hotel and upgrades at its existing facilities. The company also would pay tens of millions of additional dollars over 30 years to the state and the city. Harrah’s would not be allowed to expand its 125,000 square feet of gambling space.
In the hearing, nothing was mentioned about Harrah’s 2010 lawsuit against the state Department of Revenue, which claims the company should pay a 4.45 percent sales tax to the state for discounted and comped hotel rooms. If the court sides with the state, Harrah’s could owe up to $40 million in hotel taxes dating back to 2001. Harrah’s officials stated under a 2001 law the casino hotel is exempted from paying the taxes to the state; it does pay the taxes to New Orleans.
Officials at the Superdome Commission and the Ernest N. Morial Convention Center believe Harrah’s is overreaching by not paying the taxes, which would generate an estimated $2-$3 million annually for the facilities, and $4-$6 million once Harrah’s would open its new 340-room hotel.
State Senate President John Alario said HB544 was not amended to require that Harrah’s pay the taxes. Alario said making Harrah’s begin paying those taxes was not part of the deal worked out with the casino company before HB544 was introduced. He added the bill’s supporters wanted to avoid sending it back to the House, where it already passed but could face further scrutiny.
House Speaker Taylor Barras, HB544’s sponsor, said the courts should decide the tax issue. He said, “If they decide, ‘No, you shouldn’t tax comp rooms,’ and on the front part going forward we decide we should tax them, we’re doing the opposite of what the court case decided.” Alario stated, “I do think they ought to be paying in the future, as we think they should be paying it now. I think the state has a good case.”
Governor John Bel Edwards why other New Orleans hotels have to pay taxes to the state on discounted and comped rooms but not Harrah’s. “It’s my understanding that it’s state law that applies to all of these New Orleans hotel properties, and I don’t know how you would do that with respect to Harrah’s and not all of the rest.”
HB544 would dedicate revenue to cancer research, problem gambling, rural water projects, New Orleans infrastructure and early childhood education.
The measure also would require Caesars Entertainment, Harrah’s parent company, to pay $130 million more to the state and to New Orleans over 30-year extension, compared to a deal that failed in the legislature last year. Caesars Attorney David Satz said Caesars’ $325 million investment assures it will have another 30 years to make money in New Orleans. Also, under the arrangement, Harrah’s would no longer be limited to a single hotel, no restaurants and no meeting space.
Dan Real, who oversees the Harrah’s casino and Caesars’ other casinos in the South, said, “We want to create something that’s a world integrated resort for a world-class city. That building has not had many changes over 20 years. This is really about being able to compete.” Harrah’s investment will create 600 construction jobs and 500 new permanent jobs, company officials said.
Over the past decade, Harrah’s new Orleans winnings have dropped dramatically. According to State Police records, in fiscal year 2008, winnings totaled $419 million, and in 2018, that figure fell to $288 million. As a result, tax revenue to the state decreased from $90 million in 2008 to $63 million in 2018.
HB544 now will go to the full Senate and if it passes, Edwards has said he’ll sign it. Regarding the tax issue, Judge William Morvant of the 19th Judicial District Court in Baton Rouge will hear arguments in July.
