Revenue dropped 30 percent at Harrah’s New Orleans Hotel and Casino in June, and its top executive put most of the blame on the city’s new indoor smoking ban.
It marked the second straight month since people were forbidden to smoke inside that the state’s largest land-based casino reported a significant decline in revenue.
“It’s a tough situation,” Dan Real, general manager of Harrah’s New Orleans, told state regulators Thursday.
He then asked the Gaming Control Board for support in the casino’s efforts to change legal requirements that dictate how many employees it must hire and that restrict its ability to generate revenue with nongambling activities.
The state’s monthly casino report showed Harrah’s had $20.7 million in revenue in June 2015, which was $9.2 million less than was reported in June 2014.
The June figure was worse than last month’s report comparing May 2015 with May 2014, which saw a 16 percent drop.
Monthly receipts fluctuate depending on weather, conventions in town and other factors. Also, Harrah’s had a couple of big winners in June, Real said.
But the main reason for the sharp drop-off is that a lot of gamblers want to smoke and don’t like going outside to do so, Real said. He said it is clear that “the frustration exists.”
As a consequence, many gamblers are going to nearby riverboat casinos, where smoking at gaming tables and slot machines is allowed, or they’re not gambling as long, if at all.
Of course, nonsmokers are happy with the ban, Real said, adding, “We hear every single voice, and we are trying to help.”
The citywide restrictions on smoking indoors at bars and casinos took effect April 22.
Harrah’s, whose top officials had sought an exemption from the ban, projected early on that the casino would lose 20 percent of its business. Casino officials argued that would mean fewer tax dollars for local and state government.
Real has turned to New Orleans Mayor Mitch Landrieu, the City Council and the Legislature for help in stemming the revenue losses.
For instance, the casino wants to create enclosed smoking areas, just off the gambling floor, rather than forcing smokers to go outside. Real also would like to move the casino into some business activities other than gambling.
Both ideas would require changes in rules and regulations. “It will require quite a few approvals,” he said. He did not disclose the nature of the diversification the casino might seek.
Harrah’s also wants more flexibility in determining how many workers to employ. Harrah’s is required to hire no fewer than 2,400 employees. That needs to be adjusted downward, Real said, not only to provide some financial relief but also to pay the casino’s employees better.
It’s the only casino in the state where staffing levels are set in law. Riverboat casinos have hiring quotas in agreements, but the Gaming Control Board can — and has — approved variances because of financial concerns.
“This is not simply a financial request. It would not come anywhere near filling the funnel or the void created by the loss of revenue,” Real said. “It would, of course, be an improvement but also a significant improvement in the jobs that we offer at the property. I’ve been worried about the 2,400 head count minimum ... before the smoking ban. Now with the ban, it’s critical for us to come to a conclusion.”
Real said the casino is hiring people it doesn’t need. He said there would be no layoffs; the employee reduction would occur through attrition.
In the final weeks of the 2015 legislative session, Harrah’s unsuccessfully sought to change the law and allow the casino to cut 400 jobs.
Real said casino officials would try again next year.
Gaming Control Board member Robert W. Gaston III said he would like to see the regulatory board support Harrah’s legislative effort.
“It is just not fair for government to mandate on a private enterprise that they hire people that are not doing anything,” Gaston said. “With the smoking ban, you have got to give them more flexibility.”
Board Chairman Ronnie Jones said the board will have an opportunity in the spring to revisit the issue with the Legislature.
“After a year of revenue reports, the Legislature will look more favorably on this request,” Jones said. “I think you are great for the city of New Orleans.”
Follow Marsha Shuler on Twitter, @MarshaShulerCNB. For more coverage of the State Capitol, follow Louisiana Politics at http://blogs.theadvocate.com/politicsblog/.