The full state Legislature would lose its authority to renew Harrah’s operating license in the future under a little-noticed provision in a controversial measure pending before a Senate legislative committee.
In House Bill 553, Harrah’s is asking the state Legislature to approve a 30-year extension of its state license – which currently expires in 2024 – but then limit the authority of future approvals to only the Joint Legislative Committee on the Budget. The Louisiana Gaming Control Board also would have to approve a future extension, the same as today.
The state House approved HB553 in late March by a wide margin. No House member raised questions with the bill’s sponsor, House Speaker Taylor Barras, R-New Iberia.
But the measure has yet to receive a hearing before the Senate Judiciary B Committee, the next step in the legislative process, amidst a swirl of questions. The committee chairman, state Sen. Gary Smith Jr., D-Norco, said in an interview Tuesday that he is aiming to hold that hearing on Friday or Monday, depending on the Senate’s legislative schedule. Time is getting tight for Harrah's with the session possibly ending early on May 18.
HB553 was supposed to be heard on Tuesday, but Smith said he postponed consideration of the measure because he already had a full agenda of other bills and because of questions that have emerged. Among them:
• Is Harrah’s offering enough money to the state in return for the Legislature granting the early renewal of its license?
• How would the revelation that a Las Vegas-based real estate investment trust has an option to buy Harrah’s New Orleans affect the casino’s operations and tax payments?
• Would the state get a better deal by not acting this year and instead putting the license renewal up for a public bid?
• If the state put the license renewal out to bid and another company won out over Harrah’s, would Harrah’s be forced to turn over the building to the city, which owns the casino site, or could Harrah’s tie up the project through its lease with the city?
What would happen to future renewals has gotten no public scrutiny so far.
“Nobody has brought that up,” Smith said in an interview, adding, “That does bring an interesting point to the table.”
That point is whether the full Legislature should surrender its say over a renewal in 2054 when the extension Harrah’s is seeking would expire.
“I think the Legislature would want to have control and say over the extension and make sure it’s done in the best interests of the people,” Smith said.
He predicted that a member of his committee would offer an amendment to require the full Legislature to approve an extension of the contract when it expired in 2054.
David Satz, a top official with Caesars Entertainment, Harrah’s parent company, confirmed that the legislation calls for future license renewals to go before the joint legislative committee.
In an email, Satz also noted that Harrah’s is seeking the 30-year extension to 2054 “in order to proceed with the large capital investment that enables the new hotel and other non-gaming amenities.”
In all, Harrah’s officials are pledging to spend $350 million to build a 340-room hotel, a food court featuring local restauranteurs and a nightclub. The investment would create 600 construction jobs and 500 full-time jobs, Harrah’s officials have said.
“As to the ultimate language of the bill,” Satz wrote, “we defer to the legislative authors and members of the Legislature.”
There is a limit to how far Caesars is deferring. The company has 17 lobbyists working to pass the legislation.
Satz and the primary outside lobbyist hired by Caesars, Randy Haynie, spent 15 minutes in the back of the Senate chamber Tuesday discussing HB553 with Smith.
HB553 calls for Harrah’s to pay the state an additional $7 million per year beyond the current payment, which is a minimum of $60 million per year.
But suddenly facing political headwinds, Harrah’s lobbyists have offered a sweetener in the form of a $21 million upfront payment to extend the license this year, six years before it expires. About $14 million of the $21 million would go to the state and $7 million to the city, according to state officials.
Harrah’s would offset the $21 million, however, by reducing the planned investment of $350 million by $11 million – so it would be a $339 million investment – and by eliminating $10 million of tax payments to the state at the back end of its license 30-35 years from now.
After the Senate adjourned Tuesday, Smith spent several minutes updating Matthew Block, the governor’s executive counsel, on the latest developments with the Harrah’s legislation. Gov. John Bel Edwards and New Orleans Mayor LaToya Cantrell support the bill but are pushing Caesars to offer more money.
So is Senate President John Alario, R-Westwego.
“I don’t think $21 million is enough for what we’d be offering them,” Alario said Tuesday.