In what would represent a major expansion of its local operation, representatives of Harrah’s New Orleans Casino are lobbying state lawmakers for authorization to construct a second hotel adjacent to their facility in downtown New Orleans, company officials confirmed Thursday.
They are not seeking to expand the gambling portion of the casino, they emphasized.
Harrah’s officials also are seeking to add restaurants and a nightclub at the casino.
In all, they said, the company would spend up to $340 million, creating hundreds of jobs and providing millions of dollars in new tax revenue a year to the city and state.
For weeks, company representatives have been quietly lining up support from elected officials and business leaders for the plan, which will require approval from the Legislature, the governor and the city.
In one instance, on Nov. 2, Harrah’s officials gave a power point presentation for state legislators at Ruth’s Chris Steak House inside the casino’s existing hotel across Poydras Street.
No opposition has yet emerged to Harrah’s plan from the restaurant or lodging industries, which would face some additional competition.
“There seems to be a lot of support,” said state Rep. Walt Leger III, D-New Orleans, who received a briefing from Harrah’s in December. “It seems that it’s a win-win.”
State Senate President John Alario, R-Westwego, also seems to be on board.
“It will be a big plus for New Orleans and the state,” Alario said. “But I’d like to know: What else is involved? I just want to make sure the state’s interest is protected. I always like to see the fine print.”
The fine print — in the form of an actual bill — isn’t yet available.
Legislators said House Speaker Taylor Barras, R-New Iberia, has indicated that he plans to sponsor the measure. This means the bill is almost certain to win approval. Barras did not respond to a text asking about his plans.
The company is proposing to build a 24-story, 340-room hotel on the site of the casino's main entrance, across Convention Center Boulevard from the former World Trade Center building that is being converted into a Four Seasons Hotel.
A company presentation provided to The Advocate says it would be a “luxury” hotel with a rooftop pool, gym and 20,000 square feet of meeting space.
Harrah’s existing 450-room hotel is across Poydras Street from the casino.
The company also wants to build a clear roof over the closed-off section of Fulton Street between the hotel and its parking garage fronting Convention Center Boulevard, to allow “year-round outdoor entertainment,” according to Dan Real, Harrah’s regional president for the South.
Company officials are promoting the jobs, new investment and additional tax revenue from the overall project. They say it would generate 600 construction jobs and 500 full-time jobs, $13 million more per year to the state in gambling taxes and hotel and sales taxes, and $8 million annually in increased rent and property tax and sales tax payments to the city.
Harrah’s officials have not provided the economic analysis behind these numbers. If the new hotel and restaurants took business away from existing establishments, that would reduce the overall economic benefit.
Company officials say they are following a industry trend in which casino companies develop more and more non-gambling activities at their properties.
“Harrah's currently generates 87 percent of its (local) revenue from gaming, compared to its Las Vegas operations that approach 40 percent,” Stan Harris, the president of the Louisiana Restaurant Association, wrote in a memo to his New Orleans members in December, following a briefing from Harrah’s.
Not seeking to expand the gambling space is unusual, some industry analysts said.
“I’m guessing that they are failing on the gaming side so they need a hotel to bring in more customers,” said Bill Thompson, a retired professor of public administration at the University of Nevada-Las Vegas who has followed the industry for years.
The changes Harrah’s are seeking come at a time when entities from each of the various other gambling sectors in Louisiana — riverboat casinos, video poker and racetracks with slot machines — are pushing to get legislators to pass laws that will allow them to win more money from their customers. The legislative session begins March 12.
Harrah’s proposed expansion represents a further turn away from the original casino plan pitched in the early 1990s to build a stand-alone, state-licensed casino without an attached hotel or restaurants — a concept unheard of in the gambling industry but one that was required to overcome opposition from hotel and restaurant interests, which wanted to ensure that gamblers would have to leave the casino to eat and sleep, ensuring that its benefits would extend to the community at large.
After the original temporary casino went bankrupt in 1995, after only five months of operation, the Legislature approved a series of concessions sought by Harrah’s that reduced the benefits below what the original promoters promised for New Orleans and the state in terms of jobs and tax revenue. The present casino opened in 1999.
The minimum annual payment from Harrah’s to the state dropped from $100 million to $60 million, and the company was allowed to reduce the minimum number of employees it had to maintain. It now stands at 2,500 and includes employees at ancillary entities such as Harrah’s hotel.
Harrah’s later was allowed to build the hotel, which opened in 2006.
It now is seeking state approval to exceed the current 450-room limit and to end various restrictions on food service. The company is also seeking an extension of its casino operating contract with the state, which expires in 2024.
Randy Haynie, perhaps the state’s foremost lobbyist, has been leading Harrah’s effort to win over legislators and key business groups.
Harrah’s has pitched its plan to Gov. John Bel Edwards. A spokesman did not respond to a request for his views.
New Orleans elected officials will have to approve design and building changes.
Outgoing Mayor Mitch Landrieu is reviewing the plan, a city spokesman said.
Mayor-elect LaToya Cantrell is noncommittal at this point. Cantrell “looks forward to continued conversations with all interested parties in regards to the potential project,” said transition spokeswoman Karen Carvin Shachat.
Harrah’s is dangling a carrot to the city: The company would guarantee payment for the next 10 years to the city for police and fire services provided to the casino.
Under current law, the state is supposed to cover that cost, to the tune of $3.6 million per year, but often doesn’t.
State Rep. Helena Moreno, D-New Orleans, who will become an at-large City Council member in May, said she would like Harrah’s to assume that annual cost indefinitely.
Overall, she praised Harrah’s plan. “The key thing is that this is an expansion of the non-gaming assets,” she said.
That point also is important to state Rep. Sherman Mack, R-Albany. The Harrah’s bill will have to pass through the Criminal Justice Committee, which he chairs. “I’m not in favor of expanding gaming. But it’s my understanding it’s not,” said Mack.
The Louisiana Restaurant Association has not objected to the plan, a spokeswoman said.
Harrah’s representatives met Wednesday with officials of the Greater New Orleans Hotel & Lodging Association. “The board formed a working group to consider Harrah’s proposal,” said Mavis Early, the group’s executive director.
Owners of the Four Seasons project are also reviewing the plan, a spokeswoman said.
One person who has no reservations about the plan is Tiger Hammond, the president of the Greater New Orleans AFL-CIO. “We’re 110 percent on board,” he said. “We’re all for economic development and the creation of more jobs.”
Harrah’s officials have said in their briefings that they have to send many guests to other hotels because their existing hotel doesn’t have room for them.
“They’re over capacity,” said Lenny Wormser, a broker who closely follows New Orleans’ hotel industry. He added that a new Harrah’s hotel would have a minimal impact on other hotels because there are 25,000 hotel rooms already in the French Quarter, Warehouse District and Central Business District.