Harrah’s profits at its New Orleans casino are way down, and, while you will probably receive this news without shedding a tear, the implications for the public treasury could be dire.
The demands on that treasury are already crippling, and a reduction in the city’s share of the casino loot is bound to be reflected in the quality of public services. Since we cannot even afford to maintain a police department large enough to keep the thugs at bay, this is hardly the best time to turn up our noses at any source of revenue.
There is no doubt why Harrah’s is suddenly finding it more difficult to separate suckers from their bucks.
Lots of people in the habit of feeding those infernal machines are also hooked on nicotine, and now they can’t light up on the casino floor anymore. So, if they don’t decamp to, say Jefferson Parish, to gamble, they do have to keep stepping outside for a smoke. This seriously cuts into the time they could be losing their money.
Harrah’s says its takings are down 16 percent in the few weeks since the citywide smoking ban went into effect. The clean-air brigade, always reluctant to acknowledge any downside to its noble cause, claims there is no connection, and this is merely a seasonal blip. This flies in the face of reason, but the smoking debate has long been informed more by passion than intellectual rigor on either side.
Harrah’s reports that its head count is up, even as profits are down. Clearly, the customers are being distracted from the business at hand, and there is no doubt why.
City Council members, at least, do not deny the fiscal impact of this smoke-free ordinance and assert that this is a price worth paying for the boon of a healthier public.
Perhaps it is, but it is a price that the famously broke city will struggle to pay. Not only will the city lose sales tax revenues, but Harrah’s threatens to assert what it says is a contractual right to negotiate a reduction in its lease payments. A Harrah’s flack says that could cost the city another $13.5 million a year.
The Mitch Landrieu administration says there are no grounds for altering the lease, but does not explain its rationale. In fact, Harrah’s deal does envisage a break if government action causes a loss of profits. The smoking ban would seem to fit that bill. A smoke-free casino could be turn out to be a burdensome luxury.
The city faces several crushing financial obligations — jail maintenance and pension funds, for instance — and lacks the cash needed to build up a police department large enough to tame its hairy streets. Government has no more pressing responsibility than maintaining public safety, and maybe smoke-free bars and casinos contribute to that cause. Citizens may feel, however, that protection from hoodlums should take priority. It is not unusual in this city to pick up the paper and read about bystanders caught in the crossfire of some gang war. Secondhand smoke may be hazardous to the health, but secondhand gunfire is lethal for sure.
Although City Council members now come across as nonchalant about the financial effects of the ban, it cannot be said that they gave it mature consideration before it was enacted. Rushed through on a tide of righteous indignation, the ordinance was amended about 100 times at a raucous public hearing before its unanimous adoption.
State regulators had projected a $100 million loss in tax and fee revenues over two years if smoking were banned at Harrah’s, the Fair Grounds and video poker outlets in New Orleans But the overall impact on the tourist and convention business is still up in the air. The Harrah’s numbers, down in the first month from $28.8 million to $24.1 million, are the first proof that the blow could be severe.
Harrah’s did lobby for permission to establish a separate area for smokers, which, in the land of the free, seemed a reasonable compromise and a concession to fiscal prudence. But the council remained determined to enforce a healthy lifestyle, even if it kills us.
James Gill’s email address is firstname.lastname@example.org.