An aggressive and ultimately controversial effort by Harrah’s New Orleans Casino to extend its operating license by 30 years died on the final day of the legislative session last year over uncertainty about whether the state was getting a good deal.
Now, a study initiated by Senate President John Alario to help determine what the state should demand is laying the foundation for Harrah’s to try again during the upcoming legislative session.
During the waning weeks of the regular legislative session, a bill sought by owners of Harrah’s New Orleans Casino ran into headwinds in the s…
Alario and three other key senators said they want a New Orleans consulting firm to give them an independent evaluation of the value of the license, something they lacked last year.
“We just want to know what’s the best deal for the state and how can we accomplish that,” Alario, R-Westwego, said in an interview. “If it’s a good arrangement for the state, let’s move forward and get it going,”
Alario complained repeatedly last year that lawmakers didn’t have enough information to assess the deal proposed by Harrah’s owner, Caesars Entertainment. It was contained in a bill sponsored by House Speaker Taylor Barras, R-New Iberia.
The bill would have extended the casino’s license, which gives it the right to operate the only land casino in New Orleans. The proposed 30-year renewal did not call for any bid or solicitation process, and it would have come six years before the casino’s license expired. For good measure, it scrapped lodging and restaurant restrictions that Caesars has chafed at.
With 21 lobbyists working for Caesars, the measure sailed through the House; it had the support of Gov. John Bel Edwards and Mayor LaToya Cantrell in addition to the House speaker. But it stalled in the Senate when senators, led by Alario, questioned the terms.
After several weeks of delay, the Senate amended Barras’ bill to provide more money for the state. Under the Senate version, Caesars would have made a one-time $40 million payment to the state after the measure became law, plus a second $40 million payment if Vici Properties, a Las Vegas-based real estate investment trust, exercised its option to buy the casino and lease it back to Caesars.
More significantly, the Senate bill also would have raised by a third the minimum annual payment that the casino owner would make to the state. Whereas the House version kept the casino’s minimum payment at its current $60 million, the Senate ratcheted it up to $80 million. Senators justified the extra $20 million because Caesars officials had said their plan to spend $350 million on upgrades once they won the license extension would generate $20 million more annually in taxes to the state, for a total of $80 million.
But Caesars officials objected to the more onerous terms, saying they didn't want to guarantee the higher amount.
The bill died with the House and Senate stalemated over their differing bills.
On March 29, Speaker Taylor Barras strode down from his perch overseeing the Louisiana House of Representatives to the microphone on the chamb…
The Sisung Group is conducting the study. It is due on Feb. 15.
“We’re hoping it will reveal just what sort of deal we should get or try to get,” said Sen. Gary Smith Jr., D-Norco, who offered the Senate amendment that called for better terms for the state. “Hopefully, it comes back and says we were on target from the Senate version of the bill. We felt like that was a pretty fair estimate.”
Two other key lawmakers — Sens. Eric LaFleur, D-Ville Platte, and Jack Donahue, R-Mandeville — joined Alario last year in complaining that they couldn’t determine whether Barras’ bill was fair to the state because of the lack of any data or analysis.
“All these fiscal conservatives who don’t want to spend a nickel on anything voted to blast it through. That’s amazing to me,” Donahue said in an interview, referring to House Republicans. “How can you make a decent decision (on either the Senate or the House bill) if you have no information?
“I don’t have anything against Harrah’s,” Donahue added. “I don’t mind voting for it as long as I can get some information to know that it was the right thing to do. Voting without that information, I’d call that a bad vote. That’s why I voted against (the Senate bill).”
Depending on what the study finds, LaFleur said, “It could be the vehicle to approving (Harrah's plan). It could also be the vehicle that crashes it.”
Alario and Barras authorized the study late last year but it has not become public until now because they approved it on their own, using discretionary money.
Should Harrah’s New Orleans Casino make a second attempt next year at extending its license, the governor’s office and state lawmakers will ha…
“We think it’s a good investment,” Alario said. Barras did not respond to requests for an interview.
A Nov. 15 contract they signed with Lane Sisung called for a $165,000 payment to his company, with three of its consultants earning $400 per hour and one receiving $350 per hour.
The agreement followed an Aug. 17 meeting between Sisung and the four senators at Sisung’s office.
Alario and LaFleur said they sought out Sisung because of the firm’s work in recent years for the Public Service Commission, which oversees utilities, and various higher-education entities. Sisung also performed studies for the Jindal administration.
“Our team has members who have done similar gambling studies in 10 other states,” said John Mayeaux, one of the Sisung executives. “A large component of this is understanding the financial cash flows and contractual relationships between the state and the city.”
Joe Jaeger Jr., a major hotel owner in New Orleans who opposed the Harrah's deal last year because he said it shortchanged the state, said he didn’t have enough information on the Sisung study to comment on it.
Dan Real, who oversees the local casino for Caesars Entertainment, said he welcomed the study. “I believe it will show that there is a good deal to be had,” he said. “There’s a potential for a win-win here.”
Real said that Caesars executives want to remain in New Orleans but won’t decide until after the release of the Sisung Group’s study whether to try again to push a license extension through the Legislature.
“If we can find the right deal, we would love to pursue it,” Real said.
When the bill to extend Harrah’s New Orleans Casino’s exclusive license fell apart at the end of the regular legislative session, the gambling…
Not certain that they will remain in New Orleans after the operating license expires in 2024, Caesars officials have not made major upgrades to the Harrah’s casino in recent years.
At least partly as a result, the casino’s "win" — how much Harrah’s earned after paying off winners — declined from a peak of $419 million in 2008 to $281 million in 2017. Harrah’s tax payments to the state — at a 21.5 percent rate — have concurrently declined from $90 million in 2008 to the minimum $60 million in 2017. The 2018 numbers will be made public on Thursday.
In pitching Caesars’ plan last year, Real said that Caesars would build a 340-room hotel, an upscale food court, a flashy nightclub and a roof over a one-block stretch of Fulton Street between the existing Harrah’s hotel and its parking garage to create a mini-entertainment district.
Real said the planned investment would create 600 construction jobs, 900 permanent jobs and millions of dollars in new tax revenue for the city and the state. Leading business groups and major unions supported Barras’ bill because of the planned investment.
Separately, Louisiana Economic Development is doing a more comprehensive study of the state’s gambling industry. The state agency is in the process of choosing a consultant and hopes to have the results by the time legislators convene on April 8, said spokesman Gary Perilloux.
Louisiana casinos brought in 5.1 percent less in winnings from gamblers in October compared to a year earlier, with the New Orleans gambling m…
Louisiana Economic Development authorized a study on the Harrah's deal last year, but the consultant had only a week to prepare it. Alario said it was comparable to a term "paper written by a first-year college student in a rush."