The state of Louisiana is one step closer to collecting up to $50 million from owners of Harrah’s New Orleans after a Baton Rouge appeals court ruled that the casino company owes back taxes to the state dating to 2001.
Harrah’s officials have been arguing in court since 2010 that a 2001 law exempts them from paying sales and occupancy taxes to the state on hotel rooms that they "comp" or discount to their customers or that they comp at hotels owned by others.
The Department of Revenue has countered that if Harrah’s gives away a hotel room, it should still pay the hotel taxes on that room to the state. The current tax is 10% so for a $200 hotel room, the state would collect $20.
Wednesday’s 2-1 ruling by the state First Circuit Court of Appeal upholds a 2019 decision by 19th Judicial District Court Judge William Morvant, of Baton Rouge, that said the Revenue Department had “a clear and unambiguous” right to the taxes.
Most of the money in question would go to two state-owned facilities in New Orleans, the Ernest N. Morial Convention Center and the Louisiana Superdome Commission, as well as to state coffers. If Harrah’s were paying the tax, the two entities and the state would collect an additional $2 million or $3 million per year among them.
SEC filings by Harrah’s parent indicate that the company has set aside more than $40 million in case of an unfavorable ruling.
It’s too soon to assume that Harrah’s is about to hand over the money.
Harrah’s can ask the three judges to reconsider their decision. The company could also appeal to the Louisiana Supreme Court, which agrees to hear only a small minority of cases.
Still to be decided is how much money Harrah’s would owe. That would be settled in a trial that has yet to be scheduled.
Attempts to reach someone from Harrah's on Thursday were not successful.
In the appeals court decision, Judges J. Michael McDonald and Wayne Ray Chutz ruled in favor of the Revenue Department while Judge Mitchell Theriot sided with Harrah’s, saying he didn’t think that the tax applied when the company comped rooms at hotels owned by others.
Representing the Department of Revenue has been Drew Talbot, an outside attorney based in Baton Rouge. The Jones Walker and Adams and Reese law firms have represented Harrah’s.