It was almost 30 years ago that Louisiana lawmakers first turned to gambling in an effort to replenish state revenues devastated by the late 1980s oil bust.

In the three years starting in 1990, they legalized a state lottery, 15 riverboat casinos and a land casino at the foot of Canal Street in New Orleans. In 1997, they legalized slot machines at three of the state’s four racetracks. The fourth — the New Orleans Fair Grounds — got slots a decade later.

But tax revenue from gambling, which contributes more to the state treasury than any other industry, has stagnated over the past decade with the saturation of gambling in neighboring states.

Lawmakers in Louisiana have responded by doubling down on gambling. They are again proposing to expand legal games of chance to prop up state revenues as an alternative to having to take the unpopular step of raising taxes or cutting spending.

“It’s much more agreeable to most people than an involuntary tax,” said Jim Richardson, an LSU economics professor. “Does that mean it’s a good policy? That’s another issue.”

Last year, lawmakers allowed Louisiana’s 15 floating casinos to move onto land, allowed voters to approve digital gambling on fantasy sports and relaxed some rules for truck stop video poker parlors.

This year, lawmakers will have another shot at extending Harrah’s state license to operate the New Orleans casino, in exchange for tens of millions of dollars in additional tax revenue over 30 years and a pledge by Harrah’s owner, Caesars Entertainment, to invest $325 million in building a hotel and other amenities.

Lawmakers also will take a second shot during the remaining six weeks of the legislative session at legalizing betting on sports.

And a new study commissioned by Louisiana Economic Development, a state agency, is recommending a host of changes aimed at generating more gambling on the lottery, at Harrah’s and at what were formerly riverboat casinos — all with the aim of producing more revenue for the state amidst the continuing revenue shortfalls.

“Louisiana is a poster child for government-addicted gambling,” said John Kindt, a professor emeritus of business and legal policy at the University of Illinois.

Kindt also noted that the expansion of gambling comes with a downside that policy-makers rarely discuss: an increase in the number of compulsive gamblers.

He cited studies by Professor Earl Grinols, who also taught at the University of Illinois, which found that for every $1 the government collects in taxes from gambling, there are at least $3 in costs to society — from gambling addicts who commit crimes, file for bankruptcy and lose their homes, among other issues.

Oil and natural gas provided the biggest source of tax revenue for the state when policy-makers and voters plunged Louisiana into the modern gambling era in the early 1990s.

But gambling has now surpassed oil and gas, according to Richardson. In fiscal year 2018, the state collected $618 million in taxes from oil and gas, while various forms of gambling generated $726 million. Most of the gambling revenue, about $422 million, came from the floating casinos, while video poker machines produced $186 million, Harrah’s $63 million and slots at racetracks $53 million.

The lottery, video poker and riverboat casinos were legalized while Buddy Roemer was governor; the Harrah’s casino was authorized while Edwin Edwards was governor. Both then and in the ensuing years, votes for and against gambling have cut across partisan lines, with the prospect of jobs and tax revenues outweighing concerns about addiction and other downsides.

The gambling industry provides about 25,000 direct jobs, but the number of jobs has lagged behind what was promised. For instance, Harrah’s employs 2,400 people, including at its restaurants and hotel. Those who pushed for the New Orleans casino in the early 1990s said it alone would create 25,000 jobs.

In the meantime, the tax benefits have worn thin. Tax revenues have stagnated over the past decade, said Spectrum Gaming Group in a report released on April 2 that was commissioned by Louisiana Economic Development.

Tax collections from the Harrah’s casino have dropped from $90 million in 2008 to $63 million in 2018, commensurate with a decline in gambling there.

Harrah’s is offering to pay more to the state in exchange for the state pre-emptively extending its license, five years before the license expires. It is pledging to invest $325 million in its casino by mid-2024 — principally by building a new hotel because the current one operates at 100 percent capacity.

Harrah’s attempt to extend the license last year collapsed on the final day of the legislative session.

This year’s proposed deal with Harrah’s would generate $78 million in additional revenue over the next five years for the state and $49 million for the city of New Orleans, according to a legislative analysis.

The terms of the deal are embodied in House Bill 544, sponsored by Speaker Taylor Barras, R-New Iberia, and co-sponsored by Senate President John Alario, R-Westwego. The bill is scheduled to receive its first hearing on Wednesday before the House Criminal Justice Committee.

Meanwhile, Sen. Danny Martiny, R-Kenner, has returned with a bill that died last year that would legalize betting on college and professional sporting events — if approved by voters in a parish-by-parish election to be held in conjunction with the October primary. He said betting would be allowed only within the gambling areas of the state’s 20 licensed gambling facilities: the Harrah’s casino, the racetrack casinos and the floating casinos.

“It allows us to compete on a level playing field with Mississippi (which legalized sports betting last year) and gives us the opportunity to address what should be a priority, early childhood education,” Martiny said, adding that he didn’t think the bill could pass without dedicating the revenue to early childhood.

Slot machines' tax revenue was dedicated to a variety of sources to win legislative approval, including eradication of boll weevils, a school for the blind and City Park in New Orleans.

Martiny’s Senate Bill 153 is scheduled to be heard Tuesday by the Senate Judiciary B Committee.

A parallel measure, House Bill 498, by Rep. Neil Abramson, D-New Orleans, was passed by the Ways and Means Committee last week.

This year’s moves follow up the expansion of gambling last year.

Thanks to a bill by Rep. Kirk Talbot, R-River Ridge, which put the issue on the ballot, voters in 47 parishes approved betting on fantasy sports within their parishes. Bills before the Legislature this year would establish the tax rate and regulatory structure.

The Legislature and Gov. John Bel Edwards also authorized owners of the 15 floating casinos to move onto land and potentially expand their gambling areas.

Sen. Ronnie Johns, R-Lakes Charles, who sponsored the legislation, said he expects that the Isle of Capri in Lake Charles will become the first floating casino to move onto land within 1,200 feet of its designated berth space, as called for under his legislation, Senate Bill 316.

Legislators last year rejected one proposal that would have allowed the racetracks to have more slot machines and a second one that would have allowed the DiamondJacks floating casino in Shreveport to move to Tangipahoa Parish.

The new study commissioned by Louisiana Economic Development calls for legislators to allow that move and also permit another floating casino in either Shreveport or Bossier City to relocate to Monroe, which does not have a casino.

The report also calls for lawmakers to remove taxes on freebies given away by casinos and to take other steps to help spur more gambling in the state.

“The Shreveport-Bossier City market has clearly been hurt by the rise of bigger tribal casinos in Oklahoma that are much closer to the Dallas-Fort Worth market,” the report says. “Texas remains a continual threat to legalize commercial casinos, which if implemented near the Houston market would significantly hurt the Lake Charles market.”

Asked about the study, Alario said, “My first glance at it was that it was written by the gaming folks.”

The study briefly notes the issue of problem gambling in Louisiana and cites a March 2019 report by the Louisiana Department of Health.

As many as 280,000 Louisiana residents are problem gamblers, the department found in a 2016 study. Sen. Karen Carter Peterson, D-New Orleans, admitted last month that she is a gambling addict after news leaked that she had received a State Police summons for violating a self-imposed ban not to enter a casino.

The problems caused by compulsive gamblers typically take a back seat in the State Capitol to discussions about the new tax revenue that gambling supposedly will generate.

“We don’t hear the bad things about it, all these people who have lost their homes and lost their jobs,” said Sen. Francis Thompson, D-Delhi, who voted against legalizing gambling as a House member in the early 1990s. “It’s just as bad as alcohol, drugs or anything else.”


Follow Tyler Bridges on Twitter, @tegbridges.