A year ago, a state Senate committee approved a bill to extend Harrah’s state license, which gives it the right to be the only land-based casino in New Orleans, but only after demanding hundreds of millions of dollars more from the casino company than Harrah’s was willing to pay. The measure ultimately died.
It was a completely different story Tuesday, as the Senate Judiciary B Committee passed House Bill 544 with no changes or dissenting votes.
The only hitch came when state Sen. JP Morrell, D-New Orleans, warned Harrah’s officials that they had better resolve a dispute with the New Orleans Fair Grounds over sports betting or else face rough waters on the Senate floor, the bill’s next stop.
With HB544, the state would extend Harrah’s monopoly, which now ends in 2024, for another 30 years. In return, Harrah’s is pledging to invest $325 million, to build a new hotel and upgrade its existing facilities, and has agreed to pay tens of millions of additional dollars over 30 years to the state, which awards the license, and to the city, which owns the casino site.
HB544 would not allow Harrah’s to expand its 125,000 square feet of gambling space.
The bill sailed through the committee because the two most powerful lawmakers in the Legislature presented it: House Speaker Taylor Barras, R-New Iberia, and Senate President John Alario, R-Westwego. They had worked out the issues that had sunk a 2018 bill sponsored by Barras but not Alario.
“It was a lot different than last time,” said state Sen. Gary Smith, D-Norco, the committee chairman.
Neither Smith nor his colleagues raised questions about a lawsuit filed by Harrah’s in 2010 that challenges the view of state Department of Revenue officials that the casino company should be paying a 4.45 percent sales tax to the state for discounted and comped hotel rooms it offers to customers. The suit was the subject of an Advocate article published Sunday.
At stake in that lawsuit is as much as $40 million, including $2-$3 million per year to the Ernest N. Morial Convention Center and the Louisiana Stadium and Exposition District, which oversees the Mercedes-Benz Superdome and other state sports facilities.
HB544 does not address that issue, even though the chairman of both the convention center and the exposition district believe that Harrah’s ought to be paying tax on comped and discounted rooms to the state. (Harrah’s is paying the tax to New Orleans.)
In an interview Monday, Alario offered both a legal and a political rationale for not amending the bill to ensure that henceforth Harrah’s would pay the disputed state sales taxes.
The legal reason: Alario said state officials believe they will win the lawsuit.
The political reason: Alario said making Harrah’s begin paying those taxes was not part of the deal worked out with the casino company before HB544 was introduced. Alario added that the bill’s supporters do not want to amend the bill because that would force it to return to the more conservative House, where it has already passed but might now face further questions.
The desire to avoid amending the bill also led to an unusual deal demanded by state Sen. Greg Tarver, D-Shreveport. It would divert $680,000 of the $3.4 million per year that Harrah’s will begin paying to the Louisiana Cancer Research Center in New Orleans. The $680,000 would go to an LSU cancer center in Shreveport.
The money will be sent to Shreveport through a memorandum of understanding reached between LSU and the governor’s office, rather than through amending HB544, the normal practice.
“All I want is the money,” Tarver said in an interview before the committee hearing. “They leave us (Shreveport) out of everything.”
Asked why the bill was not amended, Tarver said: “You put one amendment on, you get another amendment and another amendment. They don’t want to go back to the House.”
Because the full House has already approved HB544, the full Senate is its last stop before final passage. Gov. John Bel Edwards has said he will sign the bill into law.
Besides money for cancer research, HB544 also dedicates more money for problem gambling, water projects in rural areas, infrastructure projects in New Orleans and early childhood education – all to win votes from a cross-section of legislators.
The city of New Orleans also stands to receive $19.5 million in one-time money over three years. John Pourciau, Mayor LaToya Cantrell’s chief of staff, said city officials haven’t decided yet how to spend that money. Cantrell is supporting HB544, as are all members of the Orleans Parish legislative delegation.
Alario set the tone for the 30-minute hearing at Judiciary B as he began his remarks to the four senators sitting on the dais before him.
“I’m so happy to be here,” he joked. “And I’m so happy to have appointed all of you to the committee.”
Alario and Barras reminded the senators about last year’s disagreement over how much Harrah’s should pay, which led to the bill’s death on the final day of the legislative session. They also noted that they had hired a New Orleans consulting firm this time to put a more precise value on the no-bid license renewal.
Pointing to the consulting firm’s findings, HB544 would require Caesars Entertainment, Harrah’s parent company, to pay an estimated $130 million more to the state and the city of New Orleans over the deal’s 30-year lifespan than last year’s bill would have required, under a measure known as “net present value.”
David Satz, a Caesars attorney, said the state is getting a good deal. He said his company will invest the $325 million with the assurance of having another 30 years to make money in New Orleans and the elimination of rules that have limited Harrah’s to a single hotel, no restaurants and no meeting space.
“We want to create something that’s a world integrated resort for a world-class city,” added Dan Real, who oversees the Harrah’s casino and Caesars’ other casinos in the South. “That building has not had many changes over 20 years… This is really about being able to compete.”
The casino has seen a sharp drop in gambling over the past decade.
In fiscal year 2008, Harrah’s winnings totaled $419 million, according to State Police. In 2018, its winnings had fallen to $288 million, a falloff of nearly a third.
The drop in winnings meant that tax revenue paid to the state fell from $90 million in 2008 to $63 million in 2018.
Three senators praised the bill and asked friendly questions before Morrell asked whether the Fair Grounds, which operates a slot-machine emporium, would be able to offer sports betting if the Legislature approves this new form of gambling in Louisiana, given Harrah’s monopoly status in New Orleans.
Satz replied that Caesars officials had just begun negotiations on the issue with the Fair Grounds, adding that they were not willing to surrender their exclusive right and permit the track to offer sports betting. He added that Caesars officials would continue the discussions.
Morrell was unsatisfied and noted that the state’s other three racetrack casinos would be allowed to begin offering sports betting immediately if Senate Bill 153, which is sponsored by state Sen. Danny Martiny, R-Kenner, becomes law.
The Harrah’s bill will face “a problem on the floor if you do not resolve that issue,” Morrell told Satz and Real.
In an interview afterward, Alario also said he wants the Caesars officials to address the issue before the Senate votes on HB544.