Twenty-six years ago, the speaker of the Louisiana House engineered the most controversial vote in the state Legislature in decades when he shut down the voting machines early to ensure passage of legislation to authorize the only land casino in New Orleans.
The speaker was Rep. John Alario, D-Westwego, and Harrah’s was selected the following year to operate the casino.
Last year, Harrah’s returned to the Legislature to seek an extension of its original operating license with the state.
The bill died on the legislative session’s final day. The state Senate president helped kill it, saying lawmakers couldn’t be sure if it offered a good deal to the state.
The Senate president was John Alario, now a Republican.
It was Alario who took center stage once again, as he reversed his position from last year – after getting Harrah’s to agree to give the state tens of millions of dollars more – and quarterbacked HB544 through the Senate.
“John’s role has been paramount,” state Sen. Gary Smith, D-Norco, said in an interview. “His support makes things a lot smoother.”
HB544 now goes to Gov. John Bel Edwards, who has said he will sign it into law.
Harrah’s monopoly license in New Orleans ends in 2024. The legislation will extend the license until 2054 and authorize Harrah’s to add restaurants and build a second hotel with limited meeting space.
In return, Harrah’s is pledging to invest $325 million, to build the new 340-room 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.
Harrah’s says the bill will create 600 construction jobs and 500 permanent jobs.
“Harrah’s wants to make significant economic development in New Orleans for non-gaming activities,” Smith, who handled the bill, told his colleagues on Tuesday.
HB544 will not allow Harrah’s to expand its 125,000 square feet of gambling space.
The bill’s swift passage this year marks a sharp departure from last year’s session. A year ago, the Harrah’s bill breezed through the House with the wind provided by its sponsor, Speaker Taylor Barras, R-New Iberia.
But Alario and other senators then raised questions about whether the casino company was offering enough to the state. Following Alario’s lead, the Senate demanded hundreds of millions of dollars more from Harrah’s than the House version, over the 30-year extension. Harrah’s balked, and the bill died.
Dan Real, Harrah’s general manager, said he didn’t know if his company’s parent, Caesars Entertainment, would want to try again.
Alario stepped in. Using discretionary legislative dollars, he hired a New Orleans consulting firm to put a dollar figure on the extension’s value. Armed with that, Alario agreed to sponsor HB544 with Barras. It would pay the state $130 million more over the 30-year extension under a measure known as “net present value” than what last year’s bill offered.
Alario also told Harrah’s chief lobbyist, Randy Haynie, not to hire two football teams worth of lobbyists as the company had done in 2018. Haynie and his son Ryan handled HB544.
The measure sailed through the House again and sailed through the Senate as well on Tuesday.
“The president obviously yields a great deal of influence,” state Sen. Troy Carter, D-New Orleans, said in an interview. “Clearly having his support and his years of expertise and wisdom has yielded a better instrument.”
Passing this year’s bill was not without drama behind the scenes.
Before passage by the Senate Judiciary B Committee last week, state Sen. Greg Tarver, D-Shreveport, insisted on diverting $680,000 of the $3.4 million per year that Harrah’s will begin paying under HB544 to the Louisiana Cancer Research Center in New Orleans. The $680,000 would go to an LSU cancer center in Shreveport.
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 from Harrah’s over three years. Mayor LaToya Cantrell has yet to decide how to spend that money.
During the Judiciary B hearing, state Sen. JP Morrell also warned Haynie and Harrah’s attorney David Satz 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. The Fair Grounds’ owners wanted to have the right to offer sports betting at the track – if a bill by state Sen. Danny Martiny, R-Kenner, passed the Legislature – which Harrah’s exclusive license for New Orleans would not normally allow.
Harrah’s “promised they’ll keep working on it,” Alario said in an interview Tuesday.
Alario insisted that any changes to HB544 be done as side deals to avoid amending it and having to put the amended bill back before the House where it might possibly face questions.
As a result, the Senate made no attempt to strengthen the language in HB544 to ensure that Harrah’s pays a 4.45 percent state sales and occupancy tax to the Department of Revenue for rooms it comps and discounts – a source of litigation between Harrah’s and the state’s tax collectors since 2010. Estimates of the amount of money at stake range from $30 million to $50 million, with the amount increasing by at least $2 million each year.
A behind the scenes discussion ensued during the past several days about a provision of HB544 that establishes a memorandum of understanding between Harrah’s and the Greater New Orleans Hotel and Lodging Association over certain requirements involving the hotel and restaurants.
Two people familiar with the discussions said privately that they fear the provision might allow Harrah’s to negotiate a lower state tax bill with the hotel association outside of the Legislature’s control and force the Department of Revenue to settle the lawsuit for less money.
Alario, though, said he did not think this private deal between Harrah’s and the hotel association could trump state law.
“Nobody could have the authority to take away our taxing authority,” Alario said in the interview.
State Sen. Karen Carter Peterson, D-New Orleans, attempted to amend the bill to clarify that Harrah’s will owe the state sales and occupancy taxes going forward, no matter how the court rules. Alario voted immediately to signal to other senators on the voting board how he wanted them to vote. Her effort failed, 4-28.
Peterson also offered an amendment that would have dedicated $1 million per year from Harrah’s to problem gambling, not the $500,000 in HB544.
“This is obviously something I’ve been dealing with,” Peterson told her colleagues, referring to news in March that she is a gambling addict and was given a misdemeanor summons by State Police for entering a casino – after voluntarily putting her name two years ago on a list of people who are banned from visiting Louisiana gambling establishments in an attempt to deal with their problem.
Peterson said the amendment would help the 200,000 gambling addicts in Louisiana.
The amendment failed, 16-19, with Alario again voting no.