Maybe we should take a gamble on a better casino deal

Fear motivates our elected officials in Baton Rouge to support House Bill 544. The Operators of Harrah’s Casino have so whipped up terror in the state House that the massive structure at the foot of Canal Street in Poydras would be rendered empty, without a casino tenant, that a bad renewal deal has been sent to the Senate floor for its concurrence and the Governor’s signature.

In the legislation, Harrah’s commits to spend $325 million on a new luxury hotel (mostly to expand its own profitability), as a sweetener to earn another 30-year contract. Representatives of the company claim that as a result of the new lodgings, total employment by Harrah’s NOLA will rise to 3,000 jobs. However, that is just a verbal pledge; they will not commit to the number in writing.

They further maintain that tax revenue to the city and the state will drastically increase as a result, yet the total paid sum would still amount to less than the $100 million to which Harrah’s originally assured would enter the state treasury annually three decades ago.

Also, its our recollection that, under this new deal, employees would total less than they promised 30 years ago, that included the caveat that they would not build hotels or restaurants that would compete with locally-owned businesses.

And now it appears the company may have avoided paying almost $40 million in hotel taxes. Yes, at the same time as they are in negotiations to grant an early extension of their monopoly license to operate the land casino in New Orleans, Harrah’s is suing the Louisiana Department of Revenue, challenging the contention that the casino owes tens of millions in back hotel taxes to the state. Harrah’s claims 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 other hotels. However, when the casino’s competitors comp, they still pay the 4.45 percent in hotel taxes on that room to the state (about $9 on a $200 hotel room), and Department of Revenue officials believe that if Harrah’s gives away lodgings to a “high roller,” the casino should do the same.

Put another way, a related deal in the current legislative session has mandated that these hotel taxes — which originally funded the construction of the Superdome and Convention Center — shall be used, in part, to rebuild New Orleans’ Sewerage System. Imagine having an extra $40 million to put towards new pipes and pumps?

The current Harrah’s contract does not expire until 2024. Time remains to put the land-based casino license out for public bid, like every other state contract, and see if another gaming operator appears with a better deal. Maybe Harrah’s might even pay a bit more to stay competitive?

Despite what Senate President John Alario has claimed, the fact is the state couldn’t do any worse if our legislators just rolled the dice for a little longer.

This article originally published in the May 27, 2019 print edition of The Louisiana Weekly newspaper.