Harrah’s New Orleans Expected to Receive 30-Year License Extension in Exchange for $325M Investment
Posted on: April 25, 2019, 09:26h.
Last updated on: April 25, 2019, 09:26h.
Harrah’s New Orleans, the only land-based casino in Louisiana, is expected to receive a 30-year license extension from the state before the legislature adjourns in June. But under the current legislation being pushed through, it will come at a hefty cost.
House Bill 544 would grant the Caesars Entertainment casino resort with a 30-year license extension. In exchange, Harrah’s New Orleans will undergo at least $325 million in capital investments, and shelve out tens of millions of dollars in higher taxes to the state and city.
The $325 million in upgrades will need to be complete by July 2024, which is when the current license expires.
It’s the second straight year that the Louisiana Legislature has tried to extend the casino license. This time around, however, the odds seem strong that Harrah’s New Orleans and state lawmakers have found solid common ground.
It is the right thing for Harrah’s and the right thing for Louisiana,” House Speaker and HB 544 sponsor Taylor Barras (R-New Iberia) said.
The Louisiana House Criminal Justice Committee passed the legislation 13-0-1 on Wednesday, and now moves to the full House for consideration. The general consensus is that the measure will be approved and sent to the Senate.
Harrah’s New Orleans isn’t the only game in town. Video gaming machines can be found at various bars across the city, but when it comes to full-scale slots and table games, the Caesars property has a monopoly on the Big Easy and neighboring French Quarter.
That’s why Caesars is willing to spend such a massive amount of money to retain operating rights of the casino.
Along with agreeing to invest $325 million, Harrah’s New Orleans will pay a $25 million upfront fee once the contract is executed. The city will receive $7.5 million, and the state the rest.
Caesars will additionally pay $40 million over three years should the company be interested in acquiring brick-and-mortar ownership of the complex. The city presently owns the land and building, and leases its operations back to Harrah’s.
“This deal far exceeds what any casino in the United States pays for renewal,” Caesars VP of Government Relations David Satz told lawmakers.
The casino will also donate $6 million a year to New Orleans “support services,” and $3.4 million to education. The state is guaranteed $60 million in yearly taxes, and New Orleans will receive a projected $8 million in rent, property, and sales taxes.
Harrah’s, Caesars Future
Gross gaming revenue (GGR) at Harrah’s New Orleans totaled $288 million in the 2018 fiscal year. That’s down from $419 million a decade ago.
Caesars execs say the casino resort needs improvements to bring back patrons. However, it was unwilling to do so without assurances from the state that it would be the operator of the venue for the long term. The $325 million will be used to build a 340-room hotel towner, modernize the gaming floor, and build new celebrity restaurants.
This is about new revenue, recurring revenue for the city and state … and long-term stability,” Caesars exec David Satz told the Criminal Justice Committee.
There has been plenty of rumors surrounding a potential Caesars acquisition by a competitor, but no concerns regarding that scenario were presented this week.
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