New Orleans CityBusiness: Harrah's exec doubles down on New Orleans casino's future

Harrah's casino executive John Payne is suddenly like a man without a country.

Payne, former general manager of Harrah's New Orleans Casino at the foot of Canal Street, was promoted in June to the post of regional president with responsibility for four Harrah's properties: Harrah's New Orleans, Harrah's Lake Charles, Grand Casino Biloxi and Grand Casino Gulfport. Harrah's acquired the two Mississippi properties when it bought Las Vegas-based Caesar's Entertainment earlier this year.

Now, all four properties are shut down due to hurricanes Katrina and Rita.We're still assessing the damage to our properties, Payne said. We'll determine when we are going to reopen in the near future.

Payne is working from Harrah's offices in Memphis, Tenn., while the company sorts out its rebuilding plans. His main task, he said, is trying to account for the more than 9,000 employees who worked at the four properties.

Louisiana collected $395.4 million in 2004 from the casino industry, nearly 5 percent of the state's total income. Most of that money, about 21.5 percent of casino revenues, went to the state's general fund. About a fourth went into a fund for teacher salaries.

Although all but a few of Louisiana's casinos escaped serious damage, it may be months before dice are rolling in Louisiana. Even casinos undamaged by the storms will have problems reopening.

All of the casinos in that area are faced with two problems, said Wade Duty, president of the Casino Association of Louisiana. One, where do you house the employees you are able to locate, and two, a lot of their gaming revenue is local market revenue, which is gone.

The state should see significantly reduced revenues until the New Orleans population swells closer to its original status, Duty said.

Boomtown Casino in Harvey has reopened, Duty said, for hours limited at first by the curfew in Jefferson Parish, which has now been lifted. It's too early to project post-Katrina revenues, he said.

In September 2004, Harrah's New Orleans won $25.4 million from gamblers and won another $28.3 million in October 2004. It was on track to beat those numbers in 2005. The casino employed more than 2,600 people and paid at least $5 million per month in taxes into state coffersAlthough the casino suffered relatively little damage from Hurricane Katrina, it has remained shuttered since Aug. 28. Harrah's officials won't say when the casino might reopen although employees say it could be as long as two years from now.

In Lake Charles, Hurricane Rita destroyed barges connecting the Harrah's casino to the shore and the casino boat broke loose from its moorings. Harrah's officials estimate it could take months to reopen.

According to Harrah's CEO Gary Loveman, the company's Biloxi and Gulfport properties were destroyed and rebuilding could take two years. The company could build temporary facilities in the meantime, he said.Harrah's plans to pay employees of the four shuttered casinos for at least 90 days, and is continuing to make its $5 million monthly payment to Louisiana for now.

In Mississippi, Gov. Haley Barbour said he would sign a bill this week to let casinos along the Gulf Coast move onto land. Both the state House and Senate passed the bill last week.

Mississippi legalized gambling in 1990 but by law casinos must be on barges floating on either the Gulf of Mexico or the Mississippi River. The present bill only includes Gulf Coast casinos.

According to the bill, casinos will be able to rebuild 800 feet from the shore or to the southern side of U.S. 90, which runs along the beach in Harrison County.

Louisiana Attorney General Charles Foti has said it might be a good idea to consider converting riverboats to land-based casinos but industry officials said that is unlikely.

We are in a different situation than Mississippi, Duty said. First and foremost, our boats were not as heavily damaged as the ones in Mississippi so we are not getting the insurance settlement checks to reinvest.

Allowing other land-based casinos in Louisiana would break the state's exclusivity agreement with Harrah's New Orleans, which could cost the state at least $60 million a year in payments from the casino.

Representatives from the casino industry will address the Louisiana Gaming Control Board Oct. 18 in Baton Rouge, but no proposal has been put forth to rebuild the casino industry.

We don't know what the market is going to be like because of the reshuffling of the economics of south Louisiana, Duty said.