Louisiana lawmakers just dropped the ax on sports gambling legislation being approved this year, but this is potentially good news for at least one casino. With the gambling industry still being tightly wrapped up in a small package, Harrah’s New Orleans will most likely enjoy greater profits. This is good news, considering it now has to spend $325 million to retain a 30-year license.
Caesars-owned Harrah’s was up for a license renewal when Louisiana made a deal. If the casino spent $325 million in upgrading the property, it would be granted a new 30-year license. Lawmakers had to sign off on the arrangement and a bill, House Bill 544 (HB 544) was introduced to make that happen. The House approved it with no issues and then it made its way to the Senate for its response. This past Tuesday, the Senate signed off on it, approving the bill by a vote of 27-10.
Governor John Bel Edwards has yet to sign the bill into law, but has already indicated that he won’t hesitate to break out the Conway Stewart and scribble his signature on the paper.
Under the provisions of the bill, the gaming floor cannot be expanded. Caesars will be required to build a 340-key hotel tower, restaurants and entertainment venues, which should create 600 construction jobs and permanent employment for around 500 individuals. Harrah’s will also have to pay tens of millions of dollars in taxes over the life of the license, divided between both city and state tax obligations.
In addition, Harrah’s will give the city of New Orleans a tax payment of $19.5 million, payable over the next three years. It also has to give the state $3.4 million annually as payment for the extended license. According to the bill, the money will be used for cancer research, water projects, childhood education and problem gambling programs. Another $60 million in guaranteed tax revenue is due each year, as well.
Harrah’s New Orleans is big money for Caesars, and for New Orleans. The city owns the venue and then leases it back to the casino company. If Carl Icahn gets his way and can find a buyer for the Caesars brand, having a 30-year license in place for Harrah’s will make it a valuable commodity in negotiating a selling price.
