Casino contract in limbo in the House

Friday, June 6, 1997 | 5:47 a.m.

At issue was a resolution on whether to approve the state's new contract with the casino investors, who include a subsidiary of Harrah's Entertainment Inc.

Because a House committee refused to take a position on the issue Wednesday, the vote Thursday evening in the House was whether to approve the issue for debate next week. The vote in favor of the resolution was 50-47. But 53 votes, a majority of the 105-member House, were needed to advance the measure.

When the motion failed, opponents then tried to have the resolution removed from the files of the House - a motion to kill the contract. That motion failed on a 45-50 vote.

The resolution was then returned to the House calendar, where it will likely stay until one side or the other can win a vote on whether to kill it or advance it.

The Senate is scheduled to vote on an identical resolution next Wednesday. Each must be passed for the contract to be approved.

Harrah's Entertainment was the most prominent among partners in the Harrah's Jazz company, which began construction on a huge gambling palace at the foot of New Orleans' historic Canal Street in January 1995. A nearby temporary casino, established to help praise money for the permanent site, did poorly. Leading to the abrupt shutdown of the project - and the sudden unemployment of 3,000 people - the week of Thanksgiving 1995.

The state sued Harrah's, Harrah's sued back while seeking protection from creditors in bankruptcy court.

Settling the litigation, getting the jobs back and making sure creditors are paid some $50 million they are owed was a major reason for some legislators - including some who opposed the casino project when it was authorized in 1992 - urged approving the contract Thursday night.

Also, the new contract contains an insured completion guarantee for the partially finished Canal Street building and a guaranteed $100 million minimum piece of the action every year for the state.

But opponents said Harrah's, which will hold a minority interest in the new project through a related company, cannot be trusted. There is no guarantee the new casino will be a success, they said, despite the more beneficial financing advantages Harrah's won in negotiations with bondholders who invested in the project.

"These people have absolutely lied to the people of Louisiana time and time again," Rep. Chuck McMains, R-Baton Rogue, said as he urged defeat of the resolution approving the contract.

Rep. Steve Windhorst, R-Terrytown, reminded lawmakers of a full-page newspaper ad the casino operators took out about a week before the shutdown: "Harrah's New Orleans is here to stay."

"They were lying. Again," shouted Windhorst as he waved a copy of the ad.

The debate scrambled traditional lines that usually separate gambling opponents and proponents.

Opposing the contract was an unusual coalition of those who have tried mightily to kill legalized gambling, like Rep. Woody Jenkins, R-Baton Rouge, and some of those who fought just as mightily in 1992 to legalize the casino, including Reps. Sherman Copelin, D-New Orleans, and John Alario, D-Westwego.

Alario raised concerns that the contract leaves open the possibility that full-scale restaurants will be allowed to open in the new casino, competing with established New Orleans restaurants.

Copelin said lawmakers haven't had a chance to look at the contract and ought to be allowed to amend it rather than make an up-or-down vote.

"They go bankrupt again and what does the state get? A building. Some slot machines. Some tables. All they're guaranteeing is zero, saying the state has the first mortgage if they don't pay the hundred million dollars."

On the other hand, among the backers of the new contract was Rep. Garey Forster, R-New Orleans, who pointedly reminded Alario and Copelin that he fought them in 1992, when they backed authorization of a casino.

Killing the contract would just lead to more uncertainty with the huge shell of a casino building remaining empty, Forster, R-New Orleans, said.

"If I thought for a moment that voting against this resolution would wipe that casino off the face of Canal Street, I would vote against it," Forster said.