Harrah’s tries again with New Orleans casino

Alan Sayre

Wednesday, April 7, 1999 | 11:27 a.m.

NEW ORLEANS--More than three years after collapsing in financial disarray, a big New Orleans casino is gearing up for a second try, but the competitive gambling environment has changed considerably.

Scheduled to open across from the French Quarter on Oct. 30, the shell of the giant building is completed and work is moving ahead on the interior. Despite standing unfinished and exposed to weather for three years, the structure was in better shape than first thought.

Across the street, a parking garage for 1,500 vehicles is under construction. Interviews are being conducted to fill about 2,500 jobs.

Casino officials predict that after years of waiting, the gambling hall will be a success. But an industry analyst is not as optimistic.

Even though a nickel has never been bet at the site across from the French Quarter, the project already has a long history.

In 1986, then-Gov. Edwin Edwards, pointing out the wide, relatively casinoless terrain between New Jersey and Nevada, proposed having one gambling hall in New Orleans as a special attraction.

It took until 1992, when Edwards returned for a fourth term, for the Legislature to narrowly approve the casino, which is supposed to have a monopoly on land casinos in New Orleans.

But the project has anything but a monopoly. Louisiana has 13 riverboat casinos and about 15,000 video poker machines, and the nearby Mississippi Gulf Coast has bloomed into the Las Vegas of the South.

Unlike the casino resorts in Mississippi, the New Orleans project is blocked from having its own hotel and is restricted to only one restaurant -- concessions made long ago to the existing tourist industry.

Gone is the temporary casino at the city's Municipal Auditorium that drove the $830 million project under after less than seven months in 1995. Still required is a minimum $100 million annual tax, which the state refused to surrender.

The casino will still carry the Harrah's name, although Harrah's Entertainment Inc. of Memphis is no longer the majority owner.

Through bankruptcy court reorganization, the casino is owned by Jazz Casino Co., a publicity traded company. Owners of $430 million in junk bonds in the old Harrah's Jazz Co. are majority owners, Harrah's holds about 45 percent and the rest is held by a small group of original investors. Harrah's will manage the project.

Jay. D. Sevigny, the chief Harrah's official at the casino, said one can "book it" that the permanent casino will open on time Oct. 30. Regardless, the casino must start paying the tax on that date.

In an interview, Sevigny said Harrah's is in a much-stronger marketing position to bring gamblers to the 100,000-square-foot casino than it was in 1995, mostly through a card program for regular Harrah's customers. Sevigny said research shows that 70 percent of the tourists who come to New Orleans have gambled within the past year.

"We don't need to create more gamblers across the U.S.," Sevigny said.

Larry Pearson, publisher of the Riverboat Gaming Report and an analyst of the Louisiana-Mississippi gambling markets, calls the venture "very risky."

"Their problem is that they have to entice a goodly number of the tourists to come here to visit that casino because they can't make it on local revenue. Therein lies their dilemma. They have to get tourists into that casino or they are going to have a very, very big problem," Pearson said.