Business leaders ask for tax cut for Harrah’s casino

Alan Sayre

Wednesday, Aug. 9, 2000 | 8:56 a.m.

NEW ORLEANS - A major business organization called for the state to reduce the $100 million annual state tax imposed on Harrah's New Orleans Casino, saying the gambling hall is too important to lose.

The action Tuesday by the New Orleans Regional Chamber of Commerce asks Gov. Mike Foster and the Legislature to give the casino the same tax rate that the state's riverboat casinos pay, provided that the boats get unlimited dockside gambling.

The casino has been winning $20 million a month from gamblers, ranking it neck-and-neck with the most successful riverboat. But officials of JCC Holding Co., the downtown casino's owner, have said the tax puts the long-term viability of the gambling hall in question. The casino employs about 3,000 and, according to a recent economic study, pumps about $84 million a year in payroll and benefits into the economy.

There has been widespread speculation of another legislative move to set a uniform casino tax and allow riverboats unlimited dockside gambling while raising their tax rate from 18.5 percent. The riverboat proposal failed in the Legislature earlier this year.

JCC Holding officials have been hinting for some time for the need for a tax cut but have not asked the Legislature to do so. JCC Holding chairman Fred Burford insisted during a news conference with Chamber officials that the casino is still not asking for a tax break.

"The Chamber is recommending that the Legislature revisit this issue," Burford said, who called the organization's request "an important first step."

No time frame was given for when the casino would need tax relief and Burford would not speculate on the casino's future if the idea was rejected. But JCC Holding's chief minority shareholder, Harrah's Entertainment Inc., is currently guaranteeing and paying the tax. Harrah's must decide by next April whether to renew the tax guarantee. Without the guarantee, the casino is in breach of its contract with the state.

"I am confident that no other company will rescue this casino under the current tax structure," Burford said. "And I believe the operator we should have is Harrah's."

A Harrah's subsidiary manages the casino, which carries the Harrah's trade name.

Chamber president Walter Leger Jr. said the organization planned an active role in talking with the governor and the Legislature about the reduction and a possible special legislative session. A uniform casino tax of 21.5 percent would increase state casino taxes by $80 million a year, while keeping Harrah's in business, Leger said.

Longtime casino opponent C.B. Forgotston suggested that the Chamber did not have its priorities in order. He pointed to last week's announcement that Entergy Corp. would move its corporate headquarters out of the state.

"I am deeply disappointed in the Chamber's priorities," Forgotston said. "It seems at a time when we have lost the only Fortune 500 company and the major corporations in the city of New Orleans are declining that the Chamber would focus its attention on real businesses and not the casino."

Leger said the Chamber's action on the casino issue is a direct response to "a cry from the community to be economically pro-active."

"We wish some of these other businesses had come to us and put their cards on the table and told us what's tough about doing business in New Orleans," Leger said.

Leger said the casino tax is "not a gaming issue, but a jobs and economic issue. Today, we are not looking at the past. We are looking at the future."

The $100 million tax was set by the Legislature in 1992 during a time when Wall Street had tabbed New Orleans as an almost-guaranteed success to become a destination center for gamblers. But the original ownership group, Harrah's Jazz Co., collapsed in late 1995, about six months after opening a temporary casino.

JCC Holding emerged from bankruptcy in October 1998 and opened the permanent casino a year later.

Another potential issue raised by JCC Holding officials has been the state ban on the casino having a connected hotel and unlimited dining facilities enjoyed by competitors on the Mississippi coast. Burford would not say if the Legislature would be asked to lift those restrictions.

"We're taking a hard look at what we need," Burford said. "First, we need a fair tax."