New Orleans casino revenue drops to $14.8 million in state police audit

Alan Sayre

Wednesday, Jan. 19, 2000 | 12:01 p.m.

NEW ORLEANS - Gamblers lost $14.8 million at Harrah's New Orleans Casino in December, state police said Tuesday, a sharp drop from the $16.2 million the French Quarter-area gambling hall won during its first full month of operation in November.

But there were different interpretations over an estimated $1.69 million collected on New Year's Eve, but not included in the report as a precaution against possible Y2K computer problems that night.

"The proper revenue for the month of December was $16.5 million," said Jay Sevigny, president of Harrah's New Orleans Management Co., which operates the casino.

Sevigny said December was stable "given its status as one of New Orleans' worst tourism months."

Industry observer Larry Pearson, publisher of the Riverboat Gaming Report, said only 25 to 30 percent of a drop - the term used by state police in its report - typically will translate into gross gambling revenue for a casino.

But in this case, the entire $1.69 million should be included because expenses were already subtracted to arrive at the $16.5 million figure, Sevigny said.

The state police report said the New Year's Eve figure was an estimate.

Pearson said the official figure of $14.8 million shows the casino is "alarmingly close" to the $13 million monthly average won by Harrah's temporary casino at the city's Municipal Auditorium for seven months in 1995 before the project went under and filed for bankruptcy protection.

The casino has been operating for 2 1/2 months. Following bankruptcy reorganization, it is owned by JCC Holding Co., of which Harrah's Entertainment Inc. is a minority partner. Harrah's New Orleans Management, a Harrah's subsidiary, operates the casino, which carries the Harrah's name.

Harrah's officials have said they are in the project for the long haul and believe their national marketing efforts to Harrah's customers in other states will succeed in bringing enough gamblers to New Orleans.

"In the long term we think it is capable of continued expansion," Sevigny said.

Industry analysts have said the project probably needs $21 million to break even; some have said it needs $25 million to $31 million for long-term success in the face of a $100 million minimum tax to the state.

The temporary casino paid a tax of 25 percent of its gross revenue from gamblers without any minimum.

Casino opponent C.B. Forgotston said that the project probably will have to ask the Legislature for more than tax relief to succeed.

"They will need to be able to give away food, hotel rooms and to downsize the casino to 25,000 to 30,000 square foot," Forgotston said. "And all of that requires legislative action."

Forgotston said that on an annual basis, the New Orleans casino would take in $1,776 per square foot of gambling space. That's above the Mississippi coast average of $1,295 and not too far away from the Las Vegas figure of $2,000.

"They are probably performing the best they can," Forgotston said. "They either have to downsize their square footage or need some serious tax breaks."

Before the land casino opened, the New Orleans area's three riverboat casinos typically took in $25 million to $26 million per month. The December tally for the trio was $20.8 million, compared to $20.7 million in November.

"A two-month trend shows that about $5 million a month has gone from the riverboats to Harrah's," Pearson said.

The casino had 486,005 visitors in December, down from 624,691 in November. Each visitor lost an average of $30.60 last month, up from $26.02 in November. However, that figure was far below all of the state's 13 riverboat casinos.

According to the audited state police figure, the land casino took less money than two floating casinos: the Horseshoe at Bossier City won $18.7 million, while the two-boat Isle of Capri complex at Lake Charles won $16.1 million.

The riverboats won $110.2 million in December, up from $108.6 million in November, but down from $120.6 million in October, the last month without competition from the New Orleans casino.

The four boats in Shreveport-Bossier City won $51.8 million, followed by $25.5 million won by the pair of two-boat complexes in Lake Charles, the $20.8 million tally of the New Orleans riverboat market and $11.9 million won by the two boats in Baton Rouge.

The riverboats saw 1,875,975 visitors, each of whom lost an average of $58.73.