Harrah’s New Orleans wins $21 million in May

Alan Sayre

Tuesday, June 20, 2000 | 11:24 a.m.

NEW ORLEANS -- Harrah's New Orleans Casino, whose performance is being watched carefully amid speculation it will seek a tax break from the state, won just under $21 million from gamblers in May.

The performance -- officially $20.98 million -- was up about $2 million from the $19 million the French Quarter-area casino won in April.

Louisiana's 13 riverboat casinos $119.7 million in May, down slightly from April's $120.4 million.

The New Orleans casino was the biggest winner at the slot machines and gambling tables: The Horseshoe riverboat at Bossier City was second at $20.4 million. The state also has three Indian reservation casinos that are not required to publicly report their winnings.

The three riverboats in the New Orleans area won just over $22 million in May, making the entire market's casino take $43.1 million. The four boats in the Shreveport-Bossier City market won $57.2 million, the pair of two-boat complexes in Lake Charles won $27.2 million and the two boats in the Baton Rouge market won $13.3 million.

While financial success has dominated the riverboat picture, the New Orleans casino has been laboring under restrictions and a high tax passed in 1992 when some annual revenue projections for the project exceeded $1 billion.

During an annual shareholders meeting last month, officials of the casino's ownership company, JCC Holding Co., said that the gambling hall's $100 million per year state tax, which must be paid no matter how little the casino wins, put the project's long-term viability in doubt

Officials also said that the casino is competitively vulnerable because it is banned by state law from offering full dining and hotel rooms like its competitors on the Mississippi coast. However, JCC Holding Chairman Fred Burford would not elaborate on whether the casino would ask for a tax break, allow the casino to have a hotel and unlimited restaurants, or both.

In late February, Harrah's Entertainment Inc. of Las Vegas, which holds about 43 percent of JCC Holding and guaranteed the $100 million annual tax, began making the daily tax payments of about $275,000 for JCC Holding. Harrah's has agreed to put up the tax guaranty through March 31, 2001.

In a statement today, Burford said: "The $21 million reported today for the month of May by the Louisiana Gaming Control Board represents a 10.4% increase over revenue reported for the month of April."

"The casino continues to draw large crowds as we devote our efforts to increasing revenues and controlling variable costs. However, the greatest cost we face is the one item that we have no control over, the minimum annual payment to the State of $100 million due under our casino-operating contract. Even with an increase in gross gaming revenues to $21 million this month, this payment represents an effective tax rate of 40 percent for the month of May and 42 percent cumulative since opening."

"While we will continue to do everything feasible to grow our revenues and control our variable costs, we know of no casino in the United States that operates successfully with a tax burden of this size."