New Orleans Casino put on notice to get financial house in order

Guy Coates

Tuesday, Sept. 19, 2000 | 9:54 a.m.

BATON ROUGE, La. - The state gambling board has put Harrah's New Orleans Casino on notice that it must get its house in financial order or shut down at some point next year.

The default notice issued Tuesday is a pure technicality required by the state contract with the casino owner, JCC Holding Co.

What the notice really does is put more attention on the casino's effort to get the Legislature to lower the $100 million-a-year tax that must be paid to the state.

Although the casino is making money, the revenue is not enough to make the operation financially viable once the state gets its cut, JCC Holding officials have said for months.

JCC Holding readily agreed to the contract and the tax to reopen the troubled casino a year ago. But even at that time, gambling opponents warned that efforts would be made to lower the amount down the road.

The contract requires the casino, at the beginning of each quarter, to show that it is capable of paying its debts for the next 12 months.

Another facet of the contract: The casino must find a outside company that will guarantee all payments to the state, which gets the $100 million in daily installments.

JCC Holding cannot guarantee that a new outside company will be available once the deal with the present guarantor, Harrah's Entertainment Inc., expires next March 31. Las Vegas-based Harrah's is JCC Holding's main minority stockholder and manages the casino.

To get a guarantee, JCC Holding says the casino must restructure its debt and the main portion of debt is the $100 million payment to state government.

The action by the Louisiana Gaming Control Board on Tuesday gives the casino seven months to show that it can pay all debts for the 12 months that started July 1.

Basile Uddo, attorney for JCC Holding, said the casino welcomed Tuesday's board action because "this notice does focus attention on the problem," which is the payment to the state.

Uddo said that Gov. Mike Foster has suggested that he might call a special session of the Legislature to deal with the fee.

Foster has said he will do nothing until after the Nov. 7 election, which includes a constitutional amendment to increase personal income taxes, abolish some sales taxes and raise an additional $200 million in the process.

Uddo said the $100 million translates to a 40 percent tax on the casino.

Riverboat casinos pay the state 18.5 percent of their gambling revenue.