Applicants plead for last Louisiana riverboat license

Alan Sayre

Friday, Oct. 12, 2001 | 10:15 a.m.

BATON ROUGE, La. -- The three applicants for Louisiana's 15th and final riverboat casino license got a last chance to plead their cases Wednesday before state gambling regulators.

However, the Louisiana Gaming Control Board was told by its legal counsel that it could decide next Tuesday not to award the license to anyone. Board chairman Hillary Crain said later that although he believes the board has the authority not to act, he knew of no move to take that route.

The inquiry into the board's authority was made by board member Rupert Richardson, who did not indicate whether she would ask the panel not to grant a license.

The three projects being considered are:

* A $220 million casino resort, including a hotel and golf course, in Lake Charles, which would be built by Pinnacle Entertainment Inc. Pinnacle also owns riverboat casinos in Bossier City and the New Orleans suburb of Harvey.

The Lake Charles market currently has a pair of two-boat riverboat complexes that draw heavily from Texas. The boats compete with a popular Indian reservation casino in nearby Kinder.

* A $150 million casino-hotel, to be owned by Horseshoe Entertainment, on the Red River in Shreveport, near Horseshoe's current complex in Bossier City. In terms of gambling revenue, that casino is the state's largest riverboat. It competes with four other floating casinos in Shreveport-Bossier City.

* A $45 million riverboat casino project in the St. Mary Parish community of Amelia, owned by Louisiana Horizons LLC, a partnership of Isle of Capri casinos and politically connected Louisiana businessmen, including Robert Tucker, who has close ties to New Orleans Mayor Marc Morial, and Donald Bollinger, a close friend of Gov. Mike Foster.

A state police background check of Pinnacle raised questions of whether the company should be attempting the project in light of the national economic slowdown and increased competition and decreasing revenue for its Casino Magic riverboat in Bossier City.

But Pinnacle's chief executive, Paul Alanis, said the company had been selling non-strategic assets for the past two years and accumulating cash specifically for the Lake Charles project.

"We are going to build a destination point," Alanis said.

Alanis said that Pinnacle is projecting that by the time the project would open in 2003, the national economy will have rebounded.

The board's attention on Horseshoe was focused largely around the company's past use of "pass-through" companies, owned by minorities, to acquire goods and services. Such companies typically dealt with the casino directly and then purchased goods from larger companies, while Horseshoe received credit for dealing with minority vendors.

Last year, Horseshoe sold its riverboat casino in Joliet, Ill., to Argosy Gaming after Illinois gambling regulators deemed Horseshoe chairman Jack Binion unsuitable to do gambling business in that state.

Binion told the board that when his company first got its Bossier City license, the now-defunct Riverboat Gaming Commission made it clear that a certain percentage of business had to be done with minority-owned businesses. However, there were few such businesses that could handle the volume of goods a casino buys, he said.

"Everyone in the industry was doing the same thing because when we got it, there weren't enough vendors to serve us," Binion said.

Horseshoe officials said the company now has a program to encourage the development of full-fledged minority vendors and does a background check on each company to make sure its minority-owned status is legitimate.

Horseshoe's casino in Bossier City has been operating on a conditional license for several years because of suitability questions that are now being studied by state police and the state attorney general.

In presenting their report on Louisiana Horizons, state police said they were aware of the political connections of its investors and had investigated, finding no improprieties.

Each of the applicants pushed their view of how their project would benefit the state's economy. Louisiana Horizons said its casino would create 684 jobs and 700 spin-off jobs in a region of the state that suffers from a chronically high unemployment rate.

Louisiana Horizons said its casino would depend upon a local market extending to Houma-Thibodaux and conceded that a major economic effect in the region would be lower household savings.

That led board member Ralph Perlman to question the proposal.

"I feel we are being asked to give a stamp of approval to the opinion of those who say that a dollar into gaming is a dollar away from families," Perlman said. "Fish cannot play slot machines."

Perlman also said the decision by the Legislature and the governor to tie teacher pay raises to gambling revenue might put more emphasis on which project can bring the most tax dollars to the state.