Louisiana Gov. Mike Foster placed his political prestige on the line Monday as he called a 12-day special session of the Legislature to consider his tax bailout plan for Harrahs New Orleans Casino.
"Expect the rhetoric out of Baton Rouge to be loud and probably to get ugly before anything happens," said a political observer in a radio newscast Monday morning.
At the beginning of the session, chances of the proposal to cut the land-based casino tax from $100 million to $60 million the first year and $50 million for the two subsequent years "has at best a 50-50 chance of passage," said Dan Davila, gaming analyst for New Orleans-based Southcoast Capital.
"Yet it seems highly unlikely that Governor Foster would call the Legislature into session to act on his casino plan unless he had the votes," Davila added.
Foster added pressure to the session last week when he warned that legislators could face recall petitions from their constituents if they failed to support the bailout. He said voters would be upset because of the loss of jobs as well as failure to develop funds needed to increase teachers salaries.
The special session will deal only with gaming issues. To appease riverboat casino operators who said their revenues fell by 20% when Harrahs New Orleans Casino opened, part of the plan would permit dockside gambling, eliminating the requirement that riverboats cruise during gambling sessions. However, their gambling tax would be increased from 18% to 21.5%.
Another issue was the stated need by JCC Holdings Inc., operator of Harrahs New Orleans Casino, to increase its restaurant and hotel operations. Following negotiations last week with local restaurant and hotel operators, the casino said an agreement had been reached, but no details were given.
"This might just be a case of be careful what you wish for because you might get it," observed Davila.
"Even with the concessions on taxes," Davila explained, "the property has to show it can be run profitably. And theres no evidence so far that it can. For instance, it will be some time before enough money can be generated to expand restaurants on the second floor of the casino. And then theres the possibility of increased competition from the riverboats that will be operating dockside."
Foster called the special session after officials of Harrahs Entertainment Inc. (HET), owner of 43% of the casino, said it would not fund the $100 million annual tax payment required by the state after March 31. Without the subsidy, the property would be forced to close.
Plans by Sheldon Adelsons Venetian Casino Resort to build an $800 million casino in Taiwan has attracted political support, according to a report from Bloomberg News.
News reports said the project, to be completed with a Taiwanese partner, had the support of President Chen Shui-bian. Interior Minister Chang Po-ya told reporters the Taiwan government wanted to improve the economy of Penghu, a small island between Taiwan and mainland China.
However, it was noted that other casino interests also would be interested in building a casino on the outlying islands if the government approved gambling. Kerry Packers Crown Casino of Australia could be among the bidders.
Icahns bid a "joke"
Carl Icahns bid for the bankrupt TWA was late in arriving. Then it was characterized as a "joke" by the bankruptcy judge conducting the proceedings. In fact, the judge said the offer didnt even meet the guidelines he established for bidders.
Airline analysts were saying Monday that American Airlines bid of $742 million, plus the assumption of $3 billion in debt (which the court favored) would save TWA employees jobs. American already has provided TWA with $200 million in financing and was prepared to ante another $130 million to keep the airline afloat.