A New Orleans real estate lawyer is reportedly urging members of the Louisiana State Senate not to ratify proposed legislation that would extend the casino license for the downtown Harrah’s Casino and Hotel New Orleans by another 30 years until 2054 because he believes it represents a bad deal for the city.
According to a recent report from The Advocate newspaper, House Bill 553 has already been passed by the Louisiana House of Representatives and is now set to be considered by the Louisiana State Senate from tomorrow. If subsequently ratified by this chamber and signed into law by Democratic Governor John Bel Edwards, the measure would additionally allow Harrah’s Casino and Hotel New Orleans to spend upwards of $350 million in order to construct a second hotel tower to sit alongside the venue’s current 450-room offering.
But, opponent Mike Sherman has reportedly declared that lawmakers should not pass the legislation due to the fact that the owner of Harrah’s Casino and Hotel New Orleans, Las Vegas-based Caesars Entertainment Corporation, already has a complex deal in place that could see it subsequently offload the venue at a massive profit.
Sherman reportedly stated that the casino license for Harrah’s Casino and Hotel New Orleans is due to expire in 2024 but Caesars Entertainment Corporation inked an agreement in October that gave the Vici Properties Incorporated real estate investment trust (REIT) a five-year option on buying the venue before leasing it back.
“Harrah’s is pursuing a real estate flip of epic proportions,” Sherman reportedly told The Advocate. “In just six years, its casino will be worthless as its gaming contract comes to an end. If the legislature extends the gaming contract for 30 years, Harrah’s will be worth upwards of $1 billion based upon the value created by the state. The citizens are entitled to approximately $500 million of [that] value when Harrah’s flips the property to Vici [Properties Incorporated].”
Las Vegas-headquartered Vici Properties Incorporated is reportedly an independent and publicly-traded vehicle that was created from Caesars Entertainment Corporation’s bankruptcy reorganization of 2015 and already owns 20 casinos including the Harrah’s Las Vegas and Caesars Atlantic City properties.
The newspaper reported that Sherman has joined with New Orleans property developer Joseph Jaeger Jr to ask legislators to reject House Bill 553 and instead force Caesars Entertainment Corporation to compete with other operators for the southern state’s only non-riverboat casino license.
For his part, Richard Broome, Communications and Government Relations Executive Vice-President for Caesars Entertainment Corporation, reportedly told The Advocate that the deal with Vici Properties Incorporated would not affect his firm’s plans to expand Harrah’s Casino and Hotel New Orleans and in the process create up to 500 additional jobs.
“We have a mutual commitment to make this investment,” Broome reportedly told the newspaper. “We want to be committed to New Orleans for at least the next 36 years. We have a 100% commitment on our side to make this investment. We’re bullish on New Orleans.”
However, Sherman’s efforts may pay off as John Alario, the Republican President for the Louisiana State Senate, reportedly told The Advocate that the possible future sale of the New Orleans casino is ‘certainly worthy for discussion’ while a spokesperson for Edwards purportedly detailed that the Governor, who has been supporting House Bill 553, had not been aware of the transfer agreement.
The newspaper reported that other key members of the Louisiana State Senate that declared they had been unaware of Caesars Entertainment Corporation’s deal with Vici Properties Incorporated included influential Louisiana State Senators Gary Smith and Jean-Paul Morrell.