Louisiana's First casino, Ten Years Later...Published November 2, 2003 by OCR Editor
Louisiana's first casino was opened 10 years ago. The state hoped it would be the beginning of a long-needed solution for chronic employment and economic development problems. Now, with 17 state-licensed casinos in full operation and three more planned, g
The Shreveport and Lake Charles areas, originally slated to have only a small piece of the action, instead became Louisiana's tourist gambler stops, entertaining millions from Texas. Three Indian reservation built gambling institutions - free from state taxation- and their location on land was considered more attractive to gamblers.
While the state was preoccupied with gambling, the 1990s economic boom across the United States largely bypassed Louisiana, which lost thousands of manufacturing and oil jobs and now finds itself in an almost-desperate game of catch-up with other states in attracting new business in a much-slower environment.
Industry analysts have said Louisiana took a wrongheaded approach, first by limiting the number of riverboat casinos, which made the licenses themselves valuable and subject to corruption, and then restricting land based gambling in New Orleans.
During the same time, Mississippi took a market-based approach to dockside gambling, rather than limiting the number of licenses. The Louisiana projects had to have local investors, some of which sold out for millions even before the wagering began. Gus Mijalis, a longtime crony of former Gov. Edwin Edwards, got a small share of a New Orleans boat that he eventually sold for $26 million.
As a result, Mississippi's industry boomed while Louisiana's often staggered. Four riverboats in New Orleans either failed or were canceled. A downtown casino in New Orleans went bankrupt twice. And Edwards himself went down, now serving a 10-year federal prison sentence for extorting riverboat applicants.
The legislation allowing 15 riverboat casinos was passed in 1991 during the administration of Gov. Buddy Roemer after an extended state recession triggered by low oil prices.
After Edwards came back for a fourth term in 1992, the Legislature decided to authorize a single land casino in New Orleans. That franchise came with stipulations designed to appease the existing tourist industry such as restricted food service and a ban on a casino hotel.
But backers said the casino would be a giant success in a city known for Mardi Gras and the French Quarter. Estimates of potential gambling winnings by the casino topped $1 billion and what turned out to be pie-in-the-sky estimates of employment hit 50,000.
Today, after two bankruptcies and a 50 percent state gambling tax cut, it employs about 2,600. It is projected to win about $285 million from gamblers in 2003, which would be the casino's best year yet. Initially, riverboats were supposed to take gamblers on cruises, other than those in Shreveport-Bossier City, which could stay at dock rather than venture out in the shallow Red River.
Within a few months of the opening of the state's first casino - The Star Casino on Lake Pontchartain in New Orleans - authorities were fighting what would become common with all the boats: staying docked because of supposed hazardous cruising conditions. In 2001, the Legislature finally authorized dockside gambling for all riverboats, while cutting the taxes of Harrah's New Orleans land casino and allowing Harrah's to build a hotel, which is now on tap for construction.
One warning from critics was that casino gambling would beget more gambling. That occurred when the state's race track industry eventually demanded a cut of the action in face of declining wagering on horses, winning authorization in 1997 to have slot-machine casinos.
Two are now open at Delta Downs near Lake Charles and Louisiana Downs at Bossier City. A third is under construction near Opelousas for Evangeline Downs. On Oct. 4, voters in Orleans Parish approved a casino for the New Orleans Fair Grounds.
Whether the casinos have been an overall boost or negative for the state is difficult to ascertain. A report put together by the University of New Orleans in the late 1990s suggested that the state got more benefits than losses from gambling - but only because of Texas gamblers coming into Shreveport-Bossier City and Lake Charles.
In mid-September, an Indian reservation casino opened in Oklahoma, just two miles of the north Texas border. For that month, revenue from gamblers in the Shreveport-Bossier City market dropped nearly 12 percent, compared with September 2002.