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From the Inside, Harrah's New Orleans Looks As if it Could Open
 Immediately However, Harrah's Needs the City to Progress with its
 Recovery Before it Can Welcome Back Gamblers
By Howard Stutz, Las Vegas Review-Journal
Knight Ridder/Tribune Business News

Nov. 14, 2005 - On any normal fall evening, the sidewalks and streets of the French Quarter would be bustling with pedestrians. The sound of jazz music would be spilling from the open-air taverns and clubs.

At the nearby Harrah's New Orleans on Canal Street, thousands of customers would be wagering inside the 100,000-square-foot casino.

But this particular early November night is far from normal.

Two months ago, 135 mph winds and driving rain from Hurricane Katrina pounded New Orleans, and the subsequent catastrophic flooding left much of the Crescent City in disarray. Now the French Quarter is relatively empty.

Noise from construction equipment repairing storm-damaged stores has replaced the sound of jazz. Open shops have limited hours. Restaurants have minimal menus.

Even at the historic French Market coffee stand, Café du Monde, just a smattering of customers -- mainly hurricane relief workers -- enjoy beignets and café au lait at the outdoor tables.

Meanwhile, in post-Katrina New Orleans, law enforcement is the only visible activity at the shuttered Harrah's. The New Orleans Police Department has used the casino's main driveway as its central command center since the hurricane.

"When's it gonna reopen?" one passer-by shouts as police officers gather for the 7 p.m. roll call and their assignments.

The answer appears to be not until next year.

John Payne, Harrah's regional president for the Gulf Coast, said visitors to downtown New Orleans aren't ready to support the state's only land-based casino, which produced $320 million in gaming revenue during 2004. Harrah's New Orleans accounted for 14 percent of the state's overall gaming revenue total of $2.14 billion and was well on its way to a similar performance this year when Katrina shut operations Aug. 29.

"We're not only concerned about having customers, but our employees as well," Payne said. "About 38 percent of the city doesn't have power and thousands and thousands of homes aren't livable. If we were to open today, I don't know if we would have enough employees to staff the property."

Throughout New Orleans, flood-ravaged homes are now unlivable because of mold and other contamination.

Payne's concern about finding employees was evident at two riverboat-style New Orleans-area casinos that reopened since the hurricane. Boomtown, in suburban Harvey, reopened Sept. 30 but lost 30 percent of its work force. The Treasure Chest in Kenner reopened Oct. 10 with less than half its original employees.

"We found most of our employees, but a lot of them didn't have anywhere to stay in the city," said Treasure Chest general manager Kim Etland, whose own home in nearby Metaire is uninhabitable. "There are many people who have lost their homes because of the flooding."

What might seem to defy logic, though, is that the two casinos outside downtown are generating gaming revenue well above prehurricane levels, casino managers said.

Lack of other entertainment opportunities is one reason given for the boost in business. But the casinos may provide a sort of refuge. The casinos' customers include local residents seeking a place away from the destruction. Construction workers brought in to rebuild the city and relief and recovery personnel have joined the locals.

"There is absolutely nothing to do in town," Etland said. "All the movie theaters are closed and very few restaurants are open. The (NFL's New Orleans) Saints are gone and so are the (NBA's New Orleans) Hornets. We're a place that was your local hangout, kind of like Cheers because we used to know all our customers by first name."

In downtown New Orleans, however, Harrah's needs the city to progress with its recovery before it can welcome back gamblers.

Two months after Katrina, the Big Easy is still in shambles. In many of the high-rise buildings along Canal Street and Poydras Street, especially near the Superdome, plywood still covers blown-out windows.

Downtown hotels, including several near Harrah's, remain closed or have partially reopened. The Riverwalk Marketplace, across from Harrah's on Front Street, will reopen later this month; the tony Shops at Canal Place, just across from the casino, won't reopen until next year.

The largest cluster of people is a tent city a few blocks from the French Quarter that is a central location for workers from the Federal Emergency Management Agency.

Still, from the inside, Harrah's New Orleans looks as if it could open immediately.

Payne gave the Review-Journal a tour of the casino, which was relatively unscathed. Only a small area housing the high-limit slot machines and gaming tables had water damage from holes torn in the roof by the hurricane. Flooding in the city never reached the building, but the bulk of the casino's 2,000 slot machines and 100 gaming tables have remained untouched since late August.

Payne looked through the window of his ninth-floor office at One Canal Place and pointed out the damage to the roof Harrah's New Orleans.

"The building came away in pretty good shape," he said.

Harrah's was more than halfway through construction of a 450-room hotel and retail addition across from the casino on Poydras Street when Katrina hit. Damage from the storm and a decrease in the number of construction workers have delayed the hotel's completion by six months, Payne said.

Harrah's has not given a timetable for the casino's reopening, and Payne said the company should have an announcement "shortly." Rumors moving through the New Orleans casino community have Harrah's reopening in time for Mardi Gras in late February.

"We're evaluating all our options," Payne said.

Harrah's has been paying the wages and benefits for the casino's 2,600 workers since the closing, but that program is scheduled to expire at the end of the month. Without saying the payments would continue beyond November, Payne said the company is evaluating other steps for the displaced workers.

Even with the casino closed, Payne said Harrah's continues to make monthly payments on its annual commitments of $60 million to Louisiana and $12.5 million to the city of New Orleans.

"Obviously this is a good public relations statement, but we feel it's important to continue helping the city recover from the hurricane and the aftermath," Payne said.

Harrah's executives hope the property's reopening will copy the success at the Treasure Chest and Boomtown, where gaming revenue has been estimated at two or three times normal levels, according to gaming insiders.

The Las Vegas-based companies that operate those casinos -- Boomtown is owned by Pinnacle Entertainment and Boyd Gaming Corp. runs the Treasure Chest -- wouldn't divulge gaming revenue for October. The Louisiana Gaming Control Board is scheduled to release revenue data Tuesday.

Before the hurricane, Boomtown averaged $10.4 million a month in gaming revenue; the Treasure Chest averaged almost $9.8 million a month.

"I can tell you this much, our parking lot is always full, and on weekends, we've got lines of people waiting up to an hour to get onto the casino boat," said Boomtown general manager David Williams. "We're busy and we're the place to be on the West Bank."

The area near Boomtown suffered very little flooding; the homes had mostly wind damage. During its five-week closure, Boomtown was a command center for hurricane recovery workers.

The 45,000-square-foot casino, which has 1,500 slot machines and 44 table games, has done little marketing because it isn't needed. However, opening with fewer employees has taxed the existing staff members, who now work 12- to 14-hour shifts.

Pinnacle Chairman Dan Lee told investors during his company's recent conference call that Boomtown is doing well because casino customers, who normally would have frequented the destroyed casinos in Mississippi Gulf Coast communities, had nowhere else to turn. Once Harrah's reopens, Lee believes, Boomtown's business will diminish.

While Boomtown is operating 24 hours, Treasure Chest has reopened on a limited basis, from noon to 3 a.m. daily. Still, customers line up to board the 24,000-square-foot multilevel floating casino on Lake Pontchartrain. During weekdays, the casino gives local residents a place to go; on weekends, the construction and recovery folks come in to let off steam.

"We've always been kind of the neighborhood place," Etland said of the casino, which has 967 slot machines and 37 table games. "Am I surprised the casino is doing well? Not really, because this is all the entertainment we have in New Orleans, and our customers wanted a familiar place to go."

The boat's deli-style restaurant is open, offering a wider selection than many restaurants in Kenner. The area around the Treasure Chest suffered significant flood damage.

"I went to a Taco Bell the other day and all they had were chips and beans," said John Sou, the Treasure Chest's assistant general manager. "For our regular customers, having the casino open gives them a sense of getting back to normal."

A third New Orleans riverboat casino, Bally's operated by Columbia Sussex on Lake Pontchartrain, was heavily damaged by the hurricane and will have to be rebuilt.


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