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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Fallout From Hurricanes: Harrah's Trims Jobs

5 December 2005

Las Vegas-based Harrah's Entertainment laid off most of its 9,400-person Gulf Coast casino work force this week, three months after devastating hurricanes halted operations at five of the company's casinos in Louisiana and Mississippi.

In letters to displaced employees, Harrah's said the workers will be given first consideration for new jobs once the storm-damaged casinos are back in operation. But for many, those jobs won't be available until well beyond next year.

"We weren't happy about sending those letters," Harrah's Senior Vice President Jan Jones said Friday. "But it's become pretty clear to us that these properties are not going to reopen within any certain time frame."

On Aug. 29, flooding in the aftermath of Hurricane Katrina closed Harrah's New Orleans, while the storm's high winds and storm surge destroyed the company's Grand Casinos in Biloxi and Gulfport, Miss. On Sept. 24, Hurricane Rita heavily damaged Harrah's two floating casinos in Lake Charles, La.

Harrah's paid wages and benefits to the 8,000 casino workers displaced by Hurricane Katrina for three months, but that program expired at the end of November. The same program was offered to the 1,400 Harrah's employees displaced by Hurricane Rita, and those payments are expected to end in a few weeks.

As dictated by The Worker Adjustment and Retraining Notification Act of 1989, Harrah's had to give its employees advance warning of the casino's closings.

Many Harrah's employees in the communities hardest hit by the hurricanes lost their homes and personal property.

Harrah's officials estimated that more than 500 of its Gulf Coast employees were transferred to one of the company's other 40 casinos around the country.

"We gave those employees who wanted to relocate priority for any jobs in the company, but many didn't want to leave the Gulf Coast," Jones said.

The company has raised more than $3.5 million for its Employee Recovery Fund that will go directly to Harrah's hardest-hit employees, including workers who have lost jobs. Jones said applications are being accepted from the displaced workers who are in need of distributions from the fund.

The relief fund is expected to increase Feb. 20 when entertainers Celine Dion, Elton John and Jerry Seinfeld headline a one-night performance at The Colosseum at Caesars Palace, with proceeds going to the recovery efforts.

Susquehanna International gaming analyst Brian McGill said Harrah's had no choice but to let the employees go.

"It was admirable for Harrah's to pay their employees for a few months," McGill said. "Unless they had some certain or concrete reopening dates, they might have kept the employees on payroll a bit longer. Unfortunately, that isn't the case."

Only Harrah's New Orleans, which had minimal storm damage, could conceivably reopen soon. However, the flooding in the aftermath Hurricane Katrina wiped out neighborhoods and businesses, making much of the city uninhabitable.

A bulk of the casino's 2,500-person work force, as with the great majority of New Orleans' residents, have scattered across the country.

Harrah's recently reassigned the president of its Gulf Coast casinos who was based in New Orleans, and the general manager of Harrah's New Orleans, to positions with the company's Atlantic City operations.

New Orleans leaders and casino observers have said they expect Harrah's New Orleans to reopen in time for Mardi Gras in late February. But Jones was noncommittal on any timing.

"Our intent is to have a big presence in the re-emergence of New Orleans and the Gulf Coast," Jones said.

In 2004, Harrah's New Orleans reported gaming revenue of $268.8 million, the highest of any Louisiana casino. Before Katrina, the 100,000-square-foot casino had reported $229.4 million in gaming revenue for the first eight months of 2005.

Since the closing, Harrah's has continued to make monthly payments on its annual commitments of $60 million to Louisiana and $12.5 million to the city of New Orleans.

With Mississippi changing its gaming regulations to allow coastal casinos to be rebuilt on land rather than over water, Harrah's officials have said the company would rebuild its casino in Biloxi but has not set a timetable.

The company has not made a commitment to rebuild its Gulfport casino.

Jones said Harrah's is still assessing damages to the two riverboat casinos in Lake Charles and no time frame for reopening can be established.

Fallout From Hurricanes: Harrah's Trims Jobs is republished from Online.CasinoCity.com.