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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Gulf Coast Casino Revenue Hurt Heavily by Hurricanes

19 October 2005

The hurricanes that ravaged the Gulf Coast also annihilated Louisiana's casino revenues for September, figures reported Tuesday by the state's Gaming Control Board show.

Prestorm evacuations and poststorm flooding caused the closure of casinos in two key Louisiana gaming markets. Heavy rains associated with hurricanes Katrina and Rita played havoc on other Louisiana gaming jurisdictions.

Louisiana's 15 riverboat casinos reported gaming revenue of $96.2 million, a 23.8 percent decline from August's figure of $126.2 million and a 19.8 percent drop from $119.9 million in September 2004.

The state's only land-based casino, Harrah's New Orleans, was closed all of September. Harrah's New Orleans had gaming revenue of $21.8 million in August and $25.4 million in September 2004. Harrah's has not set a reopening date for the casino.

CRT Capital Group gaming analyst Steven Ruggiero said the depressed Louisiana gaming revenue figures could carry through the end of the year.

"It's problematic because some people will fluff this off as a one-month impact, but I think the results will linger well into the fourth quarter," Ruggiero said. "The local customers that these casinos rely upon have lives to repair and a lot of people have had their income displaced. It's going to take some time for the market to return."

Hurricane Katrina, which hit on Aug. 29, shut down the four casinos in New Orleans. Boomtown, which is operated by Las Vegas-based Pinnacle Entertainment, reopened on the last day of the month and suffered a loss of almost $40,000 during its one day of operation.

New Orleans' riverboat casinos didn't report any gaming revenue for September, compared with $18.5 million in August and $21.9 million in September 2004.

Bear Stearns gaming analyst Joe Greff said the closures in New Orleans helped the two riverboat casinos in Baton Rouge report a jump of 47.9 percent in year-over-year gaming revenue, collecting $21.6 in September, compared with $14.6 million in September 2004.

"The destruction and closing of casinos along the coast benefited Baton Rouge establishments," Greff said. "We expect this boost to continue in October."

Other than New Orleans, the five riverboat casinos in Lake Charles suffered the next biggest loss in gaming revenue, a drop of 34.1 percent from August ($37.8 million) to September ($24.9 million). Hurricane Rita hit on Sept. 24, damaging several of the area's riverboats and the neighboring Delta Downs race track casino. The casinos were shut down between nine and 11 days, depending upon the property.

Pinnacle's $395 million L'Auberge du Lac, which opened in May, had gaming revenue of $12.6 million for the 22 days it was open during the month.

"Lake Charles, especially L'Auberge, will come back, some quicker than others," Ruggiero said. "New Orleans will also come back, but it will take some time."

Ruggiero was also cautious about gaming revenue reported in the Shreveport-Bossier market, which was off 9.8 percent from August ($55.2 million) to September ($49.8 million). While rain kept casino patrons home, competition from American Indian casinos in neighboring states is cutting into the area's customer base.

"Those declines give me some concern," Ruggiero said.

Louisiana Gaming Revenue

Casinos owned by Las Vegas gaming companies

Casino

September

August

Percent change

Lake Charles

Harrah's Pride

$3.5 million

$6.0 million - 41.7

Harrah's Star

$2.2 million

$3.8 million -42.1

L'Auberge du Lac (Pinnacle)

$12.6 million

$17.1 million -26.3

Delta Downs (Boyd)

$6.5 million

$11.4 million -43.0

New Orleans

Harrah's New Orleans

$0

$21.8 million -100

Boomtown (Pinnacle)

-$39,588

$7.3 million

-100.5

Treasure Chest

$0

$8.0 million -100